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Moving towards Alberta’s mineral future: what you need to know about the Mineral Resources Development Act (Alberta)

Energy
13.01.22
By Alicia Quesnel and Eno Akpoguma

The global transition from fossil fuels as the primary source of energy to electricity generated from renewable sources has many challenges but also many opportunities for Canada and Alberta. The move to green energy will require the accelerated mapping, development and supply of critical minerals, such as lithium, rare earth elements, titanium, vanadium and uranium, to name a few. Many of these minerals can be found in Alberta and are essential to the Province's energy future as it moves to a low-carbon economy.

In March of 2019, the Government of Canada, working with the provinces and territories, created the Canadian Minerals and Metals Plan, with an Action Plan released in March 2020 and updated in September of 2020. Alberta played a key role in the development of the Canadian Action Plan and on November 4 2021, released Renewing Alberta's mineral future: A strategy to re-energize Alberta's minerals sector (Alberta Strategy). The Alberta Strategy sets out a vision of Alberta becoming a preferred producer and supplier of minerals and mineral products, and lays out six key areas of focus. One of these key areas is to enhance the fiscal and regulatory environment for the development of mineral resources in order to ensure the new industries can thrive under a "clear, predictable and competitive regulatory framework, a strong fiscal regime and modern tenure and royalty systems…"

Mineral Resources Development Act

As part of the Action Plan laid out in the Alberta Strategy, the Alberta Government introduced Bill 82 – the Mineral Resources Development Act (MRDA). The MRDA addresses the regulatory framework for the development of Alberta's mineral resources. For this purpose, the "mineral resources" that are governed by the MRDA include all naturally occurring minerals, but specifically exclude petroleum, oil, asphalt, bituminous sands, oil sands, natural gas, coal, ammonite shell, sand, gravel, clay, peat and marl. The MRDA received Royal Assent on December 2, 2021 and is expected to be proclaimed into force in the near future.

The express purposes of the MRDA are set out in Section 2 and focus on providing for the economic, efficient and orderly development of mineral resources, life-cycle management of facilities and mine-sites, conservation and prevention of waste, protection of the environment and the management of competing interests in the development and conservation of Alberta's energy resources.

In this article, we briefly look at whether the MDRA is sufficiently robust to achieve these purposes.

Efficiency and effectiveness

Mineral resource development, management and conservation are currently governed by multiple statutes and overseen by several regulatory authorities. To create greater efficiency, effectiveness and orderly development, and in line with the development of Alberta's other resources, such as petroleum, natural gas, oil sands and coal, the MRDA establishes the Alberta Energy Regulator (AER) as the primary agency responsible for administration of the MRDA and oversight of these industries. Having a single, experienced regulatory authority responsible for the administration and oversight of mineral resource development is a very positive development for potential new investments. It will, however, add to the work that the AER already has under its mandate. To capitalize on this development, the Alberta government will need to ensure that the AER has the resources required to fulfill this ambitious mandate.

Life cycle management of facilities and mine sites

A key feature of the MRDA is its life-cycle approach to the development of these mineral resources. The MRDA addresses licensing and other regulatory requirements for exploration, development (including conservation and the prevention of waste), the construction and operation of facilities, environmental protection, remediation, abandonment and reclamation as well as related enforcement authority. This, again, is consistent with the regulatory regimes applicable to Alberta's other energy resources. It is a welcome development as it will promote consistency and coherence in the life-cycle management of mineral resources. Again, however, in order to capitalize on this development, the Alberta government will also need to ensure that the AER has the expertise required to address the myriad of new cradle to grave issues that the development of these mineral resources give rise to.

Robust rule making and regulation making authority

Notwithstanding these positive developments, industry participants should understand that the MRDA does not currently provide a comprehensive regulatory regime for mineral resource development. Instead, the MRDA provides a regulatory framework for the development of minerals resources. The AER's rule making authority and the Alberta cabinet's regulation making authority under the MRDA are extensive and while many rules and regulations will need to be enacted prior to the MRDA being proclaimed (simply to permit the AER to administer the MRDA), others will take some time to develop. While this provides the AER and the Alberta government with the necessary flexibility they need to develop a robust regime that fulfills the purposes of the MRDA, this important flexibility initially comes at the expense of certainty and clarity.

One of the purposes of the MRDA, for example, is to "manage the development of mineral resources as between licensees, permittees and approval holders and in relation to the development and conservation of energy resources in Alberta". Conflicts may arise between holders of licenses under the MRDA and holders of licenses of other resources, not covered by the MRDA, such as petroleum, oil, asphalt, bitumen, natural gas, coal and sand. Such conflicts can be expected to arise. Conflicts between holders of rights in natural gas overlying bitumen reservoirs is a case in point. The "gas over bitumen" cases required both regulatory and technical solutions to ensure the development objectives of the holders of these resources could both be met (albeit, not at the same time). Conflicts between holders of natural gas rights and holders of coal rights, as well as holders of natural gas and helium are additional examples of where conflicts may arise. Of course, it is difficult to identify in advance the circumstances that may give rise to conflicts between MRDA minerals and other minerals. As a result, the MRDA leaves the management of these potential conflicts to be addressed by the rule making authority of the AER and the regulation making authority of cabinet.

Alberta currently has robust regulatory regimes for the development of other types of mineral resources (oil and gas, oil sands, coal) not governed by the MDRA and so, legislative and regulatory authorities are not without a substantive "play-book" to draw as they develop new rules and regulations under the MDRA. However, mineral resources have unique attributes that will need to be accommodated. The AER will need to work closely with industry players and other experts to ensure the rules and regulations are "fit for purpose".

Impact on existing mineral resource projects

When it comes into effect, the MRDA will apply to the development of mineral resources in Alberta, whether the development commenced before or after the coming into force of the MRDA. This means that existing mineral resource development projects will become subject to the MRDA. The MRDA does not contain any express "transition provisions" to accommodate this change, so owners of existing mineral resource development projects will need to work closely with the AER to ensure a smooth transition to regulation under the MRDA. It will be very important for producers and the AER to understand how existing mineral resource projects will be impacted by the MRDA and to fairly address any negative or adverse impacts.

Conclusion

It is too early to tell whether the MRDA will establish a "clear, predictable and competitive" regulatory framework for the development of Alberta's mineral resources. The current framework provides the Alberta government with significant flexibility to engineer a regulatory regime that will attract investment while at the same time ensuring best practices in responsible and sustainable development. But that also means that the MRDA currently lacks clarity and certainty. Much work remains to be done and the Alberta government will need to ensure the AER has both the expertise and resources to fulfill the purposes of the MRDA. However, both the Alberta Strategy and the MRDA are necessary first steps to move Alberta closer to capitalizing on its mineral resources potential.

This article is general information only and not legal advice. Please reach out to Alicia Quesnel or Eno Akpoguma, or any member of our Energy Group, with questions about the MRDA.