Democracy in the Pits is a two-part series outlining the tarnished reputation of Canada's mining sector and the Harper government's role in supporting it. Read Part 1: The Corrosive Effect of Canadian Mining Companies Worldwide.

When your industry finds itself faced with a deteriorating reputation after its harmful practices have been exposed to the world, you have two available courses of action. The first is the honorable route: take the concerns of the public seriously, listen to the relevant experts, and figure out how to fundamentally change the way you do business. Admitting your mistakes and putting an end to your violent or unscrupulous behavior may be the first step to recuperating your standing in the community, even if damaged trust does take a long time to rebuild.

The second option is damage control. Rather than accept the fact that social, environmental and economic justice may pose legitimate constraints on your industry’s profitability, forge ahead with business as usual while trying to manage public opinion. This can be accomplished in a number of ways, ranging from discrediting your detractors to devising a flashy but shallow community engagement campaign, changing the style but not the substance of your actions.

Both of these responses fall under the rubric of corporate social responsibility. But while the first takes seriously the idea that a company requires a social license to operate, and has duties to the human community beyond earning a profit for its shareholders, the second only sees unprofitable distractions and collateral damage.

When a 2005 parliamentary report and a report compiled following the 2006 Corporate Social Responsibility Roundtables recommended that a tough legal framework be established to govern the conduct of the extractive industry, Canadian mining companies decided to band together to pursue the second option. Although the evidence clearly showed that their business model was displacing communities, poisoning water supplies and often resorting to organized violence to suppress dissent in developing countries, the mining sector felt that any kind of binding legal sanctions to clean up the industry would impose an unfair burden on their business.[view:in_this_series=block_1]

Following through on the policy recommendations detailed in the two reports would have meant taking real action to clean up the industry. It would have meant that the people responsible for committing criminal abuses including murder and rape would face justice. Since new regulations would have affected all Canadian mining companies equally (and since over 75% of the world’s mining companies are based in Canada), a new binding legal framework would have ensured a level playing field.  

International Development as Damage Control

But rather than take the reports’ conclusions to heart, members of the mining industry initiated a series of meetings with representatives from the non-profit sector, which would eventually culminate in the formation of a group called the Devonshire Initiative. The aim of the collaborative effort between these two unlikely partners was to forge an alternative to the framework recommended by the two reports, particularly by engaging the government as a partner rather than as a rule-enforcing authority. According to the organization’s website, “The objective of the Devonshire Initiative (DI) is improved social and community development outcomes wherever Canadian mining companies operate overseas.”

Devonshire Initiative companies operate in all countries shaded blue. From the Devonshire Initiative website.

The DI counts a number of high-profile companies and NGOs among its members. On the NGO side, the membership includes World Vision Canada, Save the Children Canada and Engineers Without Borders Canada. On the corporate side, mining heavyweights Barrick Gold, Goldcorp Inc. and Rio Tinto Alcan have all signed on.

At first glance, the premise sounds like it could have some potential. Since mining companies are naturally competent in the field of resource extraction, and development NGOs have on-the-ground expertise leading community projects in developing countries, bringing the two together should help to resolve some of the problems plaguing overseas mining operations. Yet there is a conspicuous lack of discussion of accountability or legal frameworks—in other words, the responses necessary for dealing with rampant criminality and environmental destruction.

When it comes to any discussion of the problems that the DI was formed to address, the language is kept vague and corporate. We are told that, “There is increasing dialogue around corporate social responsibility and best practices in sustainable community development.” There is brief mention of the “complex problems facing mining and development.” In a final flourish of high-gloss rhetoric, readers are assured that, “The realities of mining’s impact in Canada and overseas, combined with the silos of knowledge and experience, all suggest an opportunity to “do mining better,” together.“

Building the Canadian Advantage 

All of this would fall somewhere between relatively harmless and potentially beneficial if it were the mining companies themselves who would be footing the bill for their planned collaboration with development NGOs. They were riding high on an unprecedented commodities boom at the time the DI was conceived, so adequate funding was hardly an issue. But the members of the DI opted to lobby the Canadian government to provide them with funding and support through the Canadian International Development Agency (CIDA). Mining companies wanted money that was earmarked as official development assistance (ODA) to fund their corporate social responsibility initiatives on the ground, all without submitting to any new rules or regulations.

