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Bulletin

Resource Revenue Transparency Report Released

Fasken
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Corporate Social Responsibility Law Bulletin

On January 16, 2014, the Resource Revenue Transparency Working Group, comprised of Canadian exploration and mining associations, in collaboration with civil society organizations, released its final recommendations for the development of a payment transparency framework for all publicly-traded mining companies in Canada, entitled Recommendations on Mandatory Disclosure of Payments from Canadian Companies to Governments (PDF).

These recommendations follow Prime Minister Stephen Harper announcement in June 2013, prior to the G-8 summit, that Canada would establish “new mandatory reporting standards for Canadian extractive companies (mining and oil & gas) with a view to enhancing transparency on the payments they make to governments” to align with initiatives by other G-8 countries.

The Working Group—made up of the Prospectors and Developers Association of Canada, the Mining Association of Canada, Publish What You Pay-Canada and the Revenue Watch Institute—made the recommendations after over a year of multi-stakeholder consultations and a public comment process.

The recommendations include that:

  • authorities require large mining companies to disclose all payments above $100,000 CAD, and venture issuers to disclose payments above $10,000 CAD to national and sub-national authorities[1], including state-owned enterprises;
  • disclosure requirements for public Canadian mining companies be mandatory, not voluntary, through securities regulation;
  • the reporting requirements apply to all companies, their subsidiaries, controlled, and jointly controlled and/or associated entities[2];
  • all payments during a project’s life cycle from exploration to relinquishment/sale and export of the product are subject to the reporting requirements, including, but not limited to: profit taxes, royalties, fees, production entitlements, bonuses, dividends, infrastructure payments, and transportation and terminal operating fees; and
  • information disclosure should be disaggregated by project, but where payment liabilities arise at the entity level they should be reported accordingly, on an annual basis made available to the public in full.

The recommendations are consistent with existing standards and laws in the European Union and the United States, helping to create a global standard. The adoption of the recommendations would significantly increase transparency internationally as nearly 60% of the world’s mining companies are listed on Canadian stock exchanges, with more than 1,000 companies operating in over 100 countries.

With some consensus seemingly achieved on transparency in the mineral extractive industries, transparency campaigners are likely to push for global benchmarks for corporate transparency in other industries. The EU has already indicated that it has an interest in extending this transparency directive to other industries, most notably banking, energy, telecommunications and construction.

However, there remains some uncertainty in the details of how the regime will operate, especially in the context of payments to Aboriginal governments in Canada and indigenous governments around the world. As Canadian extractive companies embrace CSR principles, the likelihood of such payments is only rising and will be an important issue to resolve going forward – but one that is fraught with complexity and that will need significant consultation.

For more information on other international developments regarding extractive transparency in 2013, see our bulletin: International Progress on Resource Extraction Transparency


[1] The Working Group’s recommendations do not consider payments made to Aboriginal governments, though it is aware that such payments are being considered for inclusion in the process being led by Natural Resources Canada. See Recommendations on Mandatory Disclosure Payments from Canadian Mining Companies to Governments, January 16, 2014, footnote 2, p. 5.

[2] The recommendations create criteria to determine whether the relationship between the parent company and associated entities is significant for the associated entities to be caught by the reporting requirements. See Recommendations on Mandatory Disclosure Payments from Canadian Mining Companies to Governments, January 16, 2014, p. 6.

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