The Cerro San Pedro mine in central Mexico stopped digging for gold Wednesday, on orders from the country's environmental enforcement agency.

Earlier this month a federal court ruled that the environmental permit of Minera San Xavier, which operates the mine and is owned by Vancouver-based New Gold Inc., was "null and void."

The court decided in favour of a Mexican environmental group, which argued Minera had violated local conservation laws and was detonating explosives too close to inhabited buildings.

In a news release, New Gold said it "has been operating in full compliance with required permits and government authorizations. The mine has had excellent operational performance in 2009 and has an enviable record of meeting its environmental and social responsibilities."

The company is appealing the ruling, and will continue leeching gold from the piles of crushed rock it has stockpiled. But the open-pit mine, which employs some 340 workers and takes its name from a centuries-old village dozens of metres away, has been forced to stop excavating.

Closer to home, a debate is intensifying about whether Ottawa should have a say over how Canadian mining companies operate in developing countries.

At issue is a private members bill that proposes:

• the Department of Foreign Affairs investigate any alleged misdeeds by Canadian mining firms in developing countries and publish what it finds;
• Export Development Canada withdraw financing from mining projects that are found to violate corporate social responsibility standards in poor states;
• mining companies found to breach those standards become ineligible for investment from the Canada Pension Plan.

Bill C-300 passed second reading in April by a slim margin, with the Conservatives voting against it and MPs from the other major parties voting for it, or abstaining. A final vote could happen as early as March, and stakeholders are digging to try to influence whether or not Parliament will make it law.

Contentious issue

Amnesty International has launched an online petition to garner support for the bill, citing concerns over human rights violations by Canadian mining companies operating in other countries. MiningWatch, an industry watchdog, says at any given time it is monitoring several dozen cases of accidental or intentional misconduct by Canadian mining firms working abroad.

"We can't keep up with them all, is the problem," said Jamie Kneen, a spokesperson for MiningWatch.

Kneen argues that Bill C-300 would boost government accountability, by placing conditions on federal support to Canadian mining firms that work in developing countries such as Guatemala or the Philippines.

The United Steelworkers Union has also been campaigning in support of the bill. Many of its 250,000 members work in the mining industry. Last week, it sent a delegation to Ottawa to lobby MPs.

"We're trying to raise the floor for workers in other countries," said Stephen Hunt, the union's director for Western and Northern Canada. "They should at least follow basic standards."

But industry groups and Export Development Canada say that attaching strings to public investment money would make the country's mining industry less competitive internationally.

The proposed rules "are so out of step with the rest of the world that they would only hurt Canadian companies and take them out of the game," EDC's senior vice president, Jim McArdie, told a Parliamentary committee that's reviewing the bill on Oct. 27.

Tony Andrews, executive director of the Prospectors and Development Association of Canada, told the same committee that the bill amounts to "naive and misguided grandstanding."

"If our politicians decide to insert themselves uninvited into the internal affairs of developing countries, Canada will do more harm than good," Andrews said.

Global implications

Both sides of the debate say that mining companies should aim for international standards of corporate social responsibility, and avoid causing undue environmental damage or harming anyone who lives near mines in poor countries. But they disagree on how to do that.

"The real solution is to build the capacity within developing-country governments to manage their environmental regulations to protect the environment, and to strengthen their legal processes to protect human rights," Gordon Peeling, president and CEO of the Mining Association of Canada, told CTV.ca.

Liberal MP John McKay, who proposed the bill, said he's in favour of any measures to help developing countries strengthen their laws. But he would also like to see social responsibility rules that come with repercussions if corporations break them.

He said Bill C-300 would create "a modest set of consequences" for mining corporations that receive support from the federal government, if they violate international standards, McKay said.

"A company can carry on doing whatever it's doing, however egregious," he added. "It just can't ask for the taxpayer, or the pensioners of Canada for financial support."

Other countries have been known to withdraw public investment from mining projects for environmental or human rights reasons. Last January, Norway's public pension plan sold the $200-million stake it held in a Papua New Guinea mine owned by Toronto-based Barrick Gold.

"Pollution from the Porgera mine will potentially have serious negative consequences for human life and health," it said. In particular, it said the risk of polluting the local environment with dangerous heavy metals, such as mercury, was unacceptably high.

Whether or not Ottawa adopts similar guidelines, the fight over the bill is sure to continue until it reaches final reading, which could happen within four months.

In the meantime mining industry representatives will descend on Parliament Hill Tuesday to meet with political decision makers, as part of an annual event. And Bill C-300 will likely be a popular conversation topic.

"It needs to be defeated -- it's just a debilitating waste of time," Peeling said. "We should be getting on with more important issues."