The recently completed initial public offering by Nexa Resources S.A. (formerly, Votorantim Metais) on the Toronto Stock Exchange (the TSX) and the New York Stock Exchange has received considerable attention from capital markets participants and the financial press for its size (US$570 million, including the exercise of the over-allotment option) and for the large and impressive underwriting syndicate. Nexa’s IPO was the largest mining IPO on the TSX of a Latin American company, it was Canada’s 3rd largest mining IPO ever and the largest mining IPO in Canada over the last decade! The IPO is also noteworthy for its regulatory achievements, from both technical and securities law perspectives, including managing the regulatory authority and stock exchange approvals for an issuer with a dozen existing material projects (and the related dozen technical reports which had to be summarized in the prospectuses, and reviewed and accepted by the regulators and stock exchanges). There were also several technical elements to the disclosure included in the U.S. and Canadian prospectuses that are potentially useful to other issuers and their advisors going forward. Continue Reading
Yaiguaje v. Chevron Corporation, 2017 ONCA 827
The Ontario Court of Appeal has overturned the decision of the motion judge who ordered that the foreign-resident plaintiffs post approximately $1M in security for costs in order to continue their proceeding and appeal against Chevron Corporation (“Chevron”) and Chevron Canada.
This is a significant reversal, as the motion’s judge decision (analyzed here) called into question whether the plaintiffs would be in a position to proceed with their appeal of Justice Hainey’s decision dismissing the proceeding against Chevron Canada on the basis that its assets are not available to satisfy the plaintiffs’ foreign judgment against Chevron (decision analyzed here). Continue Reading
Yaiguaje v. Chevron Corporation, 2017 ONCA 741
Resource extraction industries have been following the Yaiguaje v. Chevron proceedings closely. The decisions that flow from this action have far-reaching implications surrounding the enforcement of international judgments and the application of those judgments against related domestic parties’ assets.
The proceedings took an interesting turn when the Ontario Court of Appeal recently assessed the merits of the appeal in a security for costs motion. Continue Reading
In an interview on 27 August, 2017, the Executive Vice-President of Chile’s Corporation for the Promotion of Production (“CORFO”), Eduardo Bitran, announced that CORFO and the National Service of Geology and Mining (“Sernageomin”) are conducting surveys in the La Cobaltera area in Chile’s Atacama region in search for cobalt deposits. Cobalt deposits are also known to exist in the Coquimbo region.
Bitran cited CORFO’s expectations that cobalt demand should considerably increase in upcoming years, and noted Chile’s potential for developing this mineral: “If we were to produce 15,000 annual tons of cobalt by 2035, we would be talking about a business worth USD $975 million, considering the current price of this mineral”. A report on La Cobaltera’s suitability for cobalt mining is scheduled to be released later this month.
This could be an interesting opportunity for Canadian investors, as demand for cobalt is set to increase by 34% per year until 2026, and by 2021 demand could fall short of production by up to 8,000 tons. Cobalt at the London Metal Exchange traded at $32,000 a ton in late 2016, and increased to $56,000 a ton in 2017. These trends go hand in hand with increased cobalt usage in battery manufacturing for the electric car industry, which will be further boosted by China’s recent announcement to join France and the United Kingdom in setting a ban on sales for all fossil-fueled powered vehicles. Continue Reading
BC’s recently sworn-in New Democratic Party (NDP) government presented its first provincial budget on September 11, 2017. Among the policy measures announced were changes to the BC carbon tax. In particular, the Budget 2017 Update (2017/18 – 2019/20) provides for the following:
- As of April 1, 2018, the carbon tax will increase by $5 per tonne of carbon dioxide equivalent (CO2e) per year until it reaches the federal target carbon price of $50 on April 1, 2021 (one year before Ottawa’s 2022 deadline). BC’s carbon tax is currently set at $30 per tonne of CO2e.
- Part 2 of the Carbon Tax Act has been repealed, meaning that the requirement for the provincial Minister of Finance to prepare the Carbon Tax Report and Plan will no longer apply after September 11, 2017. In addition, this means that the Carbon Tax Act will no longer require that revenue measures be introduced to offset carbon tax revenues. This will allow the government to spend carbon tax revenues on emission reduction measures or other green initiatives, rather than returning carbon tax revenues to taxpayers.
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.