The New Staple State: Political Economy and Public Policy Regimes in Canada’s Primary Industries



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Access to Land Issues


Mineral exploration in Canada, which peaked in 1987 at more than one billion dollars, fell by more than half by 1990. This could be attributed to many factors including the growth of offshore competition. Industry representatives, however, suggested that it was also a result of unfavourable government policies and public perceptions. (Peeling, 1998)

In the previous decade, environmental non-government organizations were raising an alarm about the impact of resource development on wilderness areas and governments were responding. Moreover, First Nations groups were gaining increasing legal recognition in the use, management and ownership over lands claimed as traditional territories. The designation of protected areas following the recommendations of the United Nations Brundtland Commission as well as the launching of a number of multi-stakeholder land use processes and commissions signalled that governments were prepared to listen to a diversity of voices including labour, environmental non-government organizations and First Nations peoples

The 1991 British Columbia Commission on Resources and the Environment (CORE) was perhaps the most extensive of these processes initiated under the governing provincial New Democratic Party. The CORE processes led to the development of land use planning strategies that assisted in the determination about where resource development could take place and under what conditions. In the protected areas, no exploration or development could take place. One particular event during this era turned into a flashpoint for the Canadian mineral industry. It became known as the “Windy Craggy” affair. The mineral industry wanted to develop an enormous copper deposit (which included some cobalt, gold and silver) in northwestern British Columbia. The problem was that the proposed mine was to be built at the confluence of the Tatshenshini and Alsek Rivers, an area highly rated for its wilderness values. The environmental perspective prevailed and the region became a World Heritage site protecting it from development. Although it could be argued that the Windy Craggy situation was unique, many in the industry believed that it signalled that Canada was not open to mining.

Many unresolved land claims also contributed to the air of uncertainty for the mineral industry. It takes many years to bring a mine into production and investors are reluctant to put their resources into a project if there are unresolved questions about ownership and the legal requirements governing the potential mine site. Once the land claims are settled, the industry must be able to negotiate effectively with First Nations peoples. Yet, its history for effective negotiation is spotty at best. As Jerry Asp discusses below, the industry has a track record that would not always inspire trust in First Nations Communities.



Adverse Environmental and Social Impacts of Mining


Access to land and new investments in exploration require both government and public support. As noted earlier, at one time the industry could count on both. Just as it was challenged on the international competitive front, the industry has also found itself facing barriers on the home front. As was the case with the Windy Craggy deposit, non-governmental environmental organizations and others were drawing public attention to the impact resource development was having on the biophysical environment, important watersheds and valued wilderness areas.

Economies and societies rely on natural resources (sometimes referred to as natural capital) for water, energy, primary materials and habitable environments. The biophysical environment needs to be protected; of that point there is little debate. How that should happen, however, is a different question. Many members of industry, for example, have applied technological approaches to solve environmental concerns believing that sustainability can be readily achieved within a global liberal-capitalist economy. Modernizing operating practices through environmental management systems, continual self-improvement, retrofitting, maximizing the ore body, minimizing waste and taking life-cycle approaches have been adopted to various degrees throughout the Canadian mineral industry. As discussed in the following sections, however, others argue that technological fixes are not enough; they call instead for major institutional, industrial, and social restructuring that recognize the socio-ecological limits of the planet.

For its part, the mineral industry has continued to attempt to solve its problems in the tradition fashion through the application of technological improvements to increase its efficiency and deal with its environmental effects. The sector, however, has been less sophisticated at dealing with the political and social challenges that affect its long-term viability. Scientific advances in such areas as geophysics, robotics, or pollution abatement initiatives can only take the industry so far. As noted above, companies need access to land and a supportive regulatory and investment environment to undertake exploration activities and to mine deposits. This will not occur without government support. As Anthony Hodge, an environmental consultant notes, the mineral industry’s “continued defensive posture that has characterized the industry for most of the second half of the 20th century will drive the industry into perfect storm conditions.” (Hodge, 2003: 14)

