In mining, most of Canada more corrupt than Botswana, Chile: study

Most of Canada is more corrupt than Botswana and Chile when it comes to mining, according to a survey of mining companies worldwide.

The Northwest Territories, Nunavut, Quebec, Manitoba, British Columbia and Alberta – which represent almost three-fourths of Canada's land area – were judged to have greater corruption than the African and South American countries, the survey by the Fraser Institute showed. Saskatchewan was seen as Canada's least corrupt region.

"It's something that plagues mining companies around the world," Fred McMahon, co-ordinator of the survey with Miguel Cervantes, said in a telephone interview from Toronto on Thursday. "It's particularly problematic for Western mining companies, which have internal codes of conduct that prevent payoffs."

The annual survey by the Vancouver-based institute was sent to about 5,000 mining companies around the world, and the results were based on 802 responses. The survey took place between October and December last year.

"This year we added a new question on corruption, and there are a few surprises," Mr. McMahon and Mr. Cervantes said in their 130-page report presenting the findings of the survey.

Responses are kept anonymous, and the report didn't cite examples of corruption in Canada's north. The survey also doesn't provide a breakdown of the number of respondents from each country.

"It's clearly a concern, though a concern amongst a minority of miners," Mr. McMahon said in the interview. "I doubt there's big money passing hands, but it might be a favour here or a favour there."

All of Canada's provinces and territories, as well as Botswana and Chile, were in the least-corrupt half of the 93 regions that were evaluated. Still, 20 per cent of respondents rated corruption in the Northwest Territories as being a "mild deterrent" to mining exploration, a "strong deterrent," or "would not pursue investment due to this factor." That compares with 15 per cent of responses about Nunavut, 11 per cent regarding Quebec, and 100 per cent for India.

Sweden, Norway and Finland were considered the least-corrupt countries.

The survey also allowed the Fraser Institute to rank regions on a Policy Potential Index, meant to measure how attractive they are for mining exploration based on government policies, regulations, taxation, political stability and security.

New Brunswick soared in the rankings to take the top spot. Quebec continued to drop in attractiveness, ending fifth after having been No. 1 in the late 2000s and fourth last year. The province's changes to mining laws and an unexpected mining tax were behind the decline, Mr. McMahon said.

"I expected Quebec to have a much bigger fall than it did," Mr. McMahon said. "Mining companies expect to pay taxes, they just don't like surprises."

"The single most important thing in the survey can be summed up in one word, and that's 'certainty,'" Mr. McMahon said. "Miners expect to follow regulations, expect to respect the environment, expect to pay taxes. But what they want to know is that the regulations say what they actually mean, and that the regulatory outcome is transparent and predictable. If you meet the rules, you get the go-ahead, and if you don't meet the rules, you get rejected."