The Government of Ontario established the Ontario Mineral Industry Cluster Council (OMICC) in 2003. The OMICC mandate is to lever Ontario’s current mineral industry assets to create a larger and more globally competitive cluster and to foster a sustainable and rising standard of living. The OMICC is co-chaired by Jim Gowans, President and CEO of De Beers Canada Inc. and Warren Holmes, Chairman, Nuinsco Resources Limited.
The following OMICC policy response has been sent to key Liberal Cabinet Ministers in the McGuinty Government:
Ontario Mineral Industry Cluster Council’s Position on Protecting a Northern Boreal Region
On July 14, 2008, Premier Dalton McGuinty announced the protection of 225,000 square kilometres of the far north boreal region under its Far North Planning Initiative. On behalf of the Ontario Mineral Industry Cluster Council (OMICC), we are pleased to submit OMICC’s position on the announcement and its potential impact on the Ontario economy, the communities, the industry and Ontario’s reputation as a preferred destination for mining exploration and development.
The OMICC, a provincial organization is mandated to foster a sustainable and rising standard of living from Ontario’s rich mineral endowment and lever the current mineral industry assets to create a larger and more globally competitive cluster of mineral and related industries. Members represent a range of mineral related industries, businesses, associations and organizations.
We find it encouraging to note that the Government of Ontario, as part of its Far North Planning initiative, has demonstrated its commitment to work with Northern communities and the mining companies to create opportunities for economic development and to ensure that the mining industry remains strong. You are well aware of OMICC’s strongly held position that responsible development of Ontario’s mineral wealth must ensure full and fair opportunities for the province’s First Nations to participate in all phases of the mining cycle and benefit from resource revenue sharing.
OMICC commends the government for taking definitive action to respond to the potential consequences of climate change. We share this concern, as witnessed by commitments that companies in the mining sector have made toward reducing the total quantity of greenhouse gases emitted from extraction and processing activities. We believe that properly managed exploration programs, should have little, if any, long-term impact on the environment.
OMICC is supportive of the preservation of 50% of Ontario’s boreal forest, and thinks there are ways to achieve this objective while at the same time allowing Ontario’s vibrant mineral exploration and mine development to continue to work in this area. We urge the provincial government to carefully consider the concept of “flexible planning” in establishing criteria for an extensive network of preserved areas in Ontario’s boreal region. There will obviously be areas where critical ecosystems need to be preserved, but with the vast area of the boreal region under-explored, a potential source of future economic value to the province of Ontario is critical to have flexibility in the allocation planning.
We take this opportunity to outline the factors and the consequences which must be considered in land use planning and propose recommendations which recognize the importance of preserving the long-term viability and integrity of Ontario’s boreal region while minimizing the adverse impact on the economy, the communities and the industry.
Factors:
We stress the importance of the following factors as the government undertakes land use planning:
1. Cluster of Related Industries and Organizations – There is more to mining than mineral extraction and processing. Mining has many other important links to other industries and sectors in the economy, including banking, geology, transportation, remote sensing, mine construction, drilling technology, legal services, and environmental management just to name a few. Mining is about a “cluster” of mineral related industries and businesses that together make a significant joint contribution to Ontario’s economy. Four hundred junior exploration companies, 5,500 prospectors, 400 mining related equipment and technology suppliers are located in Northern Ontario and the 800 exploration projects in Ontario create jobs and bring investment to Ontario.
A University of Toronto study, commissioned by the Ontario Mining Association shows that the benefits from opening one mine per year include millions of dollars of tax revenue for government and the creation of a number of highly skilled, high paying jobs. These benefits are shown to be worth: $277.8 million/annum in direct, indirect and induced benefits; 2,280 employment-years of direct, indirect and induced opportunities; and $83.8 million in taxes to all levels of government each year. The construction and building phase of one mine will increase GDP by $130 Million and 1,959 employment opportunities.
The opening of ten new mines in serviced areas, over a ten year period, would result in an economic contribution of $1.4 billion during construction phase and $2.8 billion during the production phase and would have significant impact on the northern and provincial economies. Further economic gains would also be made through the construction of infrastructure to support the opening, operation, closing and rehabilitation of the mine.
Another example of the contribution of a mine is Ontario’s First Diamond Mine which is expected to make a significant economic contribution—some Cdn$6.7 billion total GDP impact over 12 years (Cdn$4.2 billion in Northern Ontario). De Beers Canada Inc. has taken concerted positive steps to reach out and employ Aboriginal people in its operations, and is committed to sustainable development.
2. First Nations Communities – Mineral resource development in Ontario is important to the economic well being of Aboriginal communities, especially in the Far North. Northern communities themselves have recognized this, as shown by the ever-increasing numbers of Aboriginal peoples who are directly employed in the exploration and mining industry or in mining-related businesses. In the Far North communities, mineral resource development is one of the few economic activities capable of creating employment opportunities. The mineral industry is Canada’s largest employer of the First Nation’s peoples.
3. Mineral Exploration is Capital Intensive – Mineral exploration and development are highly capital intensive and the capital is mobile. If mining companies don’t have access to land for exploration, investment will be taken to where it is easier to access land.
