Mining Marshall Plan for Northern Ontario – Stan S
https://www.republicofmining.com/2011/06/08/mining-marshall-plan-for-northern-ontario-%E2%80%93-stan-sudol/
posted in Northern Ontario Politics, Ontario Mining, Stan Sudol Columns |
Stan Sudol is a Toronto-based communications consultant and strategist who writes extensively on the mining sector. stan.sudol@republicofmining.com
What a difference a decade makes! Ten years ago, according to many inthe Toronto-media, mining was a sunset industry and any modernindustrial country/province should not be in such a supposedly “lowtech” sector. Some even thought we should let the industry die and allowlesser developed and some politically unstable countries be the primarysuppliers of mineral commodities.
At that time, Ontario budgets were only a billion or two in the red,and its manufacturing sector was the cornerstone of a strong economy.Today, emerging markets like China, India are competing with the U.S.,Japan, South Korea and other developed nations for access to mineralresources around the world, the basic building blocks of any modernindustrialized society. The mining sector has become one of the moststrategic sectors of the global economy. And Ontario is a “have-not”province.
Currently, Ontario faces a number of key economic problems includingan aging workforce, crumbling infrastructure and provincial budgetdeficits that will not be able to sustain existing social programs. Inaddition, the south’s manufacturing might, which supported Ontario’shigh standard of living since the 1950s, is under extreme stress due toglobalization, a weak U.S. market – the destination of almost 90% of ourmanufactured goods – and high electricity costs.
Globally, we are witnessing a seismic shift of economic power fromthe west to the booming Asian economies of the east. In the space of onegeneration, China has become the second largest economy in the worldand is forecast to overtake the U.S.A. within two or three decadesaccording to many global think-tanks.
Quebec’s recently announce $80 billion “Plan Nord” is one of thecountry’s most visionary northern development plans that is takingadvantage of this international need for minerals. Not only will thisinitiative help build the necessary infrastructure to allow futuremining and other resource development in that province’s north, it isalso a bold step in helping alleviate First Nation poverty as well asensuring vital tax revenue for Quebec’s social programs like health andeducation.
Ontario is still the largest mineral producer in Canada. The sectoris worth about $10 billion to the provincial economy with half of allmining production centred in the enormously rich Sudbury Basin.Historically, the rapid growth of the hardrock mining industrythroughout northern Ontario and northwestern Quebec was the basis ofToronto’s financial services sector which even today is responsible forapproximately 60 per cent of global mine financing. The province has twoglobally successful mining supply and service clusters located inSudbury and the Greater Toronto Area. In addition, Ontario is recognizedaround the world for its mineral education, research initiatives,environmentally sustainable mining practices and safety standards thatare the envy of the world.
However, Ontario’s traditional high standing in the well-respectedFraser Institute’s annual mining survey has significantly decreased.
With billion-dollar deficits forecast for many years to come, theprovince needs its own northern initiative: a “Mining Marshall Plan”that will harness the enormous mineral potential located north of theFrench and Mattawa Rivers – 90 per cent of Ontario’s geography.
The following “Mining Marshall Plan” recommendations are a call toaction to sustainably develop our vast northern territory, which isalmost equal to Germany, France and Ireland combined:
• Ontario needs to help build the necessary key transportation routesto develop the north’s enormous and strategic mineral potential. Theseinclude a rail-line to the Ring of Fire mining camp and all-weatherhighways to replace winter ice roads to isolated Aboriginal communities.The first priorities should be regions with high mineral potential. Theresulting economic spin-offs throughout the entire province andincreased tax revenues will more than justify these public investments.
• Ontario must provide more competitive power rates for mining andrefining operations. Both Quebec and Manitoba have lower electricitycosts for industry. If northern Ontario is to prosper, we must becompetitive with these two provinces. The primary reason Xstrata closedthe Timmins copper smelter/refinery, moving to an older Noranda facilityand killing about 600 high-paying jobs is province’s high electricitycosts. The subsidized rates should also apply to pulp and paper andother forestry mills.
