Navigating the Green Divide: Environmental Regulation in Canadian Mining — A Comparison with China

By Denis Koshelev

The global mining industry faces a fundamental challenge: balancing its immense economic benefits with its often severe environmental impact. This tension is particularly evident when comparing Canada’s high-cost, high-regulation model, lauded for its robust environmental, social, and governance (ESG) standards, with China’s state-backed, cost-focused approach, which prioritizes rapid development and often operates with less stringent environmental oversight.

While the domestic regulatory “divide” between these two nations is stark, a surprising similarity emerges in their limited oversight of overseas mining operations, complicating the narrative of a simple “green premium” for responsibly sourced minerals.

Environmental Regulations in Mining: Canada

Mining operations, by their very nature, have profound and often detrimental impacts on the environment. They can lead to deforestation, soil erosion, contamination of water bodies with heavy metals and acid mine drainage, loss of biodiversity, and significant landscape alteration. Without robust environmental regulations, these impacts can escalate, causing irreversible damage to ecosystems and posing long-term risks to environmental health. Regulations are essential to mitigate these effects by setting clear standards for exploration, extraction, processing, waste management (especially tailings), and site rehabilitation.

Canada’s mining sector operates under a comprehensive and evolving environmental regulatory framework, involving both federal and provincial jurisdictions. A significant development post-2020 was the Supreme Court of Canada’s 2023 ruling that the federal environmental assessment scheme under the Impact Assessment Act (IAA) was, in part, unconstitutional [1]. The IAA had empowered the Minister of Environment and Climate Change to conduct environmental assessments for prescribed projects. The Court found that this granted the Minister overly broad discretion, encroaching on provincial powers. In response, the federal government announced amendments to the IAA in 2024 aimed at narrowing its scope while respecting constitutional boundaries. Despite these legal nuances, the requirement for thorough environmental assessments (EAs) remains a cornerstone, often spanning several years [12]. Beyond EAs, mine development necessitates numerous permits for water use, waste management (including stringent regulations for tailings storage facilities), air emissions, and site reclamation.

For instance, British Columbia updated its Health, Safety and Reclamation Code for Mines post-2014 to mandate robust tailings management, including regular audits and an “engineer of record” [1].

Canada’s regulatory landscape for critical minerals is evolving, driven by an increasing focus on environmental and social accountability. The Canadian Environmental Protection Act mandates a comprehensive national inventory of pollutant releases. Beyond environmental concerns, newer legislation, like the Fighting Against Forced Labour and Child Labour in Supply Chain Act, effective from 2024, signals a growing trend toward integrating social and governance factors into business operations [2]. Industry initiatives further reinforce this commitment, notably the Mining Association of Canada’s Towards Sustainable Mining (TSM) program, a key framework for reporting environmental and social performance [2].

Moreover, recent policy developments aim to mitigate specific environmental impacts. Proposed Coal Mining Effluent Regulations will restrict the discharge of harmful substances from coal operations, with similar provisions for non-coal mines anticipated by 2026 [3]. This heightened scrutiny is underscored by reports such as the Canadian Climate Institute’s 2025 assessment, which emphasizes the critical need to manage risks like water contamination and habitat destruction in the context of critical mineral extraction [4].

Environmental Regulations in Mining: China

China’s regulatory framework for mining has seen notable amendments and shifts in enforcement focus, particularly concerning Environmental Impact Assessments (EIAs) and mine closure obligations. An amendment to the Environmental Impact Assessment Law (December 2018, with ongoing implications) allows “fully capable” project proponents to prepare their own EIA forms, a departure from requiring qualified EIA institutions [5]. EIAs remain a prerequisite for mining projects, subject to approval or filing with local Ministry of Ecology and Environment (MEE) bureaus.

A restoration fund system, implemented in November 2017, allows mining rights holders more discretion in using funds according to pre-approved restoration plans, alongside strengthened government supervision. Non-compliance can lead to fines, rejected permit extensions, blacklisting, and environmental public interest lawsuits. Companies face administrative penalties (cease activities, fines, production limits, suspension, or closure) for violations, and civil liabilities for damages. Criminal liabilities can also apply to serious pollution accidents.

Foreign investment is generally encouraged, with benefits for projects in the “Catalogue of Industries for Encouraging Foreign Investment,” though rare earths, radioactive minerals, and tungsten remain prohibited for foreign investors.

Post-2020, China has continued to solidify its global mining dominance, with metals and mining investment reaching a record $19.4 billion in 2023 [6]. Domestically, China has identified 24 minerals as critical and encourages overseas expansion, sometimes in regions with weak governance, raising ESG concerns [7][8]. While domestic environmental standards are updated (EIAs, “three simultaneities,” ecological restoration, green mining), these are not always enforced abroad [8].

The “Going Global Strategy” (1999) and BRI (2013) initially saw limited overseas regulation. A 2017 Code of Conduct mandated environmental due diligence for overseas projects, and policies began covering Central State-owned Enterprises (CSoEs) in 2021, requiring compliance with Chinese and local laws but not explicitly addressing ESG. However, two environmental guidelines for overseas investments were issued in July 2021 and January 2022, with the latter being well-received for explicitly including EIA, monitoring, ecological restoration, community engagement, and adherence to international or stricter Chinese standards.

The Mineral Resources Law, effective July 2025, aims to establish a comprehensive framework, adding a chapter on “Ecological Restoration of Mining Areas” and mandating ecological restoration plans before mining begins [9] [10]. However, it has been criticized for not requiring full supply chain due diligence and for lacking clear restoration standards.

More recently, China announced new, more stringent environmental standards for its rare earth mining industry in May 2025, expected to impact global prices [11].

