Mining Institutions

4. Federal or provincial institutional arrangements for mining development

There are two principle ways in which a country creates institutions to manage the development of its mineral resources. Either the central government owns and manages the mineral resources on behalf of the whole nation, or sub-national governments that are either provinces or states are responsible for this development.  There are variations within these two systems, but these are the key divisions of governance power. Usually, the Constitution, as the most powerful law in the country, allocates duties, rights, and privileges to each level of government. Mining institutions are present at the national level in both systems of governance. But, they are responsible for different things.

The governance structure that owns and manages mineral resources is determined by the country’s system of governance. In countries where there is a Unitarian system, constitutional power is vested in a central government. Very little authority can be delegated to regional or local levels. In this type of governance system, minerals are the responsibility of the national governments. This system is usually found in smaller countries, such as in Europe, where it is relatively easy for one central government to be the single governance structure. The major mining institutions are usually located in this type of government’s capital city. There may be satellite offices scattered throughout the country, but these are still part of the national government and report to the headquarters’ institution housing the mining authority or department.

In a federal system, the power is shared between the central government and sub-national governments, usually described as provinces or states. In this type of system, laws and regulations can be defined by the sub-national governments and institutions created to implement these.

There are usually parliaments at these sub-national levels as well as a national parliament at the central level. In this federal type of governance system, provinces or states usually own and manage mineral resources.  

Quite often the responsibility for mines is linked with other economic development responsibilities, all reporting to a ministry in charge of industry or economic development. The mines department or division would usually fall under one of these overarching ministries. An example of this is where the Canadian province Ontario has linked the responsibility for mines with Northern Development (the latter being an overarching economic mandate). Both Northern Development and Mines report to a Deputy Minister in charge of these functions. The Deputy Minister in the Canadian system is not an elected politician – rather, this is the most senior bureaucrat position in the public service. The DM would report to the Minister of Northern Development and Mines, an elected member of the Ontario government Parliament.

As explained, this type of model or a variation would provide the provincial or state governments with an institutional structure to carry out their mandate for mineral development. The exception would be in countries where some minerals are privately owned. However, in these countries, such as the United States, where many private land holders own the minerals beneath the surface, the individual States still set the licensing regulatory framework to manage the mineral resources. This federal system of governance is found in larger, more regionally diverse countries such as Canada, the United States and Australia.

For example, Canada is a key mining country with a vast geographical area and a sparse population. Canada is a federal democratic democracy and has vested ownership and management of minerals to the ten provinces. Each province has its own mining institution, mineral law and regulations. The provinces compete with each other for international mineral investment. As provincial governments are responsible for mining within their respective jurisdictions, the federal government’s role in minerals and metals has been more  focused on core federal responsibilities. These include international trade and investment, science and technology, environmental protection, and aboriginal affairs.

Some countries do not have a purely defined federal or unitary system of governance. For example, Papua New Guinea is a parliamentary democracy with strong provincial governance structures, but the provinces do not own and manage the mineral resources. This has been an area of considerable debate within the country. The provinces believe they should have greater control over local mineral resource development. Customary law establishes that ownership is vested in landowners. Formal royalty payment agreements from mineral development are negotiated between the national government, the mining company, the provincial governments and the landowners. It is a complex and multi-layered system that is open to significant power struggles.