March 2, 2009
Check Against Delivery
Thank you for that introduction.
I am pleased to be here, and extend a warm welcome to everyone – especially those of you visiting Canada for the first time.
The Prospectors and Developers Association of Canada (PDAC) is one of the premier mining associations in this country. It hosts the largest conference on mining exploration and development in the world.
I’m grateful for the opportunity to comment not only on the challenges your industry currently faces but also on the action that our Government is taking with industry and with mining communities to weather the current economic recession.
This collaborative approach will see us emerge from the current downturn to take advantage of the rebound.
As you know, mining is a mainstay of the Canadian economy and is vital to some 150 rural northern and Aboriginal communities across the country.
The industry directly employed over 363,000 people in 2007, and contributed $42 billion to Canada’s GDP from mining to downstream processing.
At the end of 2007, the value of cumulative mining assets of Canadian mining companies worldwide was $80 billion in over 100 countries.
In 2008, Canada had over 1200 junior exploration and mining companies and over 2400 internationally competitive suppliers of equipment, technology and knowledge-based services.
We have achieved this stature because of three key assets:
1. We have a favourable geology and an abundance of accessible mineral deposits.
2. We have developed systems to make Canada attractive for mineral exploration and mine development, with one of the most positive investment climates in the world.
3. And most importantly, we have a highly skilled workforce, a dynamic financial cluster here in Toronto, a strong research capacity and a long history of public geoscience.
But we must strive to address short and long-term challenges to sustain our global leadership.
Today, we face a severe, worldwide economic downturn.
We are being affected by three external shocks:
– a globalized, interconnected recession;
– a global increase in financing costs and challenges over accessing credit; and
– a global decline in the prices of many commodities.
All sectors in our economy have been hit.
And I am very aware of the challenges you are facing here in Canada and in overseas markets and operations.
I have been meeting with industry leaders to talk about how the crisis is affecting you:
-Challenges in accessing credit;
-Reducing operating costs and conserving cash; and
-Speeding up regulatory reviews to have new projects come on-line when the market rebounds.
If not met, these challenges can lead to devastating results in communities dependent on your industry.
I was raised in Cape Breton, where in a few short years our coal mines closed, our steel mills closed and the cod fisheries shut down.
During our Government’s unprecedented pre-budget consultations, we heard over and over about the consequences of mine closures for many communities.
And we recently responded with clear, decisive action in our Economic Action Plan for Canada.
Our Economic Action Plan aims to protect our country from an immediate economic threat while providing the solutions needed to secure our long-term growth and prosperity.
Canada’s Economic Action Plan
Many Canadian communities are dependent on one sole industry thus making them particularly vulnerable to current economic conditions.
Through this Economic Action Plan, our government has committed $1 billion for a Community Adjustment Fund that will help mitigate the community effects of restructuring. This is in addition to $1 billion provided through a Community Development Trust that we established last year to help our communities diversify.
In this plan, our Government is adopting measures that will assist Canada’s mining industry.
We have announced an extension of the 15% Mineral Exploration Tax Credit until March, 2010.
This measure will help junior mining companies access the venture capital they need for financing their exploration activities.
An adequate level of mineral exploration is essential to foster the new mineral discoveries required to maintain Canada’s mining industry competitiveness.
The extension of this Mineral Exploration Tax Credit will further help in maintaining investors’ interest in mineral exploration during current difficult times.
We are also extending the accelerated capital cost allowance for business investments in machinery and equipment for two years.
These initiatives build on similar efforts our Government has made in the past three years to create one of the most competitive tax regimes in the G7.
By 2010, Canada will have the lowest overall tax rate of all major industrial nations on new business investment.
To make investing even more attractive, our Government is providing up to $200 billion through the Extraordinary Financing Framework to improve access to financing for consumers and allow businesses to obtain the financing they need to invest, grow and create jobs.
With $12 billion dollars over two years, we are taking immediate action to accelerate and expand investments in infrastructure.
Medium-term, how to emerge to take advantage of the rebound:
I’m sure you’ll agree that your industry understands the cyclic nature of the economy better than most.
And I need to make it very clear that our Government has confidence in your industry. Mining has played a central role in helping to build this country – and it will continue to be key to building our future.
But future success depends on us – Governments and industry – thinking strategically to take advantage of the economic rebound that will happen when demand for minerals and metals ramp up again, and the markets return to stability and growth.
To do this, we need to look at some of our longer-term challenges:
For example, base metal reserves in Canada are on a long-term decline. This impacts the complete value chain from smelters and refineries to value-added manufacturing and the people that work in these jobs;
Lack of infrastructure development, new international players, long-term shortage of equipment and labour and uncertainty in the regulatory system are eroding our long-term cost-competitiveness;
Insufficient investments in R&D present missed opportunities to improve our productivity, our environmental performance and the growing demand for green technologies;
And lastly, legacy issues and rising expectations for social and environmental performance are perpetuating an unjustified image of mining – one that impacts development and the recruitment of the next generation of industry leaders.
Government and industry must work together to provide:
-A competitive investment climate;
-An effective and efficient regulatory system;
-A world-class capacity for research and innovation;
-Excellence in environmental performance
-Leadership in social responsibility; and
-The most talented and highly skilled work force in the world
Our Government is committed to these objectives. Let me give you some examples:
To improve the investment climate, not only did we present highly competitive tax policies in our Economic Action Plan, but last year’s budget also delivered $100 million for public geoscience to map the mineral and energy resource potential of Canada’s North.
Results of seven new surveys already conducted across Canada – to be released in advance of the 2009 field-season – are expected to help guide mineral exploration activity over the coming months.
To make our regulatory system more efficient and effective, our Government created the Major Projects Management Office (MPMO) just over a year ago. After one year in operation, the MPMO is providing overarching management of the federal regulatory review process for over 40 projects.
To stimulate world class research and innovation, leaders from industry, academia and government have joined forces to create a Canadian Mining Innovation Council. This will strengthen the sector’s competitiveness through research, innovation and commercialization.
For excellence in environmental performance, we are finding synergies between growth and environmental responsibility.
For example, under its “Green Mines Green Energy” initiative, CANMET is conducting research on the possibility of remediating tailings areas with organic wastes to yield agricultural lands for energy crops and biofuel production.
Your industry has also embraced environmental responsibility, witness PDAC’s new Framework for Responsible Exploration and MAC’s Towards Sustainable Mining.
We recognize the positive steps that your industry has taken to improve and demonstrate leadership on corporate responsibility, and our Government has dedicated over $70 million to Aboriginal economic development of which, mining is a central component. This is a great marker of social responsibility.
It’s already happening. We are taking action. But we need to do more and we need to do this together.
To conclude, I want to emphasize my Government’s support for maintaining Canada’s position as a global mining giant.
To succeed in doing this, we must continue to work together in partnership, for both industry and government have essential roles to play.
In fulfilling our role, the Government of Canada has launched its Economic Action Plan, which will protect the jobs of tens of thousands of Canadians.
Moreover, it will continue to reinforce the foundation for long-term success – helping to build a mining industry that can compete both economically and environmentally with anyone in the world – anywhere in the world.