Published 29 June 2016

Environmental regulation and competitiveness in the mining industry

– experiences from Sweden, Finland, Australia and Canada

Sweden’s Minerals Strategy from 2013 emphasises that the country’s position as the leading mining nation of the EU should be strengthened, e.g. through research and innovation that generate competitive strength. At the same time it also highlights the importance of sustainable development, and that the exploitation of Sweden’s mineral resources should comply with high environmental standards.

In the light of these ambitions, the purpose of this report has been to analyse under what circumstances the environmental regulation of mining activities can be designed and implemented to achieve continuous emission reductions without jeopardising the long-run competitiveness of the industry.

Important challenges and experiences from four mining nations, Sweden, Finland, Canada and Australia, are presented and discussed. This also includes a comparison with the regulatory strategy pursued in Sweden before the advent of the Environmental Code in 1999. The analysis focuses on how the regulation and licensing of pollution and waste from mining operations are designed and carried out. Legislation in Australia and Canada typically differ across states (provinces), and the analysis primarily highlights the environ­mental regulation of mining operations in Western Australia and Ontario (Canada).

Flexibility, predictability and knowledge are prerequisites for an efficient environmental licensing of mining operations

An analytical framework is developed that highlights three prerequisites for an efficient environmental licensing, here defined as regulation that can achieve substantial emissions reductions without jeopardizing the long-term competitiveness of the mining industry. The first of these prerequisites concerns the flexibility granted to the companies to identify the relevant measures needed to comply with the regulations, as well as the time allowed for adjusting production to new regulations. Performance standards and extended compliance periods represent two important strategies for achieving such flexibility. The second pre­requisite is predictability and transparency with respect to the timeliness of the licensing process and in how the legal rules should be interpreted and put into practice. This can, for instance, be accomplished through shorter permit processing times, as well as through transparent instructions and guide­lines for interpreting the legislation and for preparing permit applications. The third prerequisite concerns knowledge on the part of the regulators about technical opportunities and their costs; this will facilitate equal, consensus-based, yet tough, negotiations between the company and the regulatory authorities.

The environmental regulations of mining operations in Sweden, Finland, Australia and Canada are built on the same legal principles, but important differences exist

In all four countries the environmental regulation of mining operations relies on a case-by-case assessment, i.e. permit conditions are determined based on separate assessments of new operations (or production increases). The report outlines a number of key components of each studies country’s environmental legislation, as well as the regulation of mining operations prior to the advent of the Environmental Code in Sweden. This shows that the regulatory requirements for preventing and reducing environmental impacts from mining are equally demanding in Ontario, Western Australia and Finland as in Sweden. In all four countries environmental assessments (EAs) are required, and the licensing process is built on the same legal principles. These include the precautionary principle, BAT (best available technology), the polluter pays principle, and integrated assessments.

There are however important differences as well. An important example is that compared to other countries the Swedish environmental regulations – e.g. the BAT requirement – are addressed relatively late in the entire permitting process. In Finland, the country’s new Mineral Act (from 2011) has implied that the environmental impacts from mining need to be addressed throughout the permit process. Another example concerns the issue of economic securities to cover the cost of mining rehabilitation for which the legislations in, for instance, Ontario and Western Australia tend to be more comprehensive compared to the corresponding Swedish legislation. The most important difference between the current regulation of industrial pollution in Sweden and the one that prevailed before 1999 does not concern legal principles, but instead that the latter was characterised by a regulatory approach relying on consensus and cooperation between the industry and the regulator.

Experiences from the four mining nations display similar difficulties in achieving an efficient environmental licensing of mining operations

The report contains a comparative analysis of how the identified prerequisites for an efficient environmental licensing have been dealt with in the four nations. This analysis builds on previous studies, interviews and case studies of specific licensing processes; it illustrates that the critique of the Swedish environmental licensing procedures is in no way unique. The problem of extended licensing processes exists also in the other mining nations, not the least as a result of appeals. This is also the case in Australia, which in spite of this is considered to have the shortest licensing process for new mines. In most mining nations policy makers therefore have implemented measures to reduce delays. The extended processes have however also been a consequence of incomplete licensing applications, and uncertainties about how the legal rules will be applied in individual mining cases.

Mining companies in all four nations have also asked for improved coordination between the different regulatory authorities, and there are claims that there is a lack of competence and professionalism on the side of the authorities. In this respect the earlier regulatory approach in Sweden appears to be most advantageous in terms of environment-competitiveness perspective. It displays the value of regular and constructive dialogues between the regulator and the industry; however, it suffers from lack of external transparency and stakeholder participation. The earlier Swedish approach also illustrates the role of compliance flexibility and extended adjustment periods for enabling far-reaching emission reductions as well as for promoting technological change.

Achieving an efficient environmental licensing of mining operations involves difficult trade-offs and requires continuous evaluations of actions already taken

The experiences from the various nations also illustrate the complexity that surrounds the environmental regulations, and how the different prerequisites for an efficient licensing may come into conflict with each other (and/or with other goals). Short licensing processes are important for the mining industry, but the industry must also acknowledge the business risks associated with tense community relations (the latter tending to be time-consuming). Another example concerns how generic performance standards for the mining industry may contribute to increased predictability, but at the same time such regulations can also come into conflict with the desire to acknowledge the context-specific impacts of mining operations. Future changes in the legal rules and their application should therefore be preceded by detailed impact assessments and evaluations of the initiatives already taken by companies and authorities as a result of the mining boom during the last decade.

Title
Environmental regulation and competitiveness in the mining industry – experiences from Sweden, Finland, Australia and Canada

Serial number
PM 2016:09

Reference number
2015/180

Download the report in SwedishPDF