Regulations Amending the Nunavut Mining Regulations: SOR/2020-174
Canada Gazette, Part II, Volume 154, Number 17
SOR/2020-174 August 10, 2020
TERRITORIAL LANDS ACT
P.C. 2020-551 August 10, 2020
Her Excellency the Governor General in Council, on the recommendation of the Minister of Northern Affairs, pursuant to sections 8, 12 and 23 footnote a of the Territorial Lands Act footnote b, makes the annexed Regulations Amending the Nunavut Mining Regulations.
Regulations Amending the Nunavut Mining Regulations
1 (1) Paragraph 60(3)(c) of the Nunavut Mining Regulations footnote 1 is replaced by the following:
- (c) subject to subsection (6), the rent for the first year of the lease must have been paid to the Mining Recorder.
(2) Section 60 of the Regulations is amended by adding the following after subsection (5):
Waiver of payment of rent on application for lease — COVID-19
(6) Due to the coronavirus disease 2019 (COVID-19) pandemic, the Minister must waive the payment of rent required by paragraph (3)(c) for the first year of the lease if — before the end of the duration of the recorded claim, or of the claim that has the earliest recording date of any of the claims in the collection of contiguous claims, or March 13, 2021, whichever comes first — the requirements for the issuance of the lease for the purposes of subsection (5), other than the requirement set out in paragraph (3)(c), have been met and the Supervising Mining Recorder receives a written request for a waiver from the holder of the recorded claim.
Rent paid — COVID-19
(7) However, if the rent for the first year of the lease has already been paid to the Mining Recorder under paragraph (3)(c), the Minister must waive the payment of rent for the second year of the lease.
2 Section 61 of the Regulations is amended by adding the following after subsection (2):
Waiver of payment of annual rent — COVID-19
(3) Due to the COVID-19 pandemic, the Minister must waive the payment of the annual rent for a lease that becomes due under subsection (2) during the year beginning on March 13, 2020, if the Supervising Mining Recorder receives a written request for a waiver from the lessee before March 13, 2021.
Annual rent paid — COVID-19
(4) However, if the annual rent for a lease has already been paid to the Mining Recorder under subsection (2) during the year beginning on March 13, 2020, the Minister must waive the payment of rent for the following year, but the amount waived by the Minister must not exceed the rent paid to the Mining Recorder during the year beginning on March 13, 2020.
3 Section 62 of the Regulations is amended by adding the following after subsection (4):
Waiver of payment of rent on renewal — COVID-19
(5) Due to the COVID-19 pandemic, the Minister must waive the payment of rent for the first year of a renewal referred to in subsection (4), if the renewal is to be issued during the year beginning on March 13, 2020 and the Supervising Mining Recorder receives a written request for a waiver from the lessee before the existing lease ends or March 13, 2021, whichever comes first.
Rent paid for first year of renewal — COVID-19
(6) However, if the rent for the first year of the renewal referred to in subsection (4) has already been paid to the Mining Recorder during the year beginning on March 13, 2020, the Minister must waive the payment of rent for the second year of the renewal.
Coming into Force
4 These Regulations come into force on the day on which they are registered.
REGULATORY IMPACT ANALYSIS STATEMENT
(This statement is not part of the Regulations.)
A lessee of a mineral lease under the Nunavut Mining Regulations must normally pay a rent equal to $2.50 per hectare of land covered under the lease during the first 21-year term and $5.00 per hectare during each renewed 21-year term. If the rent due is not paid, the lease may be cancelled. Presently, no discretion is allowed in the Regulations to provide relief from rent requirements for mineral leases.
The COVID-19 pandemic public health emergency and associated social distancing measures have created a negative economic environment and a lost 2020 summer field exploration season in Nunavut such that obligations to pay rent for mineral leases under the Regulations may not be met due to financial constraints, which places the mineral leases at risk of cancellation. This is an undesirable consequence for the industry and the government which could severely impact economic development in Nunavut. Summer is the only time in Nunavut where normally it is possible for lessees to do mineral exploration activities in the field such as drilling, building and setting up sites, extracting minerals, etc., as the winter weather is too harsh for such work. If no exploration work is possible, it affects the financing and revenues of the lessees, and they may face financial pressures and challenges to pay rents since they receive financing from investors to do mineral exploration. A healthy mining industry doing mineral exploration work is an important contributor to the economy of Nunavut.
To support the competitiveness of the mining industry in Nunavut by providing one year of rent relief.
Description and rationale
The Regulations Amending the Nunavut Mining Regulations (the Regulations) waive the requirement to pay the annual rent for a mineral lease in Nunavut that becomes due, and has not yet been paid, during the one-year period from March 13, 2020, to March 12, 2021, if the lessee requests a waiver. This includes rent for the first year of a lease newly issued or renewed before March 13, 2021. The Regulations stipulate rent would be waived on a request basis made either before the end of the duration of the claim or before March 13, 2021, whichever date in each individual context comes first. The Regulations also provide that if the rent requested to be waived has been paid, the same amount will be waived from the rent that becomes due the following year.
