Responsibility affects entire capital market

With the passage in May of the Geologists Act in Quebec, the introduction of the new Engineering and Geoscience Professions Act in Nova Scotia, and this month’s announcement of regulations under the Professional Geoscientists Act in Ontario, the last few pieces are falling into the jigsaw puzzle of geoscientist registration in Canada.

This newspaper has consistently supported registration for a number of reasons. A recognized geoscience profession is one of the essentials of an efficient capital market in the mining industry. A system that ensures that earth science is done by qualified and experienced people is an important guarantor of public safety and public welfare, as well as a safeguard for the environment. And a body of people that chooses to submit itself to codes of conduct and professional practice is infinitely preferable to a tangle of regulations and the wet blanket of government oversight.

That Ontario and Quebec — the two most populous provinces, with the two senior stock exchanges — should have been among the last to pass these laws is unusual and a little embarrassing. Geoscientists in Quebec first approached the provincial government for inclusion in the Board of Professions in 1973; rebuffed at least three times by the Order of Engineers, the Association of Professional Geologists and Geophysicists of Quebec has at last been granted status under the Professions Code.

In Ontario, the Association of Geoscientists of Ontario had a long mating dance with the Professional Engineers Ontario that ended badly in 1998. The result stood in stark contrast to the experience in every other province, where professional engineering bodies (perhaps more conscious of their own relationship with the resource industries) welcomed the opportunity to build an umbrella organization that included geoscientists.

Much of the political will that made the Ontario and Quebec registration acts happen came from well-received reports of Ontario’s Mining Standards Task Force and Quebec’s Study Committee on Financing, set up by each province’s securities commission and major stock exchange. Both the regulators and the exchanges were rightly concerned to bolster their own credibility after the excesses we saw during the mineral exploration boom of the late 1990s.

The central recommendation of both reports, the designation of a “Qualified Person” for disclosures that go to the capital markets, could not work unless geoscientists were registered. Governments, once their minds were concentrated, found that to be a workable and uncontroversial measure, easily accepted by all political parties. And to the ordinary voter — or at least any voter who happened to be aware of the issue — the promise of having a responsible, self-regulating profession in the resource, construction and environmental-protection industries played well.

But the industry cannot imagine that professional responsibility will stop at registration acts and the distribution of rubber stamps. There will have to be consistent application of the principles and spirit of self-regulation in order for venture capital to take mineral exploration seriously as an investment.

Most specifically, the legal burden placed on the Qualified Person will not relieve boards of directors of their own responsibilities under existing principles of corporate governance. And investment houses may find their clients demanding they take more legal responsibility in recommendations and in portfolio management.

That will mean that not just geoscientists and engineers, but everyone involved in the capital markets, will have to understand that professionalism matters, and that following National Instruments and task force recommendations is more than a matter of watching someone else tick boxes on a form.