As outlandish as the idea sounds, the Devonshire Initiative’s preferred approach to extractive industry governance found a sympathetic ear in the Harper government. In a 2009 report entitled “Building the Canadian Advantage: A Corporate Social Responsibility (CSR) Strategy for the Canadian International Extractive Sector,” the Harper government outlined a policy that would allow CIDA to engage in development projects that directly benefit the mining industry.

According to Catherine Coumans of MiningWatch Canada, “This strategy provided policy cover for the first time for the government to put ODA directly at the disposal of the extractive sector.”

CIDA rolled out its new vision of development with $6.7 million in funding for three pilot projects that brought together mining companies and development NGOs: World Vision and Barrick Gold in Peru, World University Service of Canada and Rio Tinto in Ghana, and Plan Canada and IAMGOLD in Burkina Faso. On top of this was a $20 million fund for a program called the Andean Regional Initiative for Promoting Effective Corporate Social Responsibility, a development fund focused on the Andean region.

But the fund came with a catch: NGOs could only apply for projects if they were partnering with a mining company.

Canada Aid Exits World Stage

If these projects sound like the beginning of the end for an agency whose explicit mandate is poverty reduction and support for international development, that’s because they were. In 2013, omnibus budget Bill C-60 legislated the end of CIDA as an independent agency, folding it into the Department of Foreign Affairs and International Trade to create a new hybrid department: the Department of Foreign Affairs, Trade and Development (DFATD).

Under the newly created DFATD, decisions about how to utilize Canadian developmental assistance are now subject to one overarching criterion: their relevance to Canada’s commercial interests. But even before the official merger, CIDA had produced a report called “Reviewing CIDA’s Bilateral Engagement,” which prioritized countries with natural resources or significant Canadian investment potential as top destinations for development assistance.

Excerpt from the report "Reviewing CIDA's Bilateral Support." Note the mention of Canada's extractive industries listed first under 'Canadian Interests.'

With Canada's international standing already in freefall thanks to moves like Harper's withdrawal from the Kyoto Protocol and the UN Convention to Combat Desertification, the new direction in Canadian aid spending only makes matters worse.

As CIDA founder Maurice Strong put it in a Globe and Mail editorial, "The commercialization of our development funding further discredits Canada's commitment to supporting the progress of developing countries." 

In flagrant contravention of the Official Development Assistance Accountability Act that came into effect in 2008, as well as the 2005 Paris Declaration on Aid Effectiveness, Canada no longer takes poverty reduction and the perspectives of the poor as the primary factors to consider in choosing how to implement development funds. Instead it comes down to naked, cynical self-interest, a point the Conservatives have tried to sell as common sense. After all, why would we spend Canadian money overseas unless it brings direct material benefit to Canadians?

The problem is, the only “Canadians” who benefit from DFATD’s Orwellian redefinition of what constitutes development assistance are the mining companies and their shareholders. The very same companies who have been accused of egregious crimes in developing countries now receive free community engagement services from the government. They haven’t changed their business practices, and they aren’t constrained by any new laws. But they now receive extensive subsidies to pursue corporate interests.

In a time of generalized austerity, when ideological attacks on labour unions and public health care endlessly repeat the message that there isn’t enough money to pay for a decent standard of living for all Canadians, the public money to subsidize some of Canada’s wealthiest corporations is readily available.

And the generosity shows no signs of slowing: $25 million in federal funding for the new Canadian International Institute for Extractive Industries and Development (CIIEID) is only the latest example of the Harper government paying to improve the image of mining companies.

Just as the resource curse works to keep countries in the developing world trapped in poverty, so does the wealth and power of the Canadian extractive industry corrode our democracy.

