On July 4, 2024, the British Columbia Court of Appeal released a landmark decision in Skeena Resources Ltd. v. Mill, 2024 BCCA 249, providing much needed guidance on the question of ownership of waste rock and tailings generated by mining operations.
Skeena Resources Ltd. ("Skeena") claimed ownership over waste rock and tailings from Eskay Creek Mine (the "Mine") that Skeena had deposited into Albino Lake (the "Lake") in accordance with environmental regulations. Richard Mill, the individual who held a mineral claim over the Lake, asserted that he was the rightful owner of the valuable minerals in the waste rock and tailings deposited by Skeena. The question before the Court was whether Skeena relinquished its rights to the material when it deposited it into the Lake.
The Court found in favour of Skeena, thus overturning the rulings of the Chief Gold Commissioner and the Supreme Court of British Columbia, both of which had found that valuable minerals in the waste rock and tailings belonged to Mr. Mill. This is a positive decision for both mining companies and for environmental stakeholders, as it ties ownership rights to environmental obligations in relation to, sometimes valuable, mine waste.
Background and procedural history
The Mine, located in northwest British Columbia in the Tahltan Territory, produced gold and silver ore for fourteen years ending in April 2008. During that period, the Mine also produced some 1,750,000 tonnes of mine waste rock and tailings (the "Materials"). Over the life of the Mine and after its closing, the mine operator was required to comply with various conditions designed to minimize risk to the environment and public safety posed by the Material. The solution, endorsed by the Province of British Columbia, was to deposit the materials in the Lake. In order to facilitate this, the operator of the Mine entered into a lease with the Province for the exclusive use of the Lake and surrounding area for "waste rock disposal site purposes" (the "Surface Lease"). Almost 1,500,000 tonnes of waste rock and 258,000 of (dry) tailings were deposited into the Lake.
Skeena acquired the Mine in 2020 along with all of its predecessors' rights, leases, and permits, including mineral claims and mining leases and ongoing monitoring and environmental obligations over the Materials. These obligations included regular site inspections, monitoring, sampling and testing programs for the Materials.
In 2021, Skeena carried out drilling exploration within the Lake to determine the degree of mineralization of the Materials. The results of this exploration were positive.
Mr. Mill was the recorded holder of a mineral claim to the Lake area, including the land that was subject to Skeena's Surface Lease. Having learned of the positive results of Skeena's exploratory drilling, Mr. Mill applied in August 2021 to the Chief Gold Commissioner (the "Commissioner") pursuant to s. 13(1)(a) of theMineral Tenure Act1 for an order that his mineral claim included rights to the Materials.
The Commissioner ruled that Mr. Mill held the right to all minerals within the boundaries of Skeena's Surface Lease and that Skeena had no right or entitlement to the Materials it deposited in the Lake. The Commissioner reasoned that the Materials had been "dumped" in the Lake because they were "deemed to have no economic value to be processed to recover any valuable minerals contained in it". The Commissioner held that there was no evidence demonstrating that Skeena's predecessors ever intended to store the Materials within the Lake for potential future use, that the Surface Lease granted only the right to dispose of waste, and that Skeena and its predecessors relinquished ownership to the Materials when they deposited them into the Lake. In the Commissioner's opinion, the right to occupy the surface in order to explore for and develop minerals was held by Mr. Mill as the recorded holder of the mineral claim in respect of the Lake area. Although Skeena was the holder of the Surface Lease, that instrument did not grant it the right to occupy the surface in order to explore for and develop the minerals.
Skeena appealed to the Supreme Court. The chambers judge dismissed the appeal, finding that the Commissioner's decision contained no palpable or overriding error.2 The judge held that Skeena lost its mineral rights to the Materials because they reverted to the Province when Skeena removed the Materials from the land subject to its mining lease and deposited them into the Lake. Mr. Mill then acquired the mineral rights to the Materials from the Province when he became the recorded holder of the mineral claim.
Skeena appealed the Supreme Court decision.