Also, we can’t forget the matter of corruption in China’s mineral mining sector, which has been described as pervasive and deeply rooted, with the industry being highly regulated by the state but lacking transparency and oversight. Fraud, bribery, and kickbacks are common, and several high-profile corruption cases have come to light, such as the execution of Liu Han, chairman of Hanlong Group, for corruption and organized crime. The extractive sector’s opacity is attributed to poor government reporting, unclear contract terms, and a lack of transparency in revenue streams and subsidies. There are no formal procedures for appealing licensing decisions, which further entrenches opportunities for corrupt practices.

This environment of corruption can distort the true cost of mining operations, as bribes and irregular payments become part of the cost structure. When companies must pay off officials or secure permits through illicit means, these additional expenses can be passed along the supply chain, ultimately influencing the market price of minerals. Furthermore, the lack of transparency and fair competition can lead to inefficiencies, reduced foreign investment, and unpredictable supply, all of which can contribute to price volatility.

Key Differences in Regulatory Approaches and Enforcement

The regulatory approaches and enforcement mechanisms in Canada and China exhibit both similarities in intent and notable differences in implementation, oversight, and stakeholder roles. A primary difference lies in Canada’s federal structure with shared federal-provincial/territorial environmental responsibilities, leading to a complex, but generally stringent environment. China’s system, while involving local MEE bureaus, appears more top-down, with national laws guiding local implementation, though the 2018 EIA self-preparation amendment might introduce variability. Both countries impose penalties for non-compliance, but Canada strongly emphasizes financial assurance for mine closure and reclamation to prevent public liability.

The Wolverine mine case in Yukon, abandoned by a Chinese-owned subsidiary, highlights risks even within Canada’s system. [4] China’s 2017 restoration fund system aims for discretion with stricter supervision, and its “Credit China” blacklisting is a unique enforcement tool. Environmental public interest lawsuits are a growing avenue of pursuing environmental enforcement in China. The most recent sampling (Oct/Nov 2024) shows the abandoned audits and tailings pond at Wolverine are still leaking zinc, cadmium, selenium and cyanide into downstream creeks that feed the Ross River Dena Council’s drinking-water sources. [33]

Canada’s Towards Sustainable Mining program reflects a co-regulatory element less evident in China’s system descriptions. Specific technical oversight, like British Columbia’s “engineer of record” for tailings, is also a feature of Canadian regulation. Canada’s continuous effort to tighten controls, like proposed effluent regulations [3], contrasts with China’s evolving landscape, where recent stricter laws for rare earth ecology coexist with historical leniency in some regions and non-binding overseas guidelines [13]. This suggests that while China is moving towards greater environmental responsibility, the consistency and stringency of enforcement may still differ significantly from Canada’s more established and uniformly applied system.

Overall, the comprehensive environmental regulations in Canadian mining make it more challenging and costly to mine in Canada compared to jurisdictions with lighter or less consistent regulations. The rigorous requirements for environmental impact assessments, emissions control, community and Indigenous consultation, and mine closure planning introduce complexity, longer timelines, and additional costs.

While China promotes overseas mining investment under initiatives like the Belt and Road, its domestic environmental standards and strict regulations do not fully apply in foreign countries. China respects the judicial sovereignty of host countries and limits the extraterritorial application of its laws, resulting in weaker environmental enforcement and oversight for its overseas mining projects. Prominent Chinese state-owned enterprises in the extractive sector, such as China Nonferrous Metals Mining Group (CNMC), China National Offshore Oil Corporation (CNOOC), China Minmetals, China National Gold Group (CNGG), and Aluminium Corporation of China, encountered significant environmental, social, and governance (ESG) and human rights disputes in their international operations. Despite these incidents, Beijing’s regulatory oversight remained conspicuously absent. [8]

Canadian mining companies operating abroad are expected by the Canadian government to adhere to high standards of responsible business conduct, including environmental stewardship and respect for human rights, regardless of where they operate. This expectation is supported by Canada’s international commitments, such as the United Nations Guiding Principles on Business and Human Rights and the OECD Guidelines for Multinational Enterprises. Canadian firms are subject to domestic requirements to provide declarations of responsible conduct for trade and export support. [31]

Still, while Canadian mining regulations are stringent domestically, this strong regulatory foundation contrasts with the more voluntary nature of overseas conduct regulations. Like China, Canada historically did not apply its domestic laws to the overseas activities of its mining companies. Canadian companies were primarily governed by the laws of the host country, which are often less stringent or poorly enforced. Despite international guidelines and the appointment of an ombudsperson, Canada’s regulatory oversight of its companies abroad is minimal and lacks real enforcement power. [32]

Final Thoughts

While both Canada and China have made significant strides in tightening environmental regulations for mining, Canada’s framework remains more comprehensive, transparent, and participatory. Canadian regulations span the entire mining lifecycle, with rigorous environmental assessments, robust emission controls, internationally recognized waste management standards, and a strong emphasis on Indigenous and community consultation. Enforcement is systematic, and there is an ongoing push to align with leading global benchmarks for mine closure and restoration.

China, on the other hand, has rapidly advanced its regulatory regime, especially with recent amendments requiring ecological restoration plans and stricter enforcement mechanisms. However, enforcement can be inconsistent and sometimes arbitrary, with community consultation and transparency far from Canadian standards. Although China’s reforms have closed much of the gap, many critics note gaps in public engagement and due diligence, especially for Chinese mining operations abroad. But this is a case where both countries are more similar to each other than one might expect.

While Canada and China have both strengthened their mining environmental regulations considerably, their approaches reflect distinct governance philosophies — Canada prioritizing transparency and community participation, while China emphasizes rapid regulatory evolution and centralized enforcement. Despite these differences, both countries share common challenges in adapting their frameworks to emerging technologies, climate change impacts, and evolving scientific understanding of environmental restoration.

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