Introduction
The global movement towards lower emission energy sources has led to an increased demand for rare earth and critical minerals, such as lithium, copper, and zinc among others. These types of resources are critical to the manufacturing of sustainable energy products such as batteries and solar panels.
In recognition of the importance and potential of these minerals to Alberta's energy future, the Government of Alberta released, in 2021, Renewing Alberta's Mineral Future: A strategy to re-energize Alberta's minerals section("Alberta's Mineral Strategy"). Alberta's Mineral Strategy is aimed at capitalizing on Alberta's untapped mineral resource potential, with the objective of positioning Alberta as the preferred international producer and supplier of minerals and mineral products and helping meet increasing global demand for mineral resources. Alberta's Mineral Strategy has led to the implementation of a number of recent legislative and regulatory changes, including the enactment of the Mineral Resource Development Act (the "MRDA").
In this article, we review recent developments arising from the implementation of the MRDA, including the Alberta Energy Regulator's ("AER") recent release of Bulletin 2023-36 (the "Bulletin"). The Bulletin invited the public to comment on a Draft Directive that sets out proposed requirements for developing rock-hosted mineral resources in Alberta. The Draft Directive was open for public comment until November 30, 2023.
Background
The MRDA was enacted to establish a regulatory framework for Alberta's critical and rare earth minerals industry, which to date has suffered from regulatory uncertainty. The MRDA received Royal Assent in December 2021 and represents a significant change to the regulatory framework governing Alberta's mineral industry. It is hoped that the introduction of the MRDA will provide a more predictable and better-defined regulatory environment for metallic and industrial development in the province.
To advance this objective the MRDA centralizes all regulatory functions for minerals under the AER. Prior to the introduction of the MRDA the minerals regime in Alberta was fragmented and fell under the purview of multiple agencies. The AER's new authority over mineral resources now aligns closely with the AER's existing authority over the oil and gas sector in the province.
In addition, theMRDA splits the regulation of mineral resources into two distinct groups:
- Brine-Hosted Mineral Resources: mineral resources found in underground saltwater that are mostly extracted through oil and gas well infrastructure. Examples of these types of mineral resources include lithium, which is widely used in electric vehicles and battery storage.
- Rock-Hosted Mineral Resources: mineral resources extracted using traditional mining or quarrying techniques (e.g., open pit or underground mining). Examples of these types of mineral resources include minerals such as limestone, sandstone, and marble, as well as critical minerals like copper and zinc. Critical minerals play a crucial role in emerging technologies and are a key component in many industries linked to the transition to a lower emissions economy.
The MRDAis being implemented in two phases based on these two mineral resource groups. Phase 1 was completed early 2023 with parts of the MRDA relating to brine-hosted mineral resources proclaimed in March 2023. Phase 2 is underway with the AER currently developing a rock-hosted mineral resource regulatory framework including rules, a directive, and other supporting documents.
Phase 2: Draft Directive for Rock-Hosted Mineral Resources
As noted, the AER released a new Draft Directive for public feedback. The Draft Directive outlines the AER's proposed requirements for developing rock-hosted mineral resources, including initiation, construction, operation, and closure.
More specifically, the Draft Directive addresses the application of the MRDA to rock-hosted mineral resources, exploration disposition requirements, mine permit applications and amendments, mine license applications and amendments, as well as abandonment requirements for underground works, and mine site closure.
Of particular note, the Draft Directive stipulates that specific liability management requirements for rock-hosted mineral resources are currently under development, and once fully developed, there will be a separate public comment period for the proposed requirements. While the Draft Directive does not provide any additional detail on what these proposed requirements may look like, the Government of Alberta has previously stated that regulation in this area is expected to mirror the oil and gas sector. Details around potential mandatory security requirements and how that may be calculated remain unknown.
Takeaways
With the enactment of the MRDA, the AER assumes the exclusive regulatory role for mineral resource development in Alberta. The decision to consolidate the regulation of the oil and gas industry and the oversight of mineral resource development under the AER may have been driven in part by potential conflicts that often arise between operations in these sectors.
The strategic move of making the AER the sole regulator appears aimed at equipping the AER with an improved capacity to efficiently evaluate and resolve conflicts arising between oil and gas operations and mineral resource development. Additionally, the consolidation is anticipated to empower the AER to provide developers with a streamlined regulatory approach to facilitate additional resource development in the province.
It is expected that throughout 2024, the AER will continue to provide additional guidance and directives that will underpin the regulatory regime for rock-hosted mineral resource development, including the creation of a new liability management regime. Although the one-stop approach is expected to provide regulatory clarity and certainty for both industry and investors, this transition may result in additional work for the AER, which could result in corresponding increases in wait times for all manner of resource projects, if not carefully managed.
With special thanks to Joelle Vandenborre, Student-at-Law, for assistance and research in the preparation of this article.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
