ENVIRONMENTAL CONSIDERATIONS IN INTERNATIONAL MINING OPERATIONS
| Jurisdiction | United States |
(Feb 1995)
ENVIRONMENTAL CONSIDERATIONS IN INTERNATIONAL MINING OPERATIONS
Colin Wise Consulting Pty Ltd
Melbourne, Victoria Australia
TABLE OF CONTENTS
1. INTRODUCTION
2. THE MINING INDUSTRY AND THE ENVIRONMENT
3. SOME CASE ILLUSTRATIONS
3.1 Windy Craggy (British Columbia, Canada)
3.2 Alaska, USA
3.3 Bingham Canyon (Utah, USA)
3.4 Ok Tedi (Papua New Guinea)
3.5 International Conventions and Treaties
3.5.1 The World National Heritage Convention
3.5.2 The Rio Declaration on Environment and Development
3.5.3 The Basel Convention
3.5.4 Conflicts between trade and environmental treaties
3.5.5 Proposed Indigenous Populations Convention
4. THE ENVIRONMENTALIST MOVEMENT
5. WHAT IS THE BOTTOM LINE?
6. WHAT OF THE FUTURE?
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1. INTRODUCTION
The nominated heading for this paper is overwhelmingly broad in its reach. It would take at least a specialised conference extending over some days to do justice to that reach. In order to establish some focus, guidance was sought from the papers presented at the inaugural Special Institute on International Resources Law in Denver in February 1991. Curiously, environmental considerations in international resources operations hardly rated a mention except in a number of specific contexts:
• Malcolm Garratt's paper on assessment of political risk under the heading "The Elements of Risk" refers to "environmental restriction" as reflecting "the growing concern for the environment and the manner in which ideas about environmental legislation might change. A host government might change environmental legislation during the life of an investment and apply that legislation retroactively. This could involve major capital expenditure which has a significant economic impact on the investment. If this legislation had been in place at the time of project commitment then the original investment would not have been justified."
Later on in the same paper under a checklist of factors to be taken into account in assessing the economics and politics of a host country, reference is made to the "willingness of country to follow international initiatives; specific environmental concerns, etc.".
• James Armstrong's paper "Doing Business in the Host Country — Non-tax Considerations for a Mineral Exploration Company" stated that:
"Environmental considerations can no longer be treated on a low-key basis even though in the short term many newly developing countries are likely to place environmental issues well down on the list of priorities or be willing to be 'flexible' about them. No major investment in a mining operation can be justified today unless environmental issues over a longer term are taken into account."
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The four years since the inaugural Special Institute in 1991 have seen the collapse of communism throughout the world in the form as it was then known which has been followed by a significant expansion of the exploration and mining industries' physical area of operating activity as the key is sought to unlock mineral wealth in the former communist and other lesser developed countries. These countries have promising geological structures that present the greatest prospect of finding new world-class deposits, added to which is the fact that development of deposits in these countries is far easier than in more developed nations, where the ability to bring a newly discovered ore body to commercial production has been made difficult and expensive by increasingly stringent environmental controls, access to land and resultant long lead times to project development.
The past four years have also seen a further surge in the growth of an international environmental regime, as opposed to what was previously a relatively random collection of nationally driven laws and practice. One senior government official has noted that emerging international environmental law is not some esoteric subject which is the exclusive province of lawyers or diplomats. It is of direct relevance to business, government and the general community.1
The unprecedented development of national and international environmental law has seen a proportionate growth of published texts and articles. They are voluminous2 .
As part of the new law's development and implementation, governments, lending institutions, political risk insurers and private enterprise (whether in the former communist world, the third world or first world countries), have had to grapple with finding the right balance in the marriage between economic practicality and the need to develop in order to generate wealth and improve living standards on the one hand, with the notion of 'sustainable development' and optimum environmental safeguard mechanisms being established on the other.
This grappling has taken place, as mentioned, against the background of an unprecedented growth of international environmental law over the past decade or so, comprising the 'hard law' of international legally binding treaties, and conventions between sovereign states, and the 'soft law' comprising
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declarations, guidelines, recommendations and resolutions on issues concerning the global environment, which are developed by the United Nations and its agencies, and regional organizations.
The development of 'hard law' calls for a balance between the right to act unilaterally on the basis of individual state sovereignty and ownership of its natural resources on the one hand, and on the other, the requirements for the creation of new international law by the development of customary law or, more directly, by multilateral treaty law.
Some of the questions underlying the development of environmental treaty law are posed by R W Bentham3 as being "essentially novel" — what duties do states owe to the international community as a whole, rather than merely to other states, what duty does this generation owe to future, or even past, generations, do 'global commons' exist as a legal concept and, if so, what is their true legal nature? Bentham observes these are fields for much speculation and argument, and the legal difficulties are compounded in that the problems being addressed are physical while in respect of them, — for example, the greenhouse effect, climate charge, sea level rise and so on, — as yet, science speaks with an uncertain voice. He contemplates, "how should the international community address problems which may well exist, but which possibly do not, or which may exist in forms the nature of which at present we can only surmise or assume".
The subject matters encompassed by 'soft law' were mostly unheard of and scarcely understood even a decade ago. Consider the following as a sample — transboundary air pollution and the protection of the global atmosphere; climate change and carbon dioxide and sulphur emissions; natural resources exploitation and sustainable development; acid rain; oil pollution and protection of the marine environment; fisheries; water resources and river regimes; protection of soils, species and nature including wetlands and habitats; transboundary movement and disposal of hazardous waste; protection of cultural and natural heritage; biodiversity; civil liability and compensation etc and so on. There will no doubt be an additional list of issues which is developed in the years ahead.
The overall context within which global environmental policies and law are being developed and implemented needs to be understood. In turn, and in the
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context of the scope of this paper, there needs to be an understanding of the position of the mining industry in the world community and the forces perceived as being influential in the unprecedented growth of international environmental law.
This paper therefore seeks to highlight some case illustrations as indicative of the forces at play which impact on international mining and exploration. It focuses on the 'big picture' and attempts to take a broad philosophical perspective without seeking to promote an industry perspective, or diminish or detract from the principles of sensible and prudent (which are clearly subjective terms), environmental protection or the sincerity with which environmentalists may state their case.
It is not a paper which purports to deal with, for example, nuts and bolts issues such as how a legal practitioner or a businessman should conduct a due diligence exercise on environmental issues when seeking to invest in a new project in another country, or for that matter, in his or her own country, or the legal issues associated with environmental auditing and/or compliance on a day to day basis, or the issues associated with the preparation of environmental impact statements, or liability issues and corporate governance, and so on.
Nor does it deal in any depth with issues such as for example, the legal basis of international environmental law, or how international conventions and treaties are incorporated into domestic law by a national government4 or, apart from a reference to the Ok Tedi project in Papua New Guinea, to environmental issues in the emerging third world lesser developed or former communist countries.
Perhaps the scope of what this paper seeks to put forward is best encapsulated in the following propositions which comprise its backbone:
1. Economic development is essential to continuing human well being and environmental preservation, especially the fruits (the metals and energy resources) which the mining industry has brought to the global economy and dependent domestic economies.
2. Environmental law is impacting, deleteriously, on the mining industry. It is not well thought out. It becomes law without sufficient input from the variety of interests it affects, is inspired by movement at local,
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national and international levels, and may...
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