Rent for a mineral lease of Inuit Owned Lands in Nunavut normally paid to Canada to be transferred to the Nunavut Tunngavik Incorporated per the Nunavut Land Claims Agreement can also be waived and the rent waived will still be paid to the Nunavut Tunngavik Incorporated by Canada.
The Regulations provide financial relief to the minerals industry in Nunavut in response to the COVID-19 pandemic and helps maintain a competitive investment environment. There is no other eligibility criteria needed as COVID-19 impacts everyone. The Regulations facilitate ease of request and implementation of the rent waiver and avoid uncertainty of relief. There is no blanket waiver in order to encourage companies to assess their needs for relief. This process is similar to the current process for relief of obligation to do mineral exploration work for claims.
A ministerial order issued by the Minister of Northern Affairs under subsection 7(2) of the Time Limits and Other Periods Act (COVID-19) retroactively extended by up to six months the time limits to pay rents for leases due between March 13, 2020, and October 29, 2020, inclusively, as well as the time limits to initiate rent collection procedures that fall in the same period, but the extended time limits must end on or before October 30, 2020. This extension allows leases to not be in default for unpaid rent due to the pandemic. The rents for these leases are still eligible to be waived.
Feedback from stakeholders such as the Northwest Territories and Nunavut Chamber of Mines was incorporated into the design of the initiative. Since the beginning of the COVID-19 pandemic, the Chamber has requested relief from rent requirements for mineral leases.
Ongoing consultations with the Government of Nunavut and the Nunavut Tunngavik Incorporated in respect to the impacts of the pandemic on the mining sector have included discussion on ways to provide relief. Representatives from Nunavut have expressed support for the provision of relief that takes into account the loss of an operating season.
Benefits and costs
The Regulations directly support the Government of Canada’s response to COVID-19 and the analytical requirements for cost-benefit analysis have been adjusted to permit a timely and effective response.
The Regulations will waive up to the total annual rent for mineral leases for 2020–2021, which is approximately $1.5 million. Part of the impact could roll into 2021–2022 for those requests made on rents already paid. Waived rent will be absorbed within the existing funding levels of Crown-Indigenous Relations and Northern Affairs Canada (CIRNAC). The waived rent will contribute to increasing the capital available to the exploration sector for other priority expenditures, such as salaries, due to the economic impacts of the COVID-19 pandemic.
The Regulations do not enable the issuance of refunds for the rents that have already been paid since March 13, 2020. CIRNAC IT and administrative systems are not equipped to issue refunds. The cost of over $100,000 to develop and implement the necessary systems changes and administrative steps is close to the value of anticipated rents that will have been paid by the time the Regulations are in force. Furthermore, the time required to modify systems would have slowed down implementation of the Regulations, creating additional uncertainty for stakeholders. The overall objective of the Regulations is to provide all lessees with the opportunity to obtain a one-year rent waiver. The Regulations ensure equity by allowing that with a request to waive rent, rents already paid will be waived and deducted from rents due the following year.
Small business lens
Analysis under the small business lens determined that the amendments will be of benefit to small businesses with mineral leases in Nunavut as rents for mineral leases are waived for one year for all lessees, which prevents lease cancellation for unpaid rent and provides financial relief to all lessees. Making the request for rent relief entails minor costs to request the waiver. However, that would be outweighed by the value of the rent relief.
The one-for-one rule does not apply, as there is no incremental change in administrative burden on business.
Regulatory cooperation and alignment
From the beginning of the COVID-19 public health emergency, the Government of Canada has explored ways to support the northern minerals industry in Nunavut. The Government consulted other mining jurisdictions in Canada on possible relief measures being considered to support minerals industry and also consulted the Northwest Territories and Nunavut Chamber of Mines to identify pressing needs for Nunavut. Holders of mineral claims and prospecting permits under the Regulations are eligible to apply for reliefs under sections 51 and 16 of the Regulations from obligations to do mineral exploration work and pay charges. However, the regulatory framework governing mineral leases on Crown lands in Nunavut requires a regulatory amendment to the Regulations to provide relief from rent requirements for mineral leases.
Lessees of mineral leases under the Regulations and key stakeholders such as the Northwest Territories and Nunavut Chamber of Mines, the Government of Nunavut and the Nunavut Tunngavik Incorporated will be contacted to advise them of the regulatory amendment and the relief available. The lessee needs to make a request in writing to the Supervising Mining Recorder of Nunavut before March 13, 2021, to have annual rent due during the year beginning on March 13, 2020, waived. There is no other eligibility criteria. Any rent already paid will be waived in the following year. Stakeholders will be contacted by email to be informed of the possibility to request a rent waiver and how to make the request.
Petroleum and Mineral Resources Management Directorate
Northern Affairs Organization
Crown-Indigenous Relations and Northern Affairs Canada