Mining Needs a Solid Foundation
What a difference a decade makes! Ten years ago, according to many in the Toronto-media and political elite, mining was a sunset industry. Some even thought we should let this supposedly low-tech sector die and allow lesser developed countries to be the primary suppliers of mineral commodities.
Around the world today, emerging markets like China and India are competing with the U.S., Japan, South Korea and other developed nations for access to mineral resources, the basic building blocks of any modern society. We are witnessing a seismic shift of economic power from the west to the rapidly industrializing and urbanizing Asian economies of the east.
Currently, Ontario faces a number of key economic problems, including provincial budget deficits that will not be able to sustain existing social programs. In addition, the south’s manufacturing might, which supported our high standard of living since the 1950s, is under extreme stress due to globalization and a weak U.S. market (the destination of almost 90% of the province’s manufactured goods).
With billion-dollar deficits forecast for many years to come, the mineral industry is one of the few booming sectors of the provincial economy. However, Ontario’s traditional high standing in the well-respected Fraser Institute’s annual mining survey has significantly decreased.
To remedy this, perhaps Ontario needs a visionary northern initiative – a “Mining Marshall Plan” – that will harness the enormous mineral potential located north of the French and Mattawa Rivers.
The original “Marshall Plan” was a large-scale American aid program that helped rebuild war-torn European economies at the end of World War Two.
The following “Mining Marshall Plan” recommendations are a call to action to sustainably develop Ontario’s resource-rich north, which is almost equal in size to Germany, France and Ireland combined.
Ontario needs to help build the necessary key transportation routes to develop the north’s enormous and strategic mineral potential. These include a rail-line to the Ring of Fire mining camp and all-weather highways to replace winter ice roads to isolated Aboriginal communities. The first priorities should be regions with high mineral potential.
Ontario must provide more competitive power rates for mining and refining operations. Both Quebec and Manitoba have lower electricity costs for industry. If Northern Ontario is to prosper, it must be competitive with these two provinces.
Ensure that the processing of major mineral deposits mined in Ontario be done in the province. However, this processing must be done on an economical and competitive basis.
For decades, both Finland and Ireland have used peat-fuel for energy production.Establish a peat research institute at Lakehead University in Thunder Bay, linked to peat expertise in Finland – the global leaders in this field – to ensure the sustainable development of this valuable energy source.
The Far North Act is not liked by northern O Allow the development of peat-fuel as a power source for isolated First Nations communities, the Ring of Fire mining camp and as a partial fuel for the two coal-fired power plants in Thunder Bay and Atikokan. Northern Ontario contains some of the largest peat-fuel deposits in the world and this energy source has significant environmentally sustainable benefits. At a time of global energy insecurity Ontario should develop this renewable energy source.ntario’s Aboriginal communities and most of the general population in the north. Conversely, southern environmentalists praise the legislation. If the Conservatives come to power, the Act will be withdrawn. If the Liberals are re-elected then the implementation of the Act should be very flexible. A thorough geo-science assessment must be conducted of any lands designated for parks, and local Aboriginal communities must be consulted and allowed a veto.
When the private sector commits billions to develop mineral resources, the interest on that capital is enormous. Unnecessary and wasteful permitting delays not only cost mining companies but delay much needed tax revenue to the provincial economy. A reasonably short provincial commission on mining regulation should be established to find environmentally acceptable initiatives to eliminate red tape.
Provincial red tape slows down, and increases the cost of mining projects that can contribute to provincial tax revenues.
There must be an immediate provincial commitment to invest millions for building the necessary infrastructure (working water treatment plants, high quality schools and training facilities, medical centres, and perhaps even motels) in the five First Nations communities closest to the Ring of Fire mining camp. Then over the next decade, repeat this development strategy in the other Aboriginal communities across the north. By increasing the capacity of First Nations communities to significantly benefit from mineral exploration and development – which should be a government, not industry, responsibility – resource conflicts will be reduced.
Northern Ontario is the hardrock mining heartland of the Americas. Sudbury, with its 12 working mines, is the epicentre and is among the top three concentrations of underground mines in the world after South Africa’s Bushveld and the Witwatersrand regions. Consolidate Ontario’s post-secondary mining programs (engineering and geology) at Sudbury’s Laurentian University and turn it into an international Harvard of hardrock mining. This would save the province money by eliminating duplicate programs in universities in Toronto and Kingston.
Northern Ontario has the deepest mine in North America. Xstrata’s Kid Creek mine in Timmins goes down 9,600 feet. Agnico-Eagle’s LaRonde mine near Cadillac, Quebec is at the 9,380 foot level while Sudbury’s Creighton mine is in third place at 7,900 feet. By comparison, the deepest South African gold mines are approaching the 13,000 foot level and the Toronto CN Tower is 1,815 feet high.
The deeper a mine goes, the higher operating costs climb. However, extending the life of a deep mine keeps jobs and economic activity in northern communities. Any mine that breaks the 10,000 foot level in Ontario should be eligible for a tax credit or lower mining taxes. Ontario offers such incentives to mines located in remote locations.