• Allow the development of peat-fuel as a power source for isolatedFirst Nations communities, the Ring of Fire mining camp, and as apartial fuel for the two coal-fired power plants in Thunder Bay andAtikokan. Northern Ontario contains some of the largest peat-fueldeposits in the world and this energy source has significantenvironmentally sustainable benefits. For decades, both Finland andIreland have used peat-fuel for energy production. Many jobs would becreated in the north, yet various Ontario government ministries areblocking this industry from starting while Newfoundland is activelysupporting the development of their peat-fuel deposits. At a time ofglobal energy insecurity, Ontario should develop this renewable energysource.
• When the private sector commits billions to develop mineralresources, the interest on that capital is enormous. Unnecessary andwasteful permitting delays not only cost mining companies but delay muchneeded tax revenue to the provincial economy. A reasonably shortprovincial commission on mining regulation should be established. Ittakes almost 10 years to build the average underground mine in Ontariodue to an overburden of red tape. Any duplication between the provincialand federal levels should be eliminated. Mining development MUST bedone in an environmentally sustainable manner. However, that developmentcan be done in a much more efficient and cost effective way.
• There must be an immediate provincial commitment to invest millionsfor building the necessary infrastructure (working water treatmentplants, high quality schools and training facilities, medical centres,and perhaps even motels) in the five First Nations communities closestto the Ring of Fire mining camp. Then over the next decade repeat thisdevelopment strategy in the other Aboriginal communities across theNorth. By increasing the capacity of First Nations communities tosignificantly benefit from mineral exploration and development – whichshould be a government, not industry responsibility – resource conflictswill be less likely to rise up.
• Northern Ontario is the hard-rock mining heartland of the Americas.Sudbury with its 14 working mines is the epicenter and is among the topthree concentrations of underground mines in the world. Only SouthAfrica’s platinum producing district, the Bushveld and the Witwatersrandgold mining region have more mines than Sudbury. Consolidate Ontario’spost-secondary mining programs (engineering and geology) at Sudbury’sLaurentian University and turn it into an international Harvard ofhardrock mining to take advantage of the community’s mining expertise.This would save the province money by eliminating duplicate programs inuniversities in Toronto and Kingston. Ensure that Aboriginal outreachprograms entice native students into mining engineering and geology asmost of the new mines in the Far North will be on traditional Aboriginalterritories.
• Northern Ontario’s mining supply and service industry is worthapproximately $6 billon in sales annually, has over 500 companieslocated primarily Sudbury, Timmins, North Bay and Thunder Bay and employover 25,000 people. The province should encourage the purchase ofmining goods and services on a regional basis from the north. Inaddition, a significant increase in resources should be committed tofurther market the region’s mining expertise and services on a globalscale.
• The multi-million dollar Northern Ontario Heritage Fund should bemandated to primarily focus on economic development initiatives that mayinclude health care and education. The Fund should ensure allcommunities have modern, industrial parks to accommodate projectedgrowth in the region’s booming supply and service sector as well asupdated telecommunications and small airport infrastructure across thenorth.
• The Ontario Mineral Deposit Inventory documents more than 200 knownrare element and rare earth element mineral occurrences across theprovince. Ontario should implement a strategic rare earth elementsstrategy by allowing additional flow-through tax breaks for juniorcompanies exploring for these vital minerals that are essential formodern 21st century manufacturing. Triple the flow-through share taxcredit to 15% for companies conducting rare earth exploration.
