Editorial Entering a new decade

When looking ahead to a new year it is often helpful to look back for a hint at what the future holds. No one knows what developments will take root and grow into the major issues of the months and years ahead, but some of events of 1989 will leave a legacy that will affect the mining industry for some time.

One issue this new decade inherits is the troubling role of the courts. In August, after an 8-year court battle that spanned the decade, the Supreme Court of Canada upheld lower courts’ decisions to hand over the Williams gold mine, the country’s richest, to Corona Corp. It was a landmark decision, but it left the industry in a state of confusion.

For one thing, the buzzword during the court case and its appeals was the term “fiduciary duty.” As a result, there have been a flood of lawsuits that have come to the attention of The Northern Miner using that very term. But only a legal expert can really be expected to know what a fiduciary duty is. In fact, it seems even the experts are divided because the decision in favor of Corona was upheld not on grounds of fiduciary duty at all, but on other factors.

Regardless of what the decision was based on, the settlement was so rich — the entire multi-billion dollar orebody was handed over to Corona — that others have seen the folly of exploring for mineral deposits and have decided it is easier to sue for them. The Northern Miner has never seen so many lawsuits involving so many properties being initiated in so short a period of time, and we find that a worrisome development.

We do not disagree with the Corona decision, nor do we believe it inevitably means prospectors need to be accompanied by a team of lawyers each time they stake a property. Given the magnitude of the decision, it was inevitable that there would be further testing of the laws and their interpretation.

What is troubling, however, is the loss of a common understanding within the industry. It was always necessary to be careful when entering into agreements or contracts of any kind, but now there is less certainty about just what the ground rules are.

That is partly a result of the Williams mine decision, but is also a reflection of the industry’s metamorphosis in the 1980s into something more than a specialized vocation run by a relatively small “club” of participants in some of Canada’s more remote communities.

The mining industry, no longer content to be merely a provider of foreign currency, is taking its place as a leader in the nation’s commerce and that means taking on new responsibilities in terms of labor relations, shareholders’ rights, environmental concerns and government relations. It also means that “outsiders,” whether from outside Canada or just from other areas of commerce, are recognizing the inherent value in mining companies and are willing to take advantage of the less formal structure of the mining industry.

Mining has always been a mainstay of the economy. In order to survive within the new economic order that arose from the recession of the early 1980s, it has dramatically improved productivity, both in exploration and output. Now it is taking an active role in leading public opinion. How it adapts to that role — both in the courts and in the boardrooms — will be one of the interesting developments to watch in the 1990s.

Another issue that will take on increasing importance in the 1990s will be the environment. Mining has come out of the 1980s with this issue under reasonable control. Two national associations — the Mining Association of Canada and the Prospectors and Developers Association of Canada — have developed environmental standards to which their broad memberships adhere. Some of the industry’s key players have already put huge sums of capital behind improvements to meet the demand for environmentally benign commercial ventures.

Mining exploits the environment, it is true. But that very reliance on the environment is why mining is acutely aware of the need for sustainable development. It has developed expertise in recognizing environmental hazards, working with government to correct problems and meeting the public’s demands for quick and effective action.

Elsewhere, the economic debates over free trade, the goods and services tax, high interest rates and high exchange rates are some of the economic issues with which the industry will have to learn to cope. Those developments are old news — issues of the 1980s. How the industry reacts to them will be one of the stories of the 1990s. Judging by mining’s abilities to go toe-to-toe with the rest of the world during the 1980s, it is likely to be one of the industry’s success stories.

The exploration sector of the industry in particular has suffered from a roller coaster decade that has left it somewhat unsteady as it enters t he last decade of the 20th century. After the highs and lows of flow-through financing, stock market crashes and wildly volatile commodity prices, explorationists are a little uncertain of their footing.

One thing is certain. The generous tax regime that helped the exploration sector survive during the early 1980s will not return. As a sector of the industry that has always put great value on self-reliance, that is a welcome development. However, the federal tax structure has also wiped out the traditional incentive to invest in mineral exploration — the opportunity for capital gains. Whether the industry can convince the tax man that changes — not handouts — are necessary to ensure mining’s contribution to the economy will perhaps be the biggest challenge of the decade.