June/July 2008

MAC Economic Commentary

Celebrating a significant investment in geoscience

By P. Stothart

During the past five years of strong growth in mineral prices, the mineral exploration community in Canada has been facing an increasingly difficult challenge — namely, how to find resources in promising northern regions where underlying mineral data is either weak or non-existent.

The federal government has been under-investing in its geological mapping responsibilities for some 20 years, with annual spending declining from $98 million in 1988 to $50 million in 2007. This decline has been equally dramatic at the provincial and territorial government levels. One interesting consequence of this neglect is that some 73 per cent of Nunavut, for example, is unmapped or poorly mapped and, at present investment levels, the first full mapping of the territory would not be finished for 80 years.

Given such a weak foundation of data, private companies are less able to undertake effective exploration programs. While exploring for minerals is, to some extent, akin to “searching for a needle in a haystack,” it is the public policy investment in basic geological survey work that allows those accessing the data to at least find where the haystacks are. In view of the high level of interest in diamonds, uranium, base metals and other northern resources, one must question the public good served by this pattern. Questions of national sovereignty in the North are also raised by this under-investment.

The federal budget tabled in February 2008 reverses this pattern. In what may stand as the best public policy news of the year for the Canadian mining industry, the federal government announced a re-investment in geological mapping of $34 million over the next two years. Given that this issue was one of their main public policy priorities over recent years, the Mining Association of Canada and  the Prospectors and Developers Association of Canada were both very pleased with this announcement.

MAC was doubly pleased with the details obtained in subsequent discussions with senior federal officials. In particular, while not formally announced, the actual investment extends a further three years, so the total federal injection of new money into this geo-mapping for energy and minerals (GEM) initiative will be $100 million over five years. (While details are being finalized, approximately three-quarters will be directed towards investment in the territories and one-quarter in the northern areas of the provinces). As well, the federal geoscience spending in the provinces will be increased further through cost-shared investment by provincial governments. The specific spending priorities and targeted projects will be developed in a coordinated manner through the National Geological Survey Committee, comprising federal, provincial and territorial government representatives.

The Geological Survey of Canada is Canada’s premier agency for geoscientific information and research and will have lead responsibility for implementing the GEM initiative. As noted within its mandate, GSC supplies the fundamental national geoscience knowledge base required to support effective mineral and hydrocarbon exploration and development across Canada, to provide the geological basis necessary to understand and address health, safety and environmental issues, and to advocate the interests of Canadian geoscience at the international level.

GSC has a fascinating history that dates to its formation a quarter-century before Confederation — a history which is closely linked to Canada’s traditional presence as a global leader in natural resources development. By investing $100 million in new funds over the next five years, the present federal government has made its own positive contribution to the long and distinguished history of GSC. This will lead to a revitalization of the geoscientific community in Canada, the hiring of new graduates, the attraction of international technical experts and, over time, the development of new mineral resource projects and value-added capital investment.

Past studies have shown that each dollar invested by governments in geoscience leverages five dollars worth of private-sector exploration expenditures. The improved geological database also enhances the effectiveness of the exploration spending. Given the buoyant long-term demand outlook for the commodities that Canada produces, this renewed federal geoscience commitment represents a solid investment in Canada’s future.


Paul Stothart
Paul Stothart is vice-president, economic affairs, at the Mining Association of Canada. He is responsible for advancing the industry’s interests regarding federal tax, trade, investment, transport and energy issues.

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