Commentary: Fostering new mine development in northwestern Ontario

The following is an edited version of the executive summary from the study Mining in northwestern Ontario: Opportunities and challenges, commissioned by Ambassadors Northwest and written by professors Bahram Dadgostar, Sam Garofalo, Nikola...



The following is an edited version of the executive summary from the study Mining in northwestern Ontario: Opportunities and challenges, commissioned by Ambassadors Northwest and written by professors Bahram Dadgostar, Sam Garofalo, Nikola Gradojevic, Camillo Lento, Karen Peterson and Lakehead University’s Small Business Consulting Services. The 106-page report can be downloaded at

Economically, what are the immediate opportunities and challenges to further developing the mining industry in northwestern Ontario? There are a number of mining projects underway in northwestern Ontario. We focus on nine projects to provide government, Aboriginal peoples, industry stakeholders and community leaders with an estimate of the potential economic benefits immediately available when growth in the mining sector is fostered.

The nine project are Bending Lake Iron Group’s Bending Lake Iron property; Cliffs Natural Resources’ Black Thor project; Goldcorp’s Bruce Channel and Cochenour gold projects; Osisko Mining’s Hammond Reef gold property; Noront Resources’ Eagle’s Nest project; Rainy River Resources’ Rainy River property; Rubicon Minerals’ Phoenix gold project; Stillwater Mining’s Marathon copper-PGM deposit; and Treasury Metals’ Goliath gold project.

These were selected because they are mature, or near the development stage; they have the potential to become producing mines within the next five years; and they have sufficient public data available.


In terms of dollar value, employment and tax revenue, the economic analysis revealed that the potential worth of the mineral deposits in northwestern Ontario is substantial:

There is a total real option value (i.e., the total value of the un-mined metals and minerals) of US$135.4 billion for these nine mines using June 1, 2012, commodity prices.

Employment growth is expected to be significant. The direct, indirect and induced employment created for the province of Ontario is expected to total 23,588 new positions (8,107 from construction and 15,481 from mining operations over an average mine life of 17.5 years). A total of 13,149 of these new positions are expected to remain in northwestern Ontario (5,719 during construction and 7,430 from mining operations).

The potential tax revenue for all three levels of government is conservatively estimated to exceed $16 billion. The federal government, province of Ontario and municipal governments will benefit significantly in terms of corporate taxes, personal income taxes, property taxes, other payroll taxes and indirect taxes, such as sales and excise taxes. These tax revenues will be received over the average operating life of 17.5 years.


Three major issues and challenges facing the development of mining in this region are Aboriginal involvement, labour market dynamics and infrastructure — specifically rail, roads and electrical power.

To enhance the involvement of Aboriginal peoples, we demonstrate that flexible, innovative and collaborative long term solutions are required.

Government and industry can play a critical role in terms of fostering community development, education and training, employment, business opportunities, revenue sharing and developing full partnerships in the mines, energy, other natural resources and its related infrastructure.

It is imperative that the federal government take a leadership role regarding Aboriginal involvement. Recognition of Aboriginal and treaty rights and clearly defined processes for meaningful consultation in relation to the duty to consult Aboriginal peoples would help move agreement-making beyond traditional impact benefits to relationship and partnership building.

Using this approach would help provide certainty regarding land management decisions, as well as maximizing mutual benefit for economic growth and community improvements.

Challenges pertaining to labour market dynamics include a tight labour market, a highly mobile labour force and an aging workforce. Over the next decade, northwestern Ontario would need to attract upwards of 30% to 45% of the entire new entrants to the mining industry. The occupations expected to be in highest demand are the trades, such as underground miners, millwrights, mineral processors, heavy equipment operators and electricians.

Recommendations and strategies to address these challenges include using underrepresented groups in mining (such as Aboriginal peoples and women), developing strategies for high school, college and university students to consider mining as a career option, and creating an industry-wide branding and communication strategy.

Inadequate and limited infrastructure has been a significant factor in hindering the development of the region’s immense economic mining potential.

The development of an integrated transportation, energy and modern communication network is necessary to realize the potential from mining. An expanded infrastructure network will also provide positive economic and social benefits for local communities and Aboriginal Peoples.

For the nine mining projects, it is estimated that capital costs for roads, rail and power line transmission are $1.7 billion. This figure represents approximately 10% of the projected government revenues to be generated by these mines (i.e., $1.739 billion capital costs divided by $16 billion in tax revenues). These capital costs will create hundreds of construction and maintenance jobs that have not been quantified as part of this study. Infrastructure development will also open the province’s northwest region to further developing mineral and metal potential.

A major constraint in operating the nine mining projects is the requirement for over 550 MW of electrical power. Industry stakeholders have suggested that surplus power capacity in excess of 500 MW exists within the current generating stations in Thunder Bay and Atikokan, and that both these thermal generating stations would have to run at full capacity to meet the needs of the mining industry.

The extent of the projected wealth, the positive economic and social benefits and the expected taxes that could be generated by these nine mines is substantial. Operating mines and other advanced exploration projects have not been considered. If these operations are included, a much greater economic impact would result.

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