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Mining Act reform alone does not adequately address the concerns regarding mining operations

Ilona Lundström Published Date 25.1.2019 11.58 Blog

Mining operations have been the focus of heated public debate since December, with the sharpest criticism being directed at the Mining Act and its shortcomings. The solution proposed is the overall reform of the Mining Act, to be implemented as soon as possible.

The debate revolves around certain concerns that deserve to be addressed. In order to identify potential solutions, these concerns need to be analysed in more detail. Concern has been expressed over the natural environment, the economic benefit to Finland from mining activities, and people's opportunities to influence matters. Even a radical reform of the Mining Act is not an adequate measure to address all these issues; other action is also required.

Concern over the natural environment: People have expressed concerns regarding sustainability and accountability in the mining business, and responsibility for environmental and water protection. Who is financially responsible for any environmental damage? 

News headlines in recent days suggest responsibilities in the mining industry are far from well defined, even though the Mining Act explicitly states that a mining permit is not to be issued if the mining activities would represent a danger to public safety, cause significant harm to the natural environment or lead to a marked deterioration in the living environment or the business environment in the location in question, and the danger or detriment cannot be remedied through permit regulations.

Therefore, it seems clear that even if a great deal of attention is paid to the sustainability of mining in the permit and control processes required to begin mining, not all environmental impacts of mining operations can be eliminated. That is why the environmental permit is the most important of all the permits and licences required. No mining activities can begin without an environmental permit.

While amendment and reform of the Mining Act represent one possible recourse, this alone is not enough.  Assessment and evaluation work is required through the collaborative efforts of the Ministry of Economic Affairs and Employment, the Ministry of the Environment, the Ministry of Justice and the Ministry of Finance.

Contingency planning represents an important element of environmental protection. Anyone starting mining activities is currently required to provide mining collateral, the purpose of which is to ensure that the land area can be remediated to a satisfactory condition and fenced off, should the mine operator run out of funds.

However, this collateral is not sufficient to cover the extensive environmental damage caused by mines. This has prompted suggestions about setting up some kind of fund that would enable compensation for loss or damage in a situation where the party at fault is unable to pay.  The Oil Pollution Compensation Fund is an excellent parallel here.

While amendment and reform of the Mining Act represent one possible recourse, this alone is not enough.  Assessment and evaluation work is required through the collaborative efforts of the Ministry of Economic Affairs and Employment, the Ministry of the Environment, the Ministry of Justice and the Ministry of Finance.

Concern over the economic benefit to Finland: Will Finland benefit from its mineral resources, or will foreign companies reap the profits? Is Finland giving away its minerals for free, on a ‘finders keepers’ principle?

The public debate has focused considerable attention on the claiming system used in Finland, stating that it offers an all too easy path for mineral exploitation without the mining operations providing sufficient benefit to the Finnish economy.

Alternatives to the claiming system include a concession principle, which identifies the state as the owner of the minerals, and the principle by which the right to raw material recovery and use is granted to the landowner, whose approval is required for any use and recovery. None of the alternative models proposed is used as such in any country; selection of a specific model has been based on the type and quantity of minerals available in each country, the land ownership principles, and the way in which the state’s right of ownership has been historically perceived. This is also true for the claiming system used in Finland. One of its objectives is to encourage private entities to invest in ore exploration. An integral part of the system is compensation payable to the landowner.

As the Finnish model is deeply rooted in history, any changes to it require an extensive knowledge of the legal aspects and implications and a full understanding of the structure of the various rights set out in the Finnish legislation. The legislation will strongly reflect the political choices made regarding values. And, where the business sector is concerned, it should withstand time and cyclical fluctuations. The same applies to taxation policy and any levies on mining activities that have been proposed.

Concern over people’s opportunity to influence matters: People have expressed concerns over having any say about whether a mining company can open a mine in their local area or neighbourhood. This is also linked to concern about preferential treatment being given to different business sectors. Which is more important for the region and its residents, the opportunities provided by nature tourism or those offered by mining?

One of the functions of the planning system referred to in the Land Use and Building Act is to coordinate different land use needs. Municipal land use planning is one area of decision-making in society where orders of precedence may be determined in a situation where such coordination is not possible. In Finland, municipalities have a monopoly on land use planning, which means they have the power to decide on the content and timing of land use plans. As a result, not a single mine can be opened anywhere in Finland without a local council having first approved the land use plan. Before approval, the proposed land use plan is presented at various public consultations, and it is made available to local residents as part of the preparation process.

An environmental permit process and a mining permit process are required before a mine can be set up. The communication procedure included in these provides local residents an opportunity to express their views. As part of the permit process, the Regional State Administrative Agency, responsible for issuing the environmental permit, and the Finnish Safety and Chemicals Agency TUKES, responsible for issuing the mining permit, handle all complaints, views and statements regarding the permit application.

While the amendment and reform of the Mining Act is one possible recourse, this alone is not enough. Instead, joint assessment and evaluation work on the legislative amendment needs in regard to the Mining Act and other legislation pertaining to mining is required, involving not only the Ministry of Economic Affairs and Employment, but also the Ministry of the Environment, the Ministry of Justice and the Ministry of Finance. This work is about to begin, and the results will be ready after the next government begins its term. 

In addition, we need consistent policies that will ensure the social acceptability of mining activities as well as their economic sustainability and profitability.

Ilona Lundström, Director General, Ministry of Economic Affairs and Employment

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