Appeal Decision
The Court began by noting that the statutory context governing Skeena's rights and obligations is a complex regulatory regime with overlapping statutes dealing with different stages of the mining cycle.3 Of importance were the definition of "mineral" in theMineral Tenure Act, which includes "rock and other materials from mine tailings, dumps and previously mined deposits of minerals" and the nature of mineral leases under theMineral Tenure Act, which are defined as an interest in land that conveys to the lessee the minerals or placer minerals within and under the leasehold.4 The definition of "mine" in theMines Actwas also relevant, as "mine" includes "all activities including exploratory drilling, excavation, processing, concentrating, waste disposal and site reclamation".5
The central question before the Court was whether by reason of its placement of the Materials in the Lake, Skeena relinquished, abandoned or otherwise effectively transferred title to the Materials to the Province. The Court considered the meaning of abandon and relinquish, noting that, in addition to an overt act of abandonment itself, there must be a specific intention or motive on the part of the original owner to completely relinquish all rights of ownership. Relinquishment, in the legal sense, means abandonment in the sense that the former owner is completely indifferent to the fate of the discarded object.
Applying these principles, the Court held that the Commissioner was clearly and palpably wrong in finding that Skeena relinquished ownership to the Materials by depositing them into the Lake. The Court accepted Skeena's argument that the requirement for a person to be "indifferent" as to the fate of their property is inconsistent with the reality of regulatory obligations attaching to the Materials. The measure of depositing the Materials into the Lake was simply a necessary step for waste to be handled in a lawful and environmentally safe way, in accordance with the Province's requirements. It was not a complete abandonment whereby Skeena relinquished all rights and obligations respecting the Material and was indifferent to its fate.
The Court noted that the Commissioner relied on the fact that the Materials had been "deemed to have no economic value" and were referred to as "waste" in reports prepared by Skeena's consultants. The Court held that, contrary to the Commissioners finding, it was reasonable to infer that the operators of the Mine were aware that waste rock and mine tailings might become more valuable as technology and ore values changed in future years. In this sense, references to "waste rock" should not be interpreted as meaning "garbage" but simply as referring to materials not worth processing as ore at a given point in time. The expansion of the term "mineral" in theMineral Tenure Actto include waste rock confirmed, in the Court's view, that market changes and new technologies may turn "waste" into worthwhile raw material.
Ultimately, the Court held that disposing of the Materials in the Lake evidenced an intention to comply with the Minister's environmental requirements, not an intention to abandon the materials. Skeena will continue to have statutory obligations with respect to the Materials. The Court also accepted submissions from the Central Government of the Tahltan First Nation, who intervened in the appeal and whose traditional territory includes the Mine and the Lake, that divorcing the ownership rights to the Materials from the obligations to actively manage the toxicity and environmental impact of the Materials would introduce "additional uncertainty and volatility into the mine closure and remediation process, and endorse an interpretation of theMineral Tenure Actthat would undercut prior consultations on a mine project and regard for Indigenous interests".
In the result, the appeal was allowed, the Commissioner's decision was set aside, and the matter was referred back to the Commissioner for rehearing and reconsideration in light of the Court's reasons.
Conclusion
Skeena Resources Ltd. v. Millis a positive decision for mine operators, Indigenous nations, and other environmental stakeholders in British Columbia. The decision recognizes that separating ownership rights from environmental obligations would disincentivize remediation and undercut prior consultation with Indigenous communities. Technological innovation increases the feasibility of extracting economic value from mine waste and tailings, andSkeenaprovides assurance to mine operators that they have a right to these valuable materials even when they have to be moved off-site to comply with environmental regulations. For Indigenous nations and other environmental stakeholders, the decision mitigates uncertainty in the mine closure and remediation process by ensuring that monitoring and remediation obligations are not divorced from ownership rights.
Footnotes
1. Mineral Tenure Act, RSBC 1996, c. 292, s. 13.
2. 2022 BCSC 2032.
3. For a comprehensive overview of the statutory scheme, see paras. 10-17 of the Decision.
4. Mineral Tenure Act,ss. 42(2), 48(2).
5. Mines Act, RSBC 1996, s. 293.
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