Canada is occasionally referred to as a “global mining giant,” a phrase I always maintain is an understatement. From our strong domestic base, Canada’s mining industry has grown to straddle the globe. Today, nearly 60 per cent of the world’s mining companies are Canadian and these companies are active in over 100 countries.
There is no question that our geology has played a major role in establishing Canada’s dominance, but an abundance of resources alone cannot account for the success of the industry. Our natural resources may be the foundation, but the powerful industry that stands on that foundation would not exist without the systems and infrastructure that attract mineral and mine exploration and development, a positive investment climate, a highly skilled workforce, strong research capacity, and the long history of innovative public geoscience that has made Canada a preferred target for mineral exploration.
Canada’s mining industry has many strengths, but it will take more than momentum to maintain our position of leadership in the face of some serious challenges. The most immediate of these is the impact of a global recession that has affected almost all sectors of Canada’s economy. Credit markets have tightened and, with few exceptions, commodity prices have declined dramatically. As a consequence, many companies are moving to cut their operating costs and conserve cash.
During our government’s extensive pre-budget consultations, we heard again and again about mine cutbacks and closures and their impacts on local communities. Having been born and raised in Cape Breton as the coal industry was shutting down, these are stories I know all too well. Our government has responded with an Economic Action Plan that sets out the clear, decisive steps we need to take to protect Canadians from the immediate economic threat, while further strengthening the economic fundamentals essential to support long-term growth and prosperity. This includes initiatives to assist the people and communities that depend on the mining industry for their economic well-being, as well as measures to position the industry for a strong recovery.
Our new Community Adjustment Fund will invest $1 billion over the next two years in local efforts to explore and develop new economic opportunities in communities that have been most affected by the global restructuring. We have extended the 15 per cent Mineral Exploration Tax credit until March 2010, and the accelerated capital cost allowance for business investments in machinery and equipment for another two years. We are further strengthening our financial system with measures such as the $200 billion Extraordinary Financing Network.
These initiatives will provide immediate benefits and reinforce our government’s ongoing efforts to create one of the most competitive tax regimes in the G7 — by 2010, Canada will have the lowest overall tax rate on new business investment of all major industrial nations.
To fully exploit the economic rebound that will occur once demand for minerals and metals ramps up again, government and industry alike must continue to think and act strategically to address some longer term challenges. Our government is moving to address these challenges, which include: insufficient investments in R&D representing missed opportunities to improve our productivity, our environmental performance and the growing demand for green technologies; uncertainty in the regulatory system, which discourages investment and erodes cost competitiveness; and base metal reserves in long-term decline. One example is the new five-year, $100 million public geoscience program that Prime Minister Harper announced in Budget 2008 to map the mineral and energy resource potential of Canada’s North. Results of seven new surveys are available already.
After only a year in operation, the Major Projects Management Office is providing overarching management of the federal regulatory review process for over 40 projects. We are also supporting the industry’s efforts to exercise greater social and environmental responsibility with initiatives such as the “Green Mines Green Energy” research project launched by my department’s CANMET division.
Our recently released Corporate Social Responsibility Strategy provides tools and advice Canadian companies need to meet and exceed the unique social and environmental challenges they face when operating in developing countries.
These are the investments — in people, in knowledge, in systems and in social and environmental responsibility — that are the key to assuring the strength of our mining industry in both the short and long term. With our ongoing commitment to partnership — between an innovative industry and a responsive government — we can assure that this “global mining giant” continues to grow in stature and importance.
The Honourable Lisa Raitt is Canada's Minister of Natural Resources.