Critics watching the mineral industry are ready to offer numerous examples of how the industry has failed to comprehend and respond to the changing public agenda; examples range from the poor handling of international mining disasters, failure to live up to national commitments, inept negotiations with local communities or indigenous peoples, poorly handled industrial relations, to bad public relationships with local property owners. (Mining Watch Canada, 2003; Russell, 1999)

With advances in the Internet and the increasing globalization of communications, non-government organizations at the local and national levels have developed connections throughout the world spawning new organizations. The resources of the well-funded organizations have helped support the causes of smaller associations. In Canada, the establishment of the Environmental Mining Council of British Columbia, formed in 1992, to promote environmentally sound mining policy and practices. (Young, 1998)

This was soon followed in 1999 by the national organization Mining Watch Canada. Mining Watch Canada focuses on the promotion of ecologically sound mineral practices and sustainable communities. The organization suggests that the mineral industry has acquired an unsustainable legacy in environmental costs in Canada and abroad:


The very real legacy of mining includes an estimated twenty-seven thousand abandoned mines across Canada, billions of dollars of remediation liability for acid mine drainage contamination, extensive disruption of critical habitat areas, profound social impacts in many mining communities, and the boom and bust upheaval of local economies. The cost of Canadian mining operations in other parts of the world has been no less dramatic. (MiningWatch Canada, 2003)

Although the figures may differ, governments acknowledge that these problems exist and must be addressed. For example, Natural Resources Canada notes that 10,000 abandoned mine sites have been identified (not to mention those that have not been uncovered) throughout Canada with liabilities associated with health, safety and environmental concerns. One of the most serious of these is the concern that old tailings ponds that contain mining wastes will fail resulting in the poisoning of watersheds. Today, modern mining operations, governed by numerous environmental regulations and operations, are much improved. That said, the environmental and public safety concerns posed by contemporary mineral activities—in addition to the cumulative historical problems—leaves the industry open to public criticism. Mining Watch Canada is affiliated with numerous other organizations including the Canadian Environmental Network, the Canadian Environmental Law Centre, as well as international organizations. Their ability to pool resources, ideas, and initiatives makes these groups an influential alternative voice to the mineral industry when setting public agendas.

Canada’s Aboriginal peoples have also become very influential members of the mineral policy community. This influence comes from the legal recognition of indigenous peoples’ rights in variety of ways including outright ownership in many mineral-rich regions of the country. This influence is both national and international as indigenous organizations around the world develop strategies to protect their interests. One member of the Canadian Aboriginal Minerals Association, (CAMA), Jerry Asp, raises some important issues related the future of industry-Aboriginal peoples relations. If corporations wish to negotiate with First Nations people, he suggests that they would do well to handle their interactions differently. For example, Asp observes that abandoned mines have left an environmentally damaging legacy that continues to affect public perceptions of the mining industry today. Asp suggests that the industry is paying insufficient attention to this problem and need to claim responsibility collectively.

Asp also reinforces Hodge’s observation about the mining industry’s defensive approach when he notes the historic tendency of the industry to proclaim that it has a relatively small impact on the land given that it does not occupy a large territory. Asp suggests that the industry should acknowledge its actual environmental impact. For example, it is quite common to hear members of the industry proclaim that a mine only takes up a small “footprint” when it is in operation. This undermines the credibility of the industry and erodes any trust that it might have gained in public consultations and discussions. Asp, speaking from the perspective of First Nations peoples, notes that when the industry claims it only takes a few acres of land to mine:


It reminds me of the story of the railroad crossing the Great Plains of America. They told the First Nations that it was only two tracks and a whistle. They forgot to tell them about the people that the train will carry. You are forgetting to tell us about the related infrastructure that goes with your project. The road, the power transmission lines, etc. This opens up our country to anyone who owns a snow machine, or a four-wheeler. This is a real disruption to us. It has a major impact on our life….then all trust is gone…. The mining company will have an uphill battle to get First Nations approval for their project. (Asp, 2004: 3)
Given the well-documented adverse cumulative impacts of resource development activities on First Nations peoples, trust will be very difficult to achieve, particularly if the industry continues to attempt to minimize the very real, potential disruption of their activities.

