Wednesday, November 28, 2007

10 Things Canada Does Best - What Canada doesn't do best is hold domestic mining companies accountable for the damage they do abroad.


In a 2005 series called "10 Things Canada Does Best," The Globe and Mail declared Canada a world leader in raising capital for mining ventures. Mining companies raised U.S. $4.2 billion on Canadian stock markets in 2005, and 85 percent of mining deals done worldwide that year were based in Canada.

According to the Department of Foreign Affairs and International Trade (DFAIT), almost 60 percent of the world's mining and exploration companies are listed on the Toronto Stock Exchange or the Calgary-based TSX Venture Exchange. Canadian mining companies account for over 40 percent of global exploration budgets and nearly 3,200 concessions in more than 100 countries.

What Canada doesn't do best is hold these domestic mining companies accountable for the damage they do abroad.

The tale of Chichipate, a Guatemalan village whose fate is controlled by a Canadian company, is a study in the harm done by Canada's mining sector in developing countries. It's a story that traces the origin of one source of Canada's wealth and calls into question Canada's self-image as a champion of human rights.

The strength of the Canadian mining sector has its cultural roots in our traditional identity as hewers of wood and drawers of water. Our history as a resource-based economy has created a cadre of geologists, mining engineers, managers, investment bankers, industry analysts and brokers with technical expertise in mining.

But there are also structural reasons for Canada's dominance. "It's relatively easy to float a mining company on the TSE," says Jamie Kneen, communications co-ordinator for Mining Watch, an Ottawa-based NGO that monitors the Canadian mining industry. "The information requirements are lax compared to the United States." The New York Stock Exchange has stricter disclosure requirements about the environmental impact of a company's operations, and it forces companies to abide by U.S. accounting rules, which are more exacting than Canada's regarding how companies place a dollar value on mining assets.

The website of the Mining Association of Canada boasts about Canada's lenient disclosure requirements. The TSX rules, it says, are "designed around the needs of the mining industry."

As a bonus, Canada has tax loopholes that benefit companies incorporated in Canada, with operations abroad. To avoid the possibility of double taxation, companies are assumed by the government to be paying taxes in the countries in which they operate. But because many companies make arrangements with host countries not to pay taxes there either, they don't pay taxes anywhere.

Here is the full article.