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Barrick Gold's Lagunas Norte mine in Peru began production in mid-June, ahead of schedule and slightly under budget. The mine is expected to produce 800,000 ounces of gold annually.

The Harper government weathered a storm when it cut funding to long-standing foreign-aid groups, but is now facing more controversy over its decision to launch development projects in partnership with mining firms.

The Canadian International Development Agency has established three foreign-aid pilot projects in Africa and South America with large mining corporations, as part of a plan to ensure that foreign aid also fuels economic growth and international trade at home.

Critics argue that Canada is needlessly subsidizing the foreign operations of profitable corporations, but the government is encouraging non-governmental organizations to come up with more projects with the private sector. This marks the first time that CIDA and mining firms are jointly funding aid projects abroad, and comes after the Conservatives faced a massive pre-election controversy over funding cuts to traditional partners, such as church-backed Kairos.

The mining industry is welcoming the new trend in Canada's foreign-aid policy.

"There is a policy shift under way, and it's one we're encouraged by," said Pierre Gratton, the president of the Canadian Mining Association.

In an interview, Mr. Gratton praised International Co-operation Minister Bev Oda for pushing the new initiatives, which will make it easier for mining firms to sell their sometimes controversial projects to local populations.

"These projects help improve the image of the industry … because they are meaningful and have value," Mr. Gratton said. "This is not just PR."

Federal officials said the policy shift at CIDA is co-ordinated with efforts by International Trade and Natural Resources to encourage the growth of Canadian firms abroad. Prime Minister Stephen Harper outlined the shift in 2007, his second year in power, when he met with officials from Barrick Gold during a trip to Tanzania and said the government wanted "to assist in building our investments here."

Ms. Oda has pushed for greater links between NGOs and mining firms, announcing $26-million in projects last fall. These included partnerships with Barrick Gold, IAMGOLD and Rio Tinto Alcan. On Dec. 23, CIDA announced a $4.5-million project in Ghana, Mali and Senegal in partnership with Lundin for Africa, which is the philanthropic arm of mining giant Lundin Group of Companies.

Over all, CIDA has approved at least $50-million in projects that are linked to the mining industry in countries such as Peru and Burkina Faso since the Conservatives came to power in 2006, according to CIDA's project database.

Officials inside and outside government said more projects are in the pipeline. Ms. Oda travelled last August to Mongolia, the resource-rich country that is in the sights of major Canadian mining operations, but not on CIDA's list of "countries of focus." During the visit, Ms. Oda said that Canada was looking to assist Mongolia to "strengthen its democratic governance and economic growth."

The practice is fuelling the ire of some NGOs and critics of the mining industry, which lambaste the government for subsidizing the so-called "corporate social responsibility" projects that are put in place by profitable companies. Jamie Kneen of MiningWatch Canada said the government is helping the mining industry to put a positive spin on their operations, despite their negative environmental and human-rights records.

"These companies are sitting on piles of cash, so why are Canadian taxpayers paying for their development projects?" Mr. Kneen said.

But World Vision Canada, which is working with Barrick Gold and CIDA in Peru on a $1-million project, is defending its actions as having a positive impact on children and families.

"We have to be realistic here, there is self-interest on the part of every party here," said World Vision Canada president Dave Toycen. "Anything we can do to encourage and advocate for better mining practices, and support the communities that they are displacing or affecting, we're contributing to a better lifestyle and environment for them."

In a statement issued by her office on Thursday, Ms. Oda said her government wants to encourage Canadian firms to help "local populations," arguing that extractive industries – referring to mining and oil and gas – are creating jobs and economic development.

"This approach of partnership will result in enriching the local communities, building a stronger skilled workforce and reducing poverty for many families," she said. "Creating sustainable economic growth in developing countries is key to reducing poverty."

With a report from Campbell Clark