On a local level, the activities of exploration companies can also erode public faith in the industry. For example, old mining laws, devised at a time when mining exploration took place a long way from human settlement, continue to govern at a time when small property owners can be adversely affected by such pieces of legislation that continue to support the concept of “free entry” for exploration (even on privately owned property).


The Decline of the Resource Community

As Hutton noted, the decline of the resource communities is another hallmark of a post-staples economy. The problems facing the industry also affect rural Canada and vice-versa. At the end of the 20th century, a number of Canada’s 150 mining communities in Canada found themselves facing difficult economic times. No new mining communities had been built for almost twenty years. Improvements in technology has led to automation of mine operations, a decline in employment, and the development of ‘fly-in’ mining where companies build housing for their workers rather than permanent communities. Fly-in mining has its advantages, from both an ecological and economic point of view. Flying workers into a mine site eliminates all of the social, economic and environmental costs associated with establishing isolated mining communities. It also weakens the abilities of labour to form unions. A decline in the fortunes of resource-based towns and in levels of employment means that the mineral industry diminishes in importance in the government agendas. Urban demands and employment concerns lead decision-makers away from the staples-producers in search of answers to other pressing problems. Rural Canada and its industries are no longer able to command the large share of government attention that it once did.

Moreover, critics are increasingly questioning whether or not it is in the long-term interests of an economy and society to continue to support investment in a staples-based economy, particularly when it is considered from a community perspective. The life of a mine is finite so communities have to think about what they will do when the ore reserves are depleted. Attempts to diversify the economy into such areas as tourism (hunting and fishing lodges), other types of resource production, or even retirement centres can be undermined by harsh weather conditions, isolated locations and the residual effects of the mining activity: “Often, other resource-based economic activities such as farming, fishing and logging are damaged by the pollution from the mine and smelters, and these remote communities become dependent on power grids, chain shores and imported goods and services to supply their needs” (Kuyek and Coumans 2003: 13). Moreover, residents of the mining communities are accustomed to the high wages associated with mining and any economic that existing before the mine development has been replaced or are insufficient to replace the needs of a resource-dependent economy (Kuyek and Coumans 2003: 13).

With the exception of a few regions that have successfully diversified, Sudbury being the most notable case, sustaining a town over the long term requires the fortuitous confluence of many supportive variables. Unless, significant government support and private investment is directed towards clusters of regions that have demonstrated a potential for diversification and are located along major transportation routes, many isolated mining towns face economic decline or closure after the mine shuts down.

By the end of the 1990s, the mineral industry was entering into increasingly unfamiliar territory as it was confronted with a complex array of new challenges ranging in scope from the global to the local. Issues ranged from international competition to concerns about land access, the reality of a diversifying economy that competed with the traditional resource sector for government attention and resources, widespread public concerns about the environmental impact of mining, new influential actors questioning the role of the mineral industry in setting government agendas, and a decline in ore reserves and mining communities.


Uncertain Territory: Complex Environments




Emerging Conceptual Perspectives


New analytical paradigms are required to address the complexity of relationships between political actors, the need to sustain valued ecosystems, and diffuse policy communities with overlapping or conflicting interests. In recent years, a ‘new’ or ‘post-normal’ science has emerged which investigates the dynamics of ecosystems and human systems. The thrust of this body of literature is that “traditional reductionist disciplinary science and expert predictions, the basis of much advice given to decision-makers, have limited capacity” (Kay et al., 1999: 722).

Ecosystem approaches, on the other hand, work across numerous human and geographic boundaries. Kay et al. argue that decision-making should be based on an understanding of a nested network of holons, as distinguished from hierarchies, because they recognize “reciprocal power relations between levels rather than a preponderance of power exerted from the top downwards” (Kay et al., 1999: 723).

Ecosystems approaches are now becoming communicated and adopted in various forums going beyond academia into the public sector and non-government organizations. Moreover, such approaches fit well with some traditional First Nations worldviews that are holistic in orientation. Kay and colleagues observe that ecosystem approaches have implications for resource decision-making:

Expectations that decision-makers can carefully control or manage changes in societal or ecological systems have also to be challenged. Adaptive learning and adjustment, guided by a much wider range of human experience and understanding than disciplinary science, are necessary (Kay et al., 1999: 722).