Northern Ontario’s mining supply and service industry is worth approximately $6 billon in sales annually, has over 500 companies located primarily in Sudbury, Timmins, North Bay and Thunder Bay and employ more than 25,000 people. The province should encourage the purchase of mining goods and services on a regional basis from the north. In addition, a significant increase in resources should be committed to further market the region’s mining expertise and services on a global scale.
The multi-million dollar Northern Ontario Heritage Fund should be mandated to only focus on economic development initiatives that may include health care and education.
Ontario should implement a strategic rare earth elements strategy by allowing additional flow-through tax breaks for junior companies exploring for these vital minerals that are essential for modern 21st century manufacturing. Triple the flow-through share tax credit to 15% for companies conducting rare earth exploration.
Currently Ontario provides a 5% flow-through share tax credit for mineral exploration in the province. Both British Columbia and Manitoba offer significantly higher rates. Considering the huge economic dividends from building new mines, Ontario should double its flow-through share tax credit to 10%.
The provincial government should allow mining municipalities to levy a small additional tax (perhaps 0.5%) on the profit of local mining operations that will go directly to host communities for road or water/waste water treatment facilities. Well maintained infrastructure is essential for efficient and profitable mining operations.
Mining in Ontario has one
of the best safety records among industrial sectors. The province should lower Workplace Safety and Insurance Board premiums to reflect this improving safety record.
There is enormous geological potential in Ontario’s vast north. The Ontario Geological Survey has been under-funded for many years. The province must significantly increase geo-science budgets. For every dollar spent on geological mapping initiatives, five dollars comes back to the provincial economy. In every major mining jurisdiction around the world, this is the primary responsibility of the host country.
Currently, most Ontario high school students graduate with no knowledge of the importance of mining to our high standard of living. Introduce a “mining in society” course that is mandatory throughout the Ontario high school system.
Junior mineral exploration companies, the lifeblood of the sector, continue to discover much of Canada’s mineral wealth. More than 50 per cent of exploration expenditures are conducted by the junior sector.
Provincial regulations mandate that the juniors must consult with Aboriginal communities before exploration work begins. However, there is still much misunderstanding of the exact definition of “consultation.” The Ontario government should convene all First Nations chiefs from communities north of the French and Mattawa Rivers and designated representatives from the junior sector to clearly define “consultation.”
Access to land is critical for the junior exploration sector to find new mineral deposits and replenish depleting reserves. Some junior mining companies are now sharing 1.5% to 2% of exploration expenditures (fees) with First Nation communities that actively participate in mineral exploration on their traditional territories. Often these agreements can include the potential for jobs and training. There should be a standardized fee agreed to by all First Nations communities and these fees must be eligible for “Flow Through” share tax credits.
River Parks throughout northern Ontario effectively strangle economic development and create enormous problems for junior exploration as they cross many mineral-rich greenstone belts. Similar to the forest industry, special permits should be available to junior companies to quickly build temporary river crossings that will enhance the search for mineral deposits.
Although the next two initiatives are a federal responsibility, they also deserve mention.
Economic clusters are regional or local groups of related industries and institutions that significantly help create wealth, largely through innovation and the global export of goods and services. Sudbury has four significant clusters focused on mineral production, mining research, mining education and mining supply and services that could be significantly enhanced through federal initiatives.
Relocate the mining activities of the Geological Survey of Canada to Sudbury. The Ontario Geological Survey is already located in the city and the synergy between those two organizations would further enhance the community’s global mining reputation.
Last year, Rio Tinto donated $10 million for underground mining research at Laurentian’s Centre for Excellence in Mining Innovation (CEMI). Vale and Xstrata conduct significant mining research in Sudbury. To further grow the research cluster in this community, the richest mining district in North America, the federal Government should also relocate its mining research initiatives to Sudbury and help create a “Silicon Valley” of the mining sector.
Quebec’s recently announced multi-billion-dollar “Plan Nord” is one of the country’s most visionary northern development plans taking advantage of the international need for minerals. Not only will this initiative help build the necessary infrastructure to allow future resource development, it is also a bold step in helping alleviate First Nation poverty as well as ensuring vital tax revenue for Quebec’s social programs like health and education.
Mining in Ontario is conducted in an environmentally sustainable manner with emphasis on worker safety and Aboriginal consultation and participation.
As an aging provincial population puts more financial pressures on unsustainable health and social programs, combined with a sluggish manufacturing sector, Ontario must look north and develop its vast mineral deposits.
Northern Ontario is geologically rich and immense. There is enough territory to be shared by both environmentalists and the mining sector. To ignore the vast mineral potential of the north would shortchange the entire province, especially the next generation.
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Stan Sudol is a Toronto-based communications consultant and strategist who writes extensively about the mining sector. www.republicofmining.com The views expressed in this article are those of Mr. Sudol and do not necessarily reflect those of Canadian Mining Journal.
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