Nice neighbours to have
Good neighbours are a real asset, and my family is blessed with great ones. In the same way, towns and cities look on local businesses as their neighbours, and some businesses make better neighbours than others.
A study released on Dec. 6, 2007, shows that a modern mine can be one of the best neighbours a community can have, in terms of direct and spinoff fiscal was prepared by economists Peter Dungan and Steve Murphy from the University of Toronto’s Rotman School of Management, under commission from the Ontario Mining Association.
Every couple of years, the OMA releases a macroeconomic study showing the mining industry’s effect on the province of Ontario, but this study was different: it sought to determine the economic impact of an average mine on its surrounding community, region and the whole province.
What is an average mine? The OMA supplied that data by choosing a nickel-copper-PGM mine with a processing plant, in a mining community somewhat like Sudbury.There are a dozen such mines in Ontario, so their stats were added up and divided by 12 to come up with the specifics of what we’ll call the “Rotman”mine and mill.
The Rotman operation has annual sales of $270 million (all dollars at 2005 purchasing power). Its 480 employees year on average; with pension, total annual compensation cost comes in just under $145,000.
The study divided the life of the mine into two phases: the construction/opening (two to four years) and a 20-to 30-year production phase. In each phase they looked at three groups of impacts: direct, indirect (such as earn $85,000 per benefits, EI, CPP and benefits. The study purchased inputs) and induced (downstream, such as what the employees buy with their wages).
Being economists, the two authors precisely defined their terms (only things that were measurable with a monetary value), ferreted out the data in extreme detail (like using Statistics Canada’s input-output system to trace inputs from 160 industries back to their origins), and erred on the side of being conservative (“our impacts might be too little”).
The study came up with some very impressive numbers. The Rotman mine directly employs 480 during production, but that number swells to 2,280 with indirect and induced jobs. (Employment totals 1,959 jobs in the construction phase.) The direct GDP impact of the Rotman mine during production is $151 million, but with indirect and induced that rises to $278 million, with an additional $84 million spent in taxes. (The total GDP impact during the construction phase is $138 million, with an additional $48 million in taxes.)
That is a lot of numbers to digest and there are many more in the report (Ontario Mining: a Partner in Prosperity Building) at www.oma.on.ca. Note that these amounts are scalable, but they are specific to Ontario.
While there are other important, nonmonetary factors to consider as well, Dungan said that the results of “this study should be part of the input in the decision-process of whether to build a mine.”
At the end of the launch, OMA president Chris Hodgson concluded that the study should be used to guide policy matters in the province, because “large corporations will only go where they are welcome, in jurisdictions that encourage mining.”