Inclusion of Aboriginal consultation costs as an eligible expense for the retention of proceeds from the sale of samples taken for testing on unpatented mining claims

Recent amendments to the Mining Act as a part of Bill 276, the Supporting Recovery and Competitiveness Act, 2021, enabled the creation of a “permit by rule” model, which would allow mining claim holders to sell the end product of a bulk sample, and retain proceeds, without seeking the minister’s permission, provided that prescribed conditions are met. Consequential regulatory amendments then followed that prescribed the conditions required for the new model. Among these conditions is the requirement that any proceeds of the sale retained by the proponent cannot exceed the allowable expenses of their testing activity – i.e., they may not profit from the sale.

When mining proponents extract and process minerals for the purposes of testing, they incur costs. Under the new ”permit by rule” model, proponents were given the ability to claim certain costs of the extraction and testing against any proceeds they might make from the sale of that product. This means proponents can recover some of their costs and potentially reduce profits that would otherwise be returned to the Crown. The allowable expenses are currently limited to the cost to the proponent of the related excavation, processing, transportation, testing, evaluation and rehabilitation.

As a result of engagement on related items in the Supporting People and Businesses Act, which received Royal Assent on December 2, 2021, the Ministry received feedback from both industry and an Aboriginal community that there is interest in having consultation-related costs included in the list of allowable expenses for testing mineral content from mining claims and from other mining lands.

This proposed amendment would allow proponents to submit consultation-related costs reasonably incurred during consultation with Aboriginal communities to ensure a consistent approach to eligible consultation costs considered for other activities regulated under the Mining Act.

This proposal specifically applies to the list of eligible costs for the retention of proceeds from testing activities on unpatented mining claims. A similar proposal is posted on the ERO that applies to the list of eligible costs for the retention of proceeds from testing activities on leases, licences and other mining lands. 

Analysis of Regulatory Impact: 

(1) This amendment is administrative in nature;

(2) No impacts are expected to health, safety, or the environment; 

(3) The proposed addition of Aboriginal consultation to the list of eligible costs may make it less costly for proponents to determine the economic viability of their potential mineral development projects; and

(4) Given the individualized nature of each project involving the retention of proceeds from the sale of testing mineral content, a quantitative analysis is not possible.