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Parallel Mining Corporation and United Tegaru Canada - Initial Assessment

Note: all references to the 2011 OECD Guidelines

Summary

1. On September 10, 2022, Canada’s National Contact Point (NCP) received a request for review from United Tegaru Canada (“UTC”), a non-government organization based in Toronto. The request for review concerned observance of the Guidelines by Parallel Mining Corporation (“Parallel”), a junior mining company with a focus on mineral exploration in Ethiopia.

2. UTC claimed that by being active in Ethiopia – and specifically by paying taxes/licensing fees to the Government of Ethiopia – Parallel is or has been involved with and contributing to adverse human rights impacts linked to violations allegedly committed by that country’s government in the Tigray conflict (Chapter IV, paragraphs 1 and 2). The Notifier also questioned whether Parallel had a policy commitment to human rights (Chapter IV, paragraph 4) and whether the company was undertaking appropriate human rights due diligence (Chapter IV, paragraph 5). The Notifier did not claim that Parallel itself had abused human rights in the context of its activities in Ethiopia.

3. As part of its initial assessment, Canada’s NCP Secretariat held separate conversations and had email exchanges with both parties. UTC and Parallel were given the opportunity to provide supporting documentation and clarification, and were invited to fact-check information in this initial assessment.

4. An ad hoc working group comprising officials from Global Affairs Canada and Natural Resources Canada examined the case and formulated a recommendation to the NCP.

5. Based on the working group’s recommendation, the NCP offers its good offices to facilitate a dialogue between the parties on the issues raised in connection with Chapter IV, paragraphs 4 (policy commitment to human rights) and 5 (human rights due diligence).

6. The NCP is not offering its good offices to facilitate dialogue on the issues raised concerning Chapter IV paragraphs 1 and 2.

Substance of the specific instance

7. The Notifier, United Tegaru Canada (UTC), is a self-described “non-political, non-religious, non-for-profit” organization based in Toronto, Ontario. UTC was founded in response to the outbreak of conflict in northern Ethiopia in 2020, and advocates for awareness and action regarding the humanitarian and human rights situation in Ethiopia’s Tigray region. UTC was represented by legal counsel in its engagement with the NCP.

8. The Respondent, Parallel Mining Corporation, is a junior mining company headquartered in Vancouver, British Columbia, and incorporated under the British Columbia Business Corporations Act. The Respondent states that it is “engaged in the acquisition, exploration and development of exploration and evaluation assets”. The Respondent announced its interest in exploration opportunities in Ethiopia in 2019. In July 2021, the Respondent was granted an exploration licence for a property in the Tigray region covering a total area of approximately 376 square kilometres (known as the “Lighting Property”). The Respondent was granted a second licence in the Tigray region in October 2021 for a property covering a total area of approximately 399 square kilometres (the “Star Property”). The Respondent has a wholly-owned subsidiary in Ethiopia called “Parallel Mining Corp. (Ethiopia)”.

9. In a Management Discussion and Analysis (MDA) document released by the Respondent and covering the nine months ended on February 28, 2023, the Respondent noted that “all of its properties in Ethiopia are in the Tigray, where there is currently political unrest”. The document further stated that the Respondent was not able to carry out any exploration work for safety reasons, and that its exploration licences were under force majeure until further notice. The MDA indicated that the Respondent would continue to monitor the situation and would decide when it was safe to resume exploration work on its properties.

Notifier’s perspectives

10. The Notifier claims that the Government of Ethiopia has been involved in the commission of serious human rights violations since it initiated military operations in the Tigray region in 2020. In connection with this claim, the Notifier provided the NCP with copies of reports by Amnesty International and Human Rights Watch. The Notifier also provided a copy of a written submission it made in June 2022 to the Subcommittee on International Human Rights of the House of Commons Standing Committee on Foreign Affairs and International Development.

11. The Notifier raises questions regarding the Respondent’s observance of several guidelines in Chapter IV (Human Rights), specifically:

12. The Notifier asks the NCP to “assist by providing a forum for constructive dialogue on these issues”.

13. The Notifier’s request for review did not make any claims regarding alleged human rights abuses committed by the Respondent itself, or linked directly to its exploration activities. 

14. The Notifier’s September 2022 request for review did not raise issues concerning observance of paragraph 3 of Chapter IV.

Respondent’s perspectives

15. The Respondent did not provide a written submission to the NCP, but a representative did share some perspectives on the Notifier’s submission in conversation with the NCP Secretariat. The Respondent did not indicate having any specific corporate policies on human rights or responsible business conduct.

Initial Assessment

16. The Initial Assessment was based on the information submitted by the Notifier and the Respondent, as well as publicly available information.

17. The Initial Assessment considers whether the issues raised are bona fide and relevant to the implementation of the Guidelines, taking into account:

18. This Initial Assessment, and the NCP’s decision to offer good offices, do not represent a determination as to whether or not the Respondent has observed the Guidelines. This Initial Assessment should not be seen as validating to any degree – one way or the other – claims made by either the Notifier or Respondent.