Image Credit: LEOL30 via Flickr

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Democracy in the Pits is a two-part series outlining the tarnished reputation of Canada's mining sector and the Harper government's role in supporting it. Read Part 2: How Canada Uses Foreign Aid as PR for Mining Companies.

In a recent article chronicling the demise of Canadian social democracy at the hands of the Harper Conservatives, Marianne Lenabat draws an important comparison: what the financial sector is to the United States, so are the extractive industries to Canada. The similarity isn’t just about the two sectors’ relative size or contribution to GDP, although it starts there. It’s about how each country’s respective darling industry has come to dictate government policy, even when the social harm they inflict far outweighs their economic benefits.

In both countries, the same platitudes are trotted out to justify the government’s helpless devotion: The industry is vital to the economic health of the nation. It leads the world in innovation. It creates the jobs we need to build communities of hard-working families. 

In the United States, where a frenzy of speculation in the housing market spawned a global economic crisis that continues to ravage the world, the government love affair with Wall Street shows no signs of faltering. The big banks were bailed out with no significant strings attached, and the stock market is now back to record highs.

In Canada, the extractive industries enjoy a similarly cozy arrangement. The government spies on activists and meets with corporate executives to help ensure the speedy implementation of pipeline projects. The oil sands are given the green light for massive expansion, despite the indisputable fact that we need to immediately phase out fossil fuel extraction if we want to continue to enjoy a climate that remains hospitable to human life.

Just as the destructive reach of Wall Street is felt around the world, so does the impact of the Canadian extractive industries exceed the nation’s borders. The informal ambassadors for the Canadian way of life are no longer roaming around Europe or Southeast Asia with maple leaves sewn onto their backpacks. They’re hard at work on massive extractive projects in Central America and Sub-Saharan Africa, where the Canadian government has begun to use its foreign aid apparatus to provide crucial support in dealing with local opposition.  

Although the oil sands tend to monopolize our attention, nowhere is the unhealthy relationship between the Canadian government and the extractive industries more visible than in the toxic mix of foreign and economic policy surrounding the mining industry.[view:in_this_series=block_1]

Over the course of its tenure, the Harper government has subordinated both domestic and foreign policy to the mining industry, undermining Canadian democracy at home and damaging the nation's credibility abroad.

Canadian mining assets.

Canada is the Miner of the World

While most people have at least heard of Canadian mining giants like Barrick Gold, what is less well known is the extent to which the global mining sector has its roots in Canadian soil. The statistics are quite surprising: more than three-quarters of all the mining companies on the planet have their headquarters in Canada.

A 2009 report by the Department of Foreign Affairs, Trade and Development summarizes Canada’s dominance:

“Canadian financial markets in Toronto and Vancouver are the world’s largest source of equity capital for mining companies undertaking exploration and development. Mining and exploration companies based in Canada account for 43 percent of global exploration expenditures. In 2008, over 75 percent of the world’s exploration and mining companies were headquartered in Canada. These 1293 companies had an interest in some 7809 properties in Canada and in over 100 countries around the world…Canadian mining companies have invested over $60 billion in developing countries, including about $41 billion in Latin America (including Mexico) and almost $15 billion in Africa.”

It’s no accident that the vast majority of the world’s mining companies are based in Canada—they’re here for a reason. According to a Vice interview with Jamie Kneen, research coordinator at MiningWatch Canada, the preponderance of Canadian companies in the global mining sector can be partially attributed to a high degree of homegrown expertise in services related to the mining industry, particularly in law and finance.

But the more compelling explanation is simple: Canada is a comfortable place for mining companies to do business. As Kneen explained to Vice, it’s easy to get listed on the Toronto Stock Exchange, disclosure requirements aren’t overly demanding, and the Canadian government doesn’t subject companies to too much pesky scrutiny about their activities in foreign countries.

