February 2009

Supply Side

Fewer mines mean less business for suppliers

By J. Baird

Mining suppliers across Canada should be aware of the proposals of the Government of Ontario, which might result in the withdrawal of huge areas from mineral exploration. What happens in Ontario may spread across the country.

On July 14, 2008, Ontario Premier Dalton McGuinty announced a major new plan for the mining industry in the province. The initiative has three facets: government revenue sharing with aboriginals, land use and revisions to the Ontario Mining Act.

The industry is happy that government is planning to share its future revenues from industrial development in northern Ontario with First Nations, who constitute the largest population group in the far north of the province. This is a model that has been developed in Quebec, Alaska and elsewhere. It helps aboriginal people accept and participate in economic development, which is the key to improving their living standards.

The land use proposals are, however, another matter, depending on how the issue is handled. Premier McGuinty proposes to withdraw 50 per cent of the boreal forest area in the north of the province from any industrial development, including mineral exploration and mining. The other half may be developed, but only with the approval of the local peoples.

If lines are drawn on maps making territory off-limits to exploration and staking, the government will be offering aboriginal people revenues with one hand but taking 50 per cent of them away with the other. Unlike the assessment of the agriculture, hydro or forestry potential, there is no way of knowing where potential mines will be found. Given that mineral exploration is non-invasive and mining takes far less than one per cent of the landscape, it is ridiculous to remove huge tracts of land from mineral exploration. At a time when Ontario’s economy seems to be faltering, this is a most extraordinary proposal indeed.

Rather than 50 per cent, the mining industry would be happy to leave 99 per cent of the land untouched, but 100 per cent needs to be accessible to exploration and development. A wise decision in this respect would benefit all Ontarians and, for that matter, all Canadians.

The third part of the proposal concerns revisions to the province’s mining act. There are clear public and aboriginal concerns over access to land for which surface rights are owned or over which traditional activities have taken place. I believe that some compromise on this point will be acceptable, since the current situation is hardly good for the industry. However, if these changes result in loss of tenure of development and mining rights, the industry in Ontario will be crippled and mineral exploration expenditures, now totalling five per cent of world investment, will plummet.

The rest of Canada should be watching what happens in Ontario. If these issues are handled improperly, other jurisdictions may follow suit, dealing a severe blow to the exploration and mining industry across the country.

If you are wondering what a mine means to mining suppliers, consider the report entitled “The Economic Impacts of a ‘Representative Mine’ in Ontario” issued by the Ontario Mining Association in December 2007. They modelled a mine with annual revenues of $270 million that hired 480 people. This operation also created 1,103 jobs in mining supply firms.

There are more jobs these days in mining supply than there are in mining. Thus, suppliers have a vested interest in seeing that governments act responsibly to ensure that their jurisdictions remain attractive to exploration and investment in mining.

Jon Baird
Jon Baird, managing director of CAMESE and the immediate past president of PDAC, is interested in collective approaches to enhancing the Canadian brand in the world of mining.

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