Guide to mining regulatory and legal regimes in Canada | Insights

Operations, processing and sale of minerals

Employment, health and safety

Employment, health and safety issues in the mining industry are largely handled through respective provincial and territorial legislation. These regimes can be complex, and mining operators should understand the specific regime in their jurisdiction. Specific minerals of concern from an occupational health and safety perspective also have specific legislation and regulations. Directors and office are responsible for ensuring corporate compliance with labour and health and safety regulations and may face personal liability in certain circumstances.

Processing and operations

Mining operations and mineral processing in Canada is subject to comprehensive regulatory regimes, which require obtaining and maintaining permits and authorizations, as well as ongoing reporting obligations.

Mineral processing is generally not required to be conducted within the province or country, unless included in the terms of the mining lease. Ontario and Nova Scotia typically require processing, refining and beneficiation within Canada (subject to being granted an ordinary-course exemption), with Québec and the other Atlantic Provinces requiring or prioritizing in-province processing.

Sale, import and export of extracted or processed minerals

Subject to provincial restrictions on the processing of minerals, import and export restrictions are the jurisdiction of the federal government. Canada does have import and export controls in place but broadly favours the free movement of goods, and the application to minerals is largely limited to application through sanctions and nuclear non-proliferation agreement.

Foreign investment

Foreign investment in Canada is regulated pursuant to the Investment Canada Act (ICA). Although the government has broad jurisdiction to review investments, foreign investors only have mandatory reporting obligations when they propose to acquire control of a Canadian business. Proposed legislative amendments would expand reporting requirements to include certain minority stake acquisitions, including non-controlling acquisitions in critical minerals businesses and require expanded pre-reporting.

Under the ICA, a Canadian business can include a mining business with a negligible connection to Canada (including a business headquartered in Canada where all of its revenue-generating assets are located outside of Canada). Mineral properties at the exploration stage of development are not considered to be “businesses” under the ICA, whereas a producing mine or a mine in development will be considered a “business”.

Reporting is typically required before or within 30 days after closing. Pre-completion approval is required where certain enterprise values are exceeded, or in the case state-owned enterprises (SOEs), a lower book value threshold.

The net benefit assessment is based on the impact that the acquisition will have on the Canadian business, with reference to the management team, employment levels and capital expenditures. For SOEs, the degree of influence that the foreign government has over the SOE and its commercial orientation and corporate governance is considered. Investments are generally approved if investors enter into binding undertakings relating to the maintenance and/or growth of the Canadian business.

All non-Canadian investors are required to submit a national security review notification form when they acquire control of a business or establish a new business, which must be filed before or within 30 days after closing. Upon receipt, the Minister has 45 days to initiate a review, and if not initiated in such period, the investment is presumed cleared under the ICA. If an investment is subject to a national security review, the maximum review timeframe is 200 days (or longer with the consent of the investor).

The likelihood of a national security review will depend on the country of origin of the foreign investor and the activities of the Canadian business. Investors from China or Russia are typically high-risk, particularly SOEs. Investors from Canada’s other primary trading partners, such as the US, UK, Australia, European Union and Japan, are unlikely to raise national security concerns, even if they are SOEs.

Transactions subject to remedial action are usually blocked or require divestiture, requiring the foreign investor to sell the acquired business within a short period of time.

Critical minerals are a current enforcement focus, with 31 minerals deemed “critical” to Canada’s economic and national security interests. In late 2022, the Canadian government announced a) a restrictive policy on investments in critical minerals; b) that it was ordering divestitures of three Chinese investments in Canadian-listed critical minerals companies; and c) a foreign investment policy stating that “China is an increasingly disruptive global power”, and that the government will “[act] decisively when investments from SOEs and other foreign entities threaten our national security, including our critical minerals supply chains”.

Pre-merger notification under Canada’s Competition Act is generally required for the proposed acquisition of interests in a Canadian business (20% for public companies, 35% for private companies), where certain thresholds for party size and asset and revenue size are met. If the thresholds are exceeded, the Competition Bureau must be notified and await a 30-day statutory waiting period before completing the transaction. The waiting period can be extended for a supplemental information request (SIR), in which case the waiting period is extended until 30 days after compliance with the SIR. Reviews typically end with the issuance of a No Action Letter confirming the merger is not being challenged.

Parties can request an exemption from pre-merger notification by applying for an Advance Ruling Certificate (ARC). An ARC application takes the form of a letter describing the transaction, the parties and explaining why there are no substantive competition law concerns. ARCs are typically issued where there is no substantive competitive overlap between the parties.

There is a filing fee, which is adjusted annually. Failure to file is a criminal offence, punishable by fines. Failure to observe the statutory waiting period is subject to civil fines.