May 2007

A brief overview of free entry

By H.E. Robinson

The free entry law in Canada grants the mineral industry privileged access to Crown land, and top priority is placed on resource development. This has prompted arguments from both supporters and critics, who both claim that this law provides an unfair advantage to the other side. As neither the industry, nor communities, nor the government appear to be satisfied with the ramifications of free entry, it is appropriate to look at the various issues shaping this debate.

The free entry system originates from the ‘frontier mentality’ that suggests mining is the first and best use of land. A prospective miner only has to purchase a license to have access to almost all public and private lands, with the exception of cemeteries, agricultural land, houses, and buildings. Most land ownership, even private, does not include control over the mineral rights. Property owners have rights over the surface of their land but, typically, mineral resources are under the jurisdiction of the Crown. Staking claims for the mineral rights can be made without the consent or knowledge of the surface property owner. This is a source of tension among landowners and mineral claim holders.

This system allows mining to prevail over other land uses, private property rights, and aboriginal rights. Essentially, almost all land under the control of the Crown is available for potential mineral exploration. Only by getting a land withdrawal is that area off limits. Withdrawals are accomplished by ministerial order and are often for alternate uses such as parks. Otherwise, the government has no reason to deny a claim and is obliged to permit mining. Surprisingly, if mineral claims have been staked at a land prior to its being withdrawn, the miner could be entitled to compensation.

Free entry is a non-discretionary law so that the government is unable to decide how and whether tenures should be granted. This appears to give exploration companies a seemingly limitless realm in which to seek mineral deposits. However, the mining industry defends this preferential treatment on the basis that there needs to be some incentive for mining companies to invest. The wider the area of exploration is, the better the chance of discovering mineral resources. Some supporters reason that the free entry is necessary or mineral exploration would not be economically viable.

Canada is a principal destination for both investment and exploration in the minerals industry. Local companies finance approximately 8,000 exploration projects and over 55 per cent of them are in Canada. During declines in exploration expenditures, tax credits were implemented and the government introduced new incentives for exploration. Recently, almost half the total global equity financing was raised in Canada.

There has been a shift of societal values in the past centuries. Since the free entry beginnings during the gold rush, mining is no longer seen by many communities in Canada as the singular most important use of land. However, the government is limited in its ability to designate parks, protected areas, and other resource extraction such as timber if exploration is an option. In contrast, members of the mining industry have expressed frustration that adverse government actions such as land withdrawals and stringent environmental regulations are inhibiting mineral development in Canada.

One of the concerns about free entry is that this law has not been modified to account for changes in mining operations over the years.

When it was first established, mines operated on a much smaller scale. Currently, mining development is a large undertaking that is able to extract or process vast quantities of natural resources, leaving a bigger ecological footprint. Giving the minerals industry free license to the land with very few options in designating areas for alternative use can compromise environmental integrity.

The early stages of acquiring mineral rights do not have to abide by any environmental monitoring, according to the West Coast Environmental Law reports on the subject. The use of Crown land during exploration is unregulated. If damage is done, the surface property owner will be compensated. Beyond that, however, the free miner is able to move up to 1,000 tonnes of waste rock without a permit (in British Columbia).

There are many examples of sustainable and environmentally sound mining developments in Canada. One suggestion regarding the free entry law is to charge mining companies financial returns on public properties. Another suggestion is to establish some boundaries of available land for mining exploration. This would give communities the opportunity to articulate the importance of other resources, parks, or protected habitats that could be spared from mining-accessible land. Although this would limit the areas available for mining exploration, these new boundaries would reduce the occurrence of land withdrawals or other adverse governmental actions. Increased predictability in legislation for mining exploration projects could be enough to mediate the risks in searching for mineral deposits in a narrower field of exploration.

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