On August 17, 2017, China’s NDRC, Ministry of Commerce, the People’s Bank of China and the Ministry of Foreign Affairs jointly released their Opinions on Further Guiding and Regulating the Directions of Overseas Investments (the “Guidelines”). The stated objectives of the Guidelines are to improve the macro guidance on overseas investments, further guide and regulate the directions of overseas investments, promote the sustainable, rational, orderly and healthy development of overseas investments, effectively prevent all types of risks and properly meet the needs of national economic and social development.
The Guidelines are encouraging for China’s continued overseas investment in the natural resources sector. The Guidelines indicate the China will support domestic enterprises with adequate capabilities and qualifications to actively and prudently invest overseas in an effort to, among other things, make up for China’s shortcomings in energy and resources. In particular, Chinese domestic enterprises have been encouraged to participate in the exploration and extraction of offshore oil and gas, mining and other energy resources based on prudent assessment of cost benefits.
In the past couple of years, we have seen several major Chinese overseas investments in the natural resources sector including:
- Yancoal’s ongoing acquisition from Rio Tinto of a majority interest in the Hunter Valley coal assets in Australia
- China Moly’s acquisition from Freeport of a majority interest in the Tenke copper and cobalt mine in the DRC
- Sinoenergy’s acquisition of Long Run Exploration, an intermediate oil and natural gas public company in Canada*
While we expect that overseas investments in the natural resources sectors by Chinese domestic enterprises will continue apace, we also expect that Chinese acquirers will spend more time on technical and legal diligence, cost benefit analysis and compliance issues in making their overseas investments.
* McCarthy Tétrault acted for Sinoenergy on this acquisition
In the decision of 1520658 Ontario Inc. v. Her Majesty the Queen, 2017 ONSC 4141 released earlier this month, Justice Goldstein of the Ontario Superior Court of Justice determined that a mining claim is not an equitable interest in land under the Ontario Expropriations Act.
This decision lays out the framework for the analysis of determining the definition of land, specifically the interplay between the Mining Act and the Expropriations Act, and may have broader implications for the mining and excavation industries as a whole. Continue Reading
The article “Mining in Latin America: An Overview of Mining Law in Argentina, Brazil, Chile, and Peru” by Frederico Marques and Etienne Ravilet Guzman (available here) offers an in depth analysis of the regulatory framework for investment and development of mineral exploration and mining projects in Argentina, Brazil, Chile and Peru. The goal is to provide stakeholders with a broad understanding of the suitability of these Latin American jurisdictions for mineral exploration and mining projects. It will also assist Canadian and international companies, as well as policy makers, to navigate contemporary challenges in the sector and at the same time identify common grounds and trends in the region. Each case study addresses foreign investments, mineral exploration and mining rights, main taxes, royalties, government incentives and environmental regulations.
The outcome is a comprehensive legal overview of mineral exploration and mining activities in these jurisdictions with practical insights to doing business in this increasingly international industry; as understanding and navigating these frameworks is essential to minimize risk, increase efficiency and attract capital.
What’s At Stake?
In 2015, the Supreme Court of Canada in Chevron Corp. v. Yaiguaje (discussed here) determined that Ontario courts have jurisdiction to adjudicate a recognition and enforcement action against an Ontario affiliate of a foreign corporation. In this case, the enforcement action was brought by Ecuadorian plaintiffs against Chevron Corporation (“Chevron”), a US-based corporation, and its seventh level indirect subsidiary, Chevron Canada Limited (“Chevron Canada”). Continue Reading
The following post by Joanna Rosengarten and Bryn Gray on our Canadian ERA Perspectives blog may be of interest to readers of this blog: Expert Panel Recommends Significant Changes to Canada’s Environmental Assessment Regime
On April 5, 2017, Environment and Climate Change Canada released the report of an external Expert Panel that was established in August 2016 to review the scope and process of federal environmental assessments under the Canadian Environmental Assessment Act, 2012 (“CEAA 2012”). The Expert Panel’s Report contains numerous recommendations which, if implemented, would result in a fundamentally different federal environmental assessment (“EA”) process to the one that is currently in place.
We are pleased to bring you the newest edition of our popular book, Mining in the Courts, Year in Review.
For the second time in recent months, a British Columbian court has allowed a civil case to proceed against a resource company in British Columbia for wrongs allegedly committed outside of Canada.
On October 6, 2016, the British Columbia Supreme Court determined that a civil claim alleging human rights violations at an Eritrean mine could proceed to trial against a British Columbia mining company (see Araya v. Nevsun Resources Ltd., 2016 BCSC 1856: British Columbia Supreme Court refuses to strike civil claims alleging human rights violations at Eritrean mine).
On January 26, 2017, the British Columbia Court of Appeal determined that seven Guatemalan nationals who were allegedly shot while protesting at a mine in Guatemala can continue an action in British Columbia against a British Columbia mining company, Tahoe Resources Inc. (Garcia v. Tahoe Resources Inc., 2017 BCCA 39). In doing so, the Court of Appeal reversed the decision of the chambers’ judge, who had stayed the case on the basis that Guatemala was clearly the more appropriate forum for the action.
Garcia is significant, both for Canadian resource companies operating abroad and for foreign nationals alleging that Canadian parent companies are responsible for wrongs committed in the complainants’ home countries. Continue Reading
La version française suit / French language version follows
On January 11, 2017, the Minister of Energy and Natural Resources of Québec (“MERN“), Mr. Pierre Arcand, published new Government Policy Directions (in French only) aimed at promoting the harmonious coexistence of mining activities with other uses of the territory. On the same day, the Québec Government also issued Decree 1075-2016, which sets December 14, 2016 as the date on which section 108 of the Act to amend the Mining Act (2013, chapter 32) came into force.
As a result of these developments, which follow the 2013 reform of Quebec’s Mining Act, regional county municipalities (“RCM“) can now delimit, in their land use and development plans, any territory deemed incompatible with mining activities. These territories will be withdrawn from mining exploration and operations in the Province, subject to certain conditions. Continue Reading
The challenging commodity price environment will likely bring renewed focus on the rights and obligations that will be impacted if insolvency overtakes exploration and production companies. The British Columbia Supreme Court’s recent decision in Re: Walter Energy Canada Holdings, Inc. is a case in point. The case dealt squarely with the question of whether a mineral royalty “runs with the land” – a question that takes on significantly greater importance in the insolvency context. Continue Reading
The Ontario Court of Appeal in 798839 Ontario Limited v. Platt, 2016 ONCA 488, recently affirmed a trial judge’s decision that saw an optionholder that invested millions into the development of mining claims be left with zero interest in those claims. The optionholder failed to meet all of the necessary preconditions to be able to exercise its option, and was left without any interest to show for it. What seems like an unjust outcome is just the nature of options, according to the Court of Appeal. Continue Reading