Dealing with complex systems requires new policy approaches to understanding and managing human interactions with biophysical systems. In the mining sector, resource managers, labour representatives, government decision-makers and community leaders are now trying to develop strategies to deal with the inevitable complexity and uncertainty that accompanies contemporary resource and environmental policy-making (McCarthy, 2003). Institutional techniques for bringing together groups, interests and concerns to address resource complexity include multi-stakeholder consultations, co-management, integrated resource management, and institutional interplay at vertical or cross-scale linkages (Berkes, 2003). These new systems perspectives have been influencing the policy environment in a number of ways and to varying degrees. Public and private decision-makers in the mineral sector have had many different responses.

Rising to the Challenge? Responses to Change

The mineral industry and public officials in government departments of mines have been traditionally educated in such fields as geology, engineering and finance. None of these disciplines adequately equip the personnel with the tools required to operate within a complex systems paradigm as described above. Industry has, however, one again responded to competitive challenges in the ways it knows best, primarily through technical innovation. For many years, industry has been investing heavily in research to mitigate their adverse environmental impacts such as acid rock drainage considered to be mining’s most devastating environmental impact, develop recycling programs to recover metals, and adopt integrated environmental management systems.

The industry has also become aware that it needs to work more effectively with other groups affected by mineral activities. To that end, with varying degrees of commitment from companies and mining associations, from the 1990s onward, the industry initiated a number of multi-stakeholder approaches to mining development. One of the most notable of these was the national Whitehorse Mining Initiative (WMI), an extensive attempt by industry and government to foster a broader consensus about how mining should proceed in the future: “The Accord adopt[ed] a strategic vision for a healthy mining industry in the context of maintaining a healthy and diverse ecosystems in Canada, and for sharing opportunities with Aboriginal peoples.” (Mining Association of Canada, 1994; McAllister and Alexander, 1997) More recently, consultative efforts have extended to international efforts including a three-year Global Mining Initiative (GSI), created by international mining companies (including Canadian corporations) in preparation for the World Summit on Sustainable Development in Johannesberg in 2002. The GSI provided funding for the Mining Minerals and Sustainable Development (MMSD) project, which was billed as an “independent two-year process … with the objective of understanding how to maximise the contribution of the mining and minerals sector to sustainable development at the global, national, regional and local levels” (International Institute for Environment and Development, 2004). One representative from a Peruvian non-governmental organization, however, observed that the “The MMSD, however much good work has gone into it, is still an attempt to set an agenda from the top down, to limit the debate, and to define who the legitimate actors or stakeholders are. The role of NGOs is to support processes that are built from below, to construct a new social agenda, and to support communities’ struggles to recuperate their economic, social, and cultural rights" (International Institute for Environment and Development, 2004).

Nevertheless, efforts such as the WMI and the MMSD do indicate a recognition on the part of governments and industry that they need to develop effective consultation processes, distribute the economic benefits from mining more widely, and mitigate the environmental impacts. The question remains; do these changes indicate a significant shift toward a new approach to staples development?



Seismic Shifts or Minor Tremors in the Status Quo?

The past few decades has raised questions about whether the mineral industry could be classified as a sunset industry with Canada moving into a post-staples, knowledge based economy. As the Sudbury example would suggest, it is possible for an economy to diversify based on its resource-based strengths. The mineral industry, much like other enterprises in Canada has adapted to competitive challenges with many technological innovations contributing to a so-called knowledge economy. An examination of its production values suggests that they remain very strong and Canada continues to be a world leader in mineral exports and exploration. (Natural Resources Canada, Minerals and Metals Sector, 2001). Canada exports 80% of its mineral production which account for 13% of the country’s total export earnings. Canada is the base for more mining companies than any other country in the world with its largest city, Toronto, touted as the mine-financing capital of the world. (Ontario Ministry of Northern Development and Mines, 2004).

Michael Howlett suggests that Canada has diversified by experiencing a growth in the tertiary sector, industrial expansion in regional centres, significant growth of metropolitan regions and a decline in resource-based communities (Howlett, 2003: 58).