Identity of the party concerned and its interest in the matter

19. The Notifier is an organization with an interest in and mandate related to the humanitarian and human rights situation in Ethiopia. The Notifier appears to have a clear interest in observance of the OECD Guidelines by the Respondent, an enterprise that has a commercial presence in Ethiopia and in the Tigray region.

Whether the issues are material and substantiated

20. In assessing whether the issues raised are “material”, the question is whether the issues raised have clear and meaningful relevance to the Guidelines.

21. In assessing substantiation, the question is whether the issues raised are based on a plausible and coherent interpretation of events, supported by a reasonably compelling and credible evidence base. The available information does not have to prove conclusively, or even on a balance of probabilities, that certain events occurred or that the enterprise acted in a particular way. This reflects the preliminary nature of the initial assessment, and its objective of determining whether the issues raised merit further examination, namely through dialogue under the good offices of the NCP.

22. The NCP’s assessment of whether the issues are material and substantiated in no way asserts that events occurred in the way alleged by the Notifier, nor is it a determination as to whether or not the Respondent has observed the Guidelines.

Issue raised concerning Chapter IV, paragraphs 1 and 2 (adverse impacts on human rights)

23. Paragraph 1 of Chapter IV calls on enterprises to avoid infringing on the human rights of others and to address adverse human rights impacts with which they are involved. Paragraph 2 calls on enterprises to avoid causing or contributing to adverse human rights impacts within the context of their own activities. The Notifier claims that by paying taxes and/or licence fees to the Government of Ethiopia – and effectively, by simply operating in Ethiopia – the Respondent may be involved with and contributing to the human rights violations allegedly committed by that country’s government.

24. It is important to note that the Guidelines call on enterprises to avoid, and failing that, to address adverse impacts – including on human rights – when they cause or contribute to such impacts “through” or “in the context of” their “own activities” (paragraph A.11 of Chapter II, paragraph 2 of Chapter IV). As commentary paragraph 14 observes, “the Guidelines concern those adverse impacts that are either caused or contributed to by the enterprise”. This commentary further elaborates that “contributing to” an adverse impact should be interpreted as making a substantial contribution, and should not include minor or trivial contributions.

25. The language of the Guidelines and accompanying commentary suggests that the payment of taxes/licence fees to a government is not alone sufficient to substantiate a claim that the enterprise is contributing to or is involved in adverse impacts linked to violations committed by that government. In this case, and on the basis of the information provided, there is little to substantiate the claim that the Respondent is “contributing” to the alleged adverse impacts, as understood in the Guidelines, especially given how remote those alleged impacts appear to be from the Respondent’s own commercial activities.

26. The Guidelines do not call on enterprises to avoid operating in a jurisdiction due to the fact that the relevant State may be failing to protect human rights. Chapter I, paragraph 2, as well as Commentary paragraph 38, recognize the possibility that enterprises may find themselves operating in jurisdictions where domestic laws or regulations conflict with the principles and standards of the Guidelines, and/or where the State is acting contrary to international human rights obligations. In those situations, enterprises are asked to seek ways to honour the principles and standards of the Guidelines (including respect for international human rights), to the fullest extent which does not place them in violation of domestic law.

27. This reflects the distinction between the State’s duty to protect human rights and the enterprise’s responsibility to respect human rights, and speaks to the Guidelines’ being concerned more with how multinational enterprises operate, not where they operate (and to which governments they must therefore pay taxes or licence fees). Issues around the ultimate use of State tax revenue will typically not be material to the Guidelines.   

Issues raised concerning Chapter IV, paragraph 4 (policy commitment to human rights)

28. Paragraph 4 recommends that multinational enterprises have a policy commitment to respect human rights. Commentary paragraph 44 elaborates on the content and nature of such a commitment.

29. At the outset, the NCP wishes to address the question of whether the Respondent is an enterprise too small to need a dedicated policy commitment to human rights. It is useful here to cite in full Chapter I, paragraph 6 of the Guidelines:

Governments wish to encourage the widest possible observance of the Guidelines. While it is acknowledged that small- and medium-sized enterprises may not have the same capacities as larger enterprises, governments adhering to the Guidelines nevertheless encourage them to observe the Guidelines’ recommendations to the fullest extent possible.

While the Respondent may be a relatively small enterprise, it nonetheless appears to be a multinational enterprise to which the Guidelines – including the recommendations in Chapter IV – are addressed. The Respondent’s size may certainly be relevant to how and to what extent it is able to observe the Guidelines’ recommendations. However, the Respondent’s size does not mean that the Guidelines are inapplicable to its activities, and, in this case, does not offer a compelling reason to preclude further examination of the issue raised concerning observance of paragraph 4 of Chapter IV.