• Currently Ontario provides a 5% flow-through share tax credit formineral exploration in the province. Both British Columbia and Manitobaoffer significantly higher rates. Considering the huge economicdividends from building new mines, Ontario should double itsflow-through share tax credit to 10%,
• The underground activities of mineral development are impossible totax. This has always caused much concern in mining communities as thesurface facilities that are subject to municipal taxes, are only a smallpart of the operations. Mining activities cause enormous ware on roadand other infrastructure. The provincial government should allow miningmunicipalities to levy a small additional tax (perhaps 0.5%) on theprofit of local mining operations that will go directly to hostcommunities for road or water/waste water treatment facilities. Highmineral prices due to China’s voracious appetite will allow miningcompanies to comfortably absorb this small tax increase, notwithstandingtheir expected “howls” of protest. Well maintained infrastructure isessential for efficient and profitable mining operations.
• Mining in Ontario has one of the best safety records amongindustrial sectors. It has a better safety record than the electrical,pulp and paper, forestry, health care, construction, agriculture andtransportation industries and continues to improve. The province shouldlower Workplace Safety and Insurance Board premiums to reflect thisimproving safety record.
• There is enormous geological potential in Ontario’s vast north. TheOntario Geological Survey has been under-funded for many years. Theprovince must significantly increase geo-science budgets. For everydollar spent on geological mapping initiatives, five dollars come backto the provincial economy. In every major mining jurisdiction around theworld, this is the primary responsibility of the host country. Ontariomust step up and start pulling its weight to remain globally competitiveand attract exploration investment with a long-term, systematic,well-funded geo-science strategy.
Although the next two initiatives are a federal responsibility, Ihave decided to include them in this list. Economic clusters areregional or local groups of related industries and institutions thatsignificantly help create wealth, largely through innovation and theglobal export of goods and services. Internationally respected Harvardprofessor, Michael Porter is a keen promoter of the ability of clustersto drive high valued economic development. Sudbury has four significantclusters focused on mineral production, mining research, miningeducation and mining supply and services that could be significantlyenhance through provincial and federal initiatives.
• Relocate the mining activities of the Geological Survey of Canadato Sudbury. The Ontario Geological Survey is already located in the cityand the synergy between those two organizations would further enhancethe community’s reputation as a cluster of mining expertise around theworld and help establish Laurentian University as a global centre ofgeo-science excellence.
• Last year, Rio Tinto donated $10 million for underground miningresearch 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 richestmining district in North America, the Harper Conservatives shouldrelocate all federal mining research initiatives to Sudbury and helpcreate a “Silicon Valley” of the mining sector.
The urbanizing and industrializing economies of China, India, Braziland many other developing countries are creating a tsunami of metaldemand that current global mineral production will be hard pressed tomeet. The United States, China, Japan and South Korea are all puttingmore recourses towards their strategic mineral stockpiles to ensuresecurity of metal supply for their respective manufacturing sectors.Mining in Ontario is conducted in an environmentally sustainable mannerwith emphasis on worker safety and Aboriginal consultation andparticipation.
As an aging provincial population puts more financial pressures onunsustainable health and social programs, combined with a sluggishmanufacturing sector, Ontario must look north and develop its vastmineral deposits in an environmentally sensitive manner.
In addition, this will provide much needed employment to impoverishedFirst Nations communities with rapidly growing young populations. Themining industry is the largest private sector employer of Aboriginals inCanada and there are many, many success stories across the countryranging from Vale’s Voisey Bay and Xstrata’s Raglan development inQuebec to the Cameco’s uranium mines in northern Saskatchewan and thediamond deposits in the Northwest Territories.
The world is experiencing the biggest commodity super-cycle in thehistory of mankind. According to John McGagh, Head of Innovation, at RioTinto, the world’s third largest mining company, “In the next 25 years,demand for metals could meet or exceed what we have used since thebeginning of the industrial revolution.”
Mark Carney, the Bank of Canada governor has publicly stated, “Eventhough history teaches that all booms are finite, this one could go onfor some time.”
Northern Ontario is geologically rich and immense. There is enoughterritory to be shared by both environmentalists and mining sector. Toignore the vast mineral potential of the north would shortchange theentire province, especially the next generation.