Howlett poses two possibilities. The first is that Canada will remain “stuck in a mature staples” trap and will continue “to reinforce existing economic policy measures promoting increased resource extraction” (Howlett, 2003: 59). The second would see the diversification of the economy based on the traditional staples industries with value-added products including environmentally-related services moving toward a post-staples economy (Howlett, 2003: 59). With respect to the mineral industry, we are seeing elements of both trends developing.

Many examples can be found of government policies that continue to subsidize industry and support policies that continue promote primary resource extraction. For example, the Canadian mineral exploration sector led the world in exploration expenditures in 2002 and 2003. One singularly important reason for this is that the industry received the benefits of national a flow-through share program, also referred to as “super flow-through”. These tax incentives have been enhanced by provincial tax incentives in British Columbia, Saskatchewan, Manitoba, Ontario and Quebec. In total over $525 million of these shares were raised for mineral exploration in one year (Natural Resources Canada. Minerals and Metals Sector, 2004).

These kinds of government incentives signal that governments are continuing to actively promote policy measures in order to reinforce the economic position of extractive, industries. This reality runs counter to a post-staples, ecosystems-based argument that suggests that post-industrial economies often have a competitive advantage over staples-dependent economies. These ‘new’ economies are competitive, it is argued, because government uses taxation incentives and regulatory measures to develop goods and services that do not rely as much on the costly production of raw materials and substantial energy inputs.(Dale, 2001). Clearly, the current Canadian taxation and regulatory environment continues to promote staples-based development.

In Canada, we are also seeing signs of the emergence of a new, staples economy. These developments reflect Howlett’s second more optimistic alternative suggested above; that is, the Canadian economy will continue to diversify supported by its traditional resource industries. Recent Natural Resources Canada documents identifying diversification and shifts in the industry suggest that it is undergoing “profound structural change.” Economic diversification of the minerals industry has been growing in terms of downstream, value-added processes. Employment in mining itself has declined, in part because of the substitution of labour through technological developments, but it is growing in other areas such as materials handling, specifically recycling which is becoming an important source of metals in many regions (Natural Resources Canada. Minerals and Metals Sector, 2001: 9).

Canadians are large investors in exploration (accounting for 30% of all projects throughout the world) and mining projects overseas (approximately 6000). (Natural Resources Canada. Minerals and Metals Sector, 2001: 17) International investment, in turn, generates a demand for Canadian mining, equipments, services and expertise—all of which contribute to the secondary and tertiary economic sectors. Canadian innovations in the mineral industry, its global leadership in the production of minerals, research and development and environmental technologies, mean that there are promising trends in its ability to diversify. The most notable example of these developments can be found in the example of Sudbury which has diversified its economy based on mining-related spin-off businesses associated with equipment, robotics and technology.



The shift to a knowledge economy has not directed attention away from the mineral industry. It, along with other economic enterprises, has been using information technology to foster productivity and creating value-added goods and services. The federal government has been encouraging this direction suggesting that investment in such things as fuel cells, batteries, sensors, lightweight and structural materials which rely on mineral production will provide new opportunities for the industry. (Natural Resources Canada. Minerals and Metals Sector, 2001: 16). Continuing public concerns about the ongoing adverse biophysical and socio-economic impacts of Canadian mining operations in Canada and around the world are fuelled by reports of failure of tailings dams contaminating watersheds, displaced communities and workers. or unwanted resource development. One commentator has this to say about the new, post-Fordist environment:
About the empowerment of workers, households, and communities, it is not. About the creation of more participative, skilled labour processes, it is, at best, tangential. Rather, the emerging economy is, first and foremost, about doing more with less and for less….Thus, despite local variations, downsizing, the expansion of work areas, and the addition of new tasks to old jobs were the real trademarks of the changes that were besetting the mining industries. (Russell, 1999: 199).
That said, in Canada, we are seeing some pockets of change in the way traditional resource activities are carried out. In some areas, institutional and individual learning is taking place in new consultative forums as people bring a diverse suite of resource values to the negotiating table. In such forums, positions must be justified on the bases of their contribution to the broader public interests that now includes ecological and community sustainability. One analyst, Robert Gibson, suggests that one can find evidence that changes may be taking place in the mineral development process—changes that distribute wealth and proceed in a more economically and ecologically sustainable manner. The example that Gibson offers is that of the Voisey’s Bay mine development, a huge nickel-copper-cobalt deposit in Labrador owned by a subsidiary of nickel giant INCO Ltd. In June 2002, the Aboriginal peoples in the area, the Innu and the Inuit, agreed to the ratification of an agreement to open the mine following an environmental assessment process and negotiations with the major stakeholders, which in this case included affected communities, governments and industry. Gibson suggests that the agreements were remarkable given the vast difference in cultures, priorities and interests involved and the fact that the agreement was able to encompass and integrate biophysical and socio-economic considerations.(Gibson, 2002). He notes that the reasons for success, at least up until this point of the development, can be attributed to the substantial power given to the indigenous people in the decision-making processes, the fact that all the main players had an important level of influence, and that the planning and assessment processes called for an integrated, lifecycle, approach to ecological, socio-cultural and economic aspects of the project. Notably, the agreements emphasised long-term benefits, and requirements that the evaluative and decision-making process be continuing and adaptive through the life of the project. Although this was a single case, decision-making processes are frequently built on previous experiences and lessons learned. The Voisey’s Bay case sets some standards for a new approach to mineral development that others might follow.