30. The issue of whether the Respondent has a policy commitment to respect human rights is material to the Guidelines. In this case, the issue is also sufficiently substantiated. Communications with the Respondent did not indicate that it has a dedicated corporate policy or statement expressing its commitment to human rights. This does not mean that the Respondent has necessarily failed to meet the recommendation set out in paragraph 4. However, it does suggest that there is a sufficient basis for the issue to merit further discussion under the NCP’s good offices.

Issues raised concerning Chapter IV, paragraph 5 (human rights due diligence)

31. Paragraph 5 calls on multinational enterprises to carry out human rights due diligence as appropriate to their size, the nature and context of operations and the severity of the risks of adverse human rights impacts. The Notifier claims that there are reasonable grounds to believe the Respondent has not observed this recommendation, citing the lack of any mention of human rights in the Tigray region in the company’s public statements.

32. The issue raised by the Notifier – whether the Respondent has undertaken or is undertaking appropriate human rights due diligence – is material to the Guidelines. In its communications with the NCP, the Respondent did not indicate any planned or completed human rights due diligence with respect to its activities in Ethiopia. This does not mean that the Respondent has necessarily failed to meet the expectations of the Guidelines. However, it does suggest a sufficient basis for the issue to merit further discussion under the NCP’s good offices.  

Whether there seems to be a link between the enterprise’s activities and the issue raised in the specific instance;

33. There seems to be a link between the enterprise’s activities and the issues raised concerning observance of Chapter IV paragraphs 4 and 5. There does not seem to be a meaningful link between the enterprise’s activities and the issues raised concerning paragraphs 1 and 2.

The relevance of applicable law and procedures, including court rulings;

34. Neither of the parties referenced laws, procedures, or court rulings that would be relevant to this specific instance.

How similar issues have been, or are being, treated in other domestic or international proceedings

35. Neither of the parties indicated the existence of parallel proceedings that would be relevant to this specific instance.

Whether the consideration of the specific issue would contribute to the purposes and effectiveness of the Guidelines

36. Chapter IV (paragraphs 1 and 2): Consideration of whether the Respondent’s payment of taxes or licensing fees in Ethiopia is contributing to or involves it with adverse human rights impacts allegedly caused by that country’s government would not contribute to the purposes and effectiveness of the Guidelines. As noted above, the NCP does not consider this issue sufficiently substantiated or material to the Guidelines. Here, the NCP also takes note of the OECD Investment Committee’s response to the substantiated submission by OECD Watch regarding the Australian National Contact Point (2018), particularly the Committee’s comment at paragraph 42:

It is important that NCPs carefully distinguish the enterprise responsibility to respect human rights and the due diligence requirements that accompany that from the broader State duty to protect human rights. The role of the NCP is to address the former but not to address the latter.

In the present case, the NCP is of the view that the issue raised by the Notifier essentially one of government policy (use of tax revenues) and the State’s duty to protect human rights, and not the enterprise’s responsibility to respect human rights.

37. Chapter IV (paragraph 4): The Respondent provided no indication of having a dedicated statement or policy on its commitment to human rights, and did not suggest that work was underway to develop one. It seems clear that further consideration of this issue under the NCP’s good offices could help inform and potentially enhance the Respondent’s approach to this recommendation, and thereby contribute to the wider purposes and effectiveness of the Guidelines.

38. Chapter IV (paragraph 5): The NCP recognizes that the Respondent declared force majeure on its licences in Ethiopia, and may have yet to carry out significant exploration work on its properties there. However, this does not necessarily render the recommendation in Chapter IV, paragraph 5 inapplicable. The Guidelines recommend that multinational enterprises undertake human rights due diligence in relation to their activities. Commentary paragraph 45 notes that this due diligence entails “assessing actual and potential human rights impacts” and that it is an “ongoing exercise”. At the same time, the Guidelines recognize that the scope and nature of an enterprise’s human rights due diligence may be informed by the size of the enterprise, the nature and context of its operations, and the severity of the risks of adverse human rights impacts. While the precise nature of the human rights due diligence undertaken by an enterprise may therefore be highly context-specific, the Guidelines still clearly recommend that such due diligence be carried out all the same.

39. Giving this issue further consideration under the good offices of the NCP appears to have the potential to better inform and potentially enhance the Respondent’s approach to the recommendation in paragraph 5, and thereby contribute to the wider purposes and effectiveness of the Guidelines.

Conclusion

40. The NCP offers its good offices to facilitate a single session of dialogue between the Notifier and Respondent. This would provide an opportunity to share perspectives that may be useful to informing and potentially enhancing the Respondent’s approach to the recommendations found in paragraphs 4 and 5 of Chapter IV of the Guidelines.

41. The NCP is not offering its good offices to facilitate dialogue on the issues raised concerning Chapter IV paragraphs 1 and 2.

December 12, 2023

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