The Dark Side of the Commodities Boom

The first decade of the 21st century was a great time to be in the mining business. Driven by a combination of increasing demand for raw materials from the rapidly growing BRICS economies and speculative hot money looking for high returns after the dot-com bubble burst, commodities underwent a decade-long boom that saw prices soar to unprecedented levels all across the board. All commodities, from wheat to uranium and everything in between, were affected by the massive price increase.

Between 2001 and 2011, the price of gold rose by 528%, silver 1130%, copper 666% and platinum 435%, to name but a few examples.  

Price of gold from BuisnessInsider.

With such a disproportionate share of mining companies flying the Canadian flag, good times for the industry meant good times for Canada. But as the decade wore on, the social costs of the mining boom became increasingly difficult to ignore. Canadian mining companies were being implicated in a range of flagrant human rights and environmental abuses around the world.

The litany of offenses is too long to catalogue, and ranges from involvement in gang rapes and massacres of anti-mining activists to the poisoning of crucial water sources for rural communities. It includes the 2009 murder of Guatemalan community leader Adolfo Ich Chamán by security forces employed by CGN, a subsidiary of Manitoba’s HudBay Minerals. Chamán was a prominent community leader involved in anti-mining protests in Guatemala. In addition to the murder of Chamán, HudBay is accused of responsibility for a 2007 gang rape of 11 women during a land dispute. Claims by 13 Mayan Guatemalans against HudBay Minerals are currently awaiting trial in Canadian courts. 

By the end of 2009, the problem had become too glaring for even the industry to ignore. Research funded by the Toronto-based Prospectors and Developers Association of Canada (PDAC) produced a stunning report that was never published, though it was obtained by the Toronto Star. As the report claims, “Canadian mining companies are far and away the worst offenders in environmental, human rights and other abuses around the world.”

Excerpt from HudBay Minerals Corporate Social Responsibility 2012 report.

Social Irresponsibility

But the problem had been visible much earlier on. In 2005, the flood of criminal accusations against Canadian mining companies spurred a parliamentary report that called for a complete overhaul of the regulations governing the industry. Specifically, the report recommended that legal norms be established so that Canadian companies would be held accountable by the Canadian justice system for abuses committed in foreign countries.

Concerned by the fact that the reputation of the industry and of Canada as a whole was being undermined by the violent and unscrupulous conduct of Canadian companies operating overseas, the report also mandated the organization of Corporate Social Responsibility Roundtables. Held in Vancouver, Calgary, Toronto and Montreal, the roundtables examined the conduct of the Canadian extractive industries in developing countries, compiling input from a variety of stakeholder groups with the aim of producing a report for parliament.  

Published in 2007, the report advocated a series of sweeping changes to governance of the extractive sector, including mandatory accountability measures. But rather than implement the changes, Stephen Harper took a trip to Tanzania that same year to promote the beginnings of what has come to be a radical overhaul of the relationship between the Canadian government and mining companies.

Harper met with representatives from Barrick Gold while in Tanzania, where the company was seeking to replace a thousand miners who were striking in what Barrick deemed an illegal work stoppage. During a press conference, Harper made a seemingly innocuous announcement of what was on the agenda for his meeting with executives from Barrick and other Canadian companies operating in Tanzania: “We’ll be discussing, obviously, the general business climate, what the government of Canada can do to assist in building our investments here. And obviously we always want to promote notions of corporate social responsibility.”

What was not obvious at the time was the extent of the government support for the mining industry that Harper planned to implement. Rather than create a legal framework to address the disastrous conduct of Canadian mining companies operating in developing countries, Harper planned to turn the Canadian International Development Agency (CIDA) into the taxpayer-funded corporate social responsibility wing of the extractive industries. 

Read Part 2 of Democracy in the Pits: How Canada Uses Foreign Aid as PR for Mining Companies.

Image Credit: United Nations Photos via Flickr

The Narwhal’s reporters are telling environment stories you won’t read about anywhere else. Stay in the loop by signing up for our free weekly dose of independent journalism.