Conclusions: New Frontiers


Processes and agreements of the kind undertaken in the Voisey’s Bay case indicates that mining can continue to take place in a new political arena—one that recognizes a diversity of interests. The status quo need not prevail and, in fact, it is unlikely to do so given the new sets of players now participating in the decision-making arenas. A new generation of policy-makers have grown up with environmental considerations as part of their educational curriculum. The comparatively recently recognized rights of Aboriginal peoples to make decisions with respect to their territories have also altered the dynamics of the game. Government departments now temper their promotional mineral-related activities by acknowledging the need to ensure adequate environmental protection measures are in place and that attention is paid to the socio-economic health of affected communities (Natural Resources Canada. Minerals and Metals Sector, 2004). All that said, a precautionary note is needed, the prevailing drive for mineral development is based on the same profit motive that has always driven capitalist development. Moreover, the predominant method for dealing with competitive and other challenges has remained technological, rather than social or environmental innovation. While numerous changes may take place on a variety of levels, at this most fundamental level, industrial relations and community relations and new managerial paradigms will all be informed by the choices made by industry to develop a mine, introduce a measure of ‘workplace democracy’ or adopt other voluntary initiatives. As Russell has noted, in the case of industrial relations and work reorganization, “changes would be at the margins to jobs that had been essentially predesigned to meet corporate requirements” (Russell, 1999: 166).
Howlett’s analysis that Canada is experiencing uneven economic development (Howlett 2003) certainly appears to be supported by an examination of the mineral industry. Given concerns about depleting ore reserves, changing public values about resource development, and growing global competitiveness, Canada’s long term economic and ecological health will depend on its ability to diversify into other value-added enterprises. While Canada remains a world leader in the production and export of minerals, there are signs that the economy is beginning to diversify into other areas, albeit using the primary sector as the basis for the production of new goods and serves.

On a final note or perhaps as a caveat to the above statement, although the Canadian mineral industry is an old one, there always appears to be new frontiers for staples production. This seems to be the case despite pressures from various groups to move towards a post-staples economy. Today, in addition to the more typical exploration targets, engineers are now discussing the possibilities of using new technologies to pursue deep mining techniques extending the life of existing ore bodies, or even to mine deep sea deposits or asteroids (Scoble et al, 2001). The development of the nascent diamond industry in the Canadian North has continued to fuel exploration interest. In 1998, the first diamond mine, the Ekati mine, began production in the Northwest Territories. For the northern economy relatively recently opened up to diamond mining, “post-staples” would seem to be an odd characterization. Nevertheless, as Patricia Fitzpatrick discusses in the next chapter, the old approach to staples-led economic development will no longer suffice in the complex policy environment of the 21st century.



Notes:

The author would like to thank Patricia Fitzpatrick for her intelligent and helpful observations during drafts of this article and providing very useful sources. Thanks also to Michael Howlett and Keith Brownsey for facilitating this chapter and project.




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