4. Mineral Exploration is High Risk Business – The mineral exploration business is characterized by high cost, high risk and uncertainty. For example, about 1 mineral exploration project in 10 is taken to the drill stage and 1 drill program in 1000 finds a viable mineral deposit; hence, less than 1 project in 10,000 becomes a mine. Mining has a minimal environmental impact or footprint on any area. While this might not have been true historically, the change in the environmental performance by the industry has been dramatic. If done properly, mineral exploration is not more harmful to the environment than hunting, fishing, trapping or tourism. It should be permitted over all but the most environmentally sensitive areas. There were some 800 exploration projects in Ontario in 2008. If these numbers are to rise and increase the likelihood of new mines opening here, the industry needs encouragement, not the loss of access to land.
5. Declining Base Metal Reserves – Ontario’s Mining industry has raised its concerns about the decline in base metal reserves and the need to promote exploration to offset this trend. The significant decline in Ontario’s nickel, zinc and copper reserves has created a gap between the production level and the replacement of reserves by the discovering of new deposits. The gap can only be closed by a significant increase in the level of exploration activities. Unless new discoveries are made, reserves for many base metals may be significantly depleted and this may lead to closure of smelters and refineries and the loss of part of the existing infrastructure advantage.
6. Ontario Lagging Behind – The mineral industry has raised its concern about the decline in base metal reserves and the need to increase exploration to offset this trend. The significant decline in Ontario’s nickel, zinc, gold and copper reserves have created a gap between the production level and the discovery of deposits. Exploration expenditures have not kept up with its market share compared to other Canadian jurisdictions while exploration expenditures for B.C., Saskatchewan, and Manitoba have more than doubled in the recent years.
7. Environmental Stewardship – The mining industry in Ontario now spends approximately $85 million annually on environmental protection, environmental improvement and pollution prevention. In the early 1990s, $1 billion was spent on sulphur dioxide abatement programs in Sudbury alone. The mining industry in Ontario is proactively and constantly striving to clean up environmental legacy issues of the past and to improve the way it operates so as to leave less of a mark on the land, to prevent pollution, reduce energy consumption and encourage the increase of metal recycling. The mining companies’ commitment to preserve the environment and rehabilitate closed mines to a natural environment is illustrated in the rehabilitated mines calendar which profiles 12 rehabilitated mines in Ontario. (Photos of the 12 rehabilitated mines can be seen at www.omicc.ca).
8. Distinctive and Unique Nature – The changes in societal interest, industry expertise and the government regulatory environment all have combined to create a very environmentally responsible industry. OMICC recognizes the importance of protecting the long-term viability and integrity of Ontario’s boreal region. On the other hand, industry needs access to land in order to find the resources that are economical to develop. It is not possible to outline these definitively without doing years of investigative work. Given the potential of resources to stimulate economic activity in these areas, it is critical that the province not declare any area off limits for mineral exploration and development. Mineral exploration and mine development should not be counted among the activities that have become forbidden in a large fraction of the boreal region. Exploration and mine development have a small ecological footprint and is only a temporary use of the land.
9. Mineral Exploration as a Building Block – Exploration serves as a building block for the entire mining cycle—no exploration, no discovery—no discovery, no new mine—no new mine, a decline in production and a decline in demand for all of the equipment and services associated with mining in communities throughout the province.
10. Large Land Mass Untapped – About 5% of Ontario has been explored to a reasonable extent, but less than 1% of the Far North, which leaves a great deal of land yet to be explored. The vast, prospective and unexplored geology holds great promise for exploration, mine operators, suppliers and financers to discover and develop new mines.
Consequences:
The consequences of prohibiting mineral exploration and mine development in 50% of Ontario’s boreal region, as the government intends, reach far beyond the mineral industry. They range from: adverse impacts on the aboriginal communities in terms of loss of employment and development opportunities; the potential loss of exploration expertise to other jurisdictions; a continued decline of base metal reserves in Ontario, decline of Ontario as an attractive investment destination and impacts on Ontario’s economy as a whole.
Recommendations:
We reiterate our strongly held position that the Government of Ontario announce soon an annual contribution of $50 million as a down payment toward resource revenue benefits sharing, and contribute 1% of gross revenue from all new mines (post government announcement of the Fund) to the Fund which was expected to be announced in the fall of 2008.
We urge the government to develop a new approach to land use planning that recognizes the unique and distinctive nature of the minimal impacts that potentially result from mineral resource development.
We propose that the Government of Ontario establishes targets for opening new mines. As mentioned, a single mine creates new jobs, business opportunities, and builds infrastructure. The Ontario Mining Association projects 10 new mines in the Far North would create 4,800 direct jobs paying $145,000 per person, per year and 18,000 indirect jobs paying $48,000 per person, per year. Annually these mines would provide $840 million in tax revenue, with $326 million being the province’s share, and they would contribute $2.8 billion to Ontario GDP during production phase and $1.4 billion during construction phase.
We submit that government focus on preservation not merely on protection. This shift to preservation will protect the long term viability and integrity of Ontario’s boreal region and at the same time will allow the mineral exploration and development to continue to grow. This will allow the exploration for and development of viable deposits, contributing to sustainability of the Far North.
Concluding Remarks:
OMICC believes that flexibility in allowing mineral exploration and mine development in Ontario’s boreal region, while ultimately setting aside about 50% of the area to achieve the objectives of the Far North Planning Initiative, is critical. Clearly the absence of mineral exploration and mine development activity is unlikely to make a meaningful difference in our collective efforts to respond to climate change. In addition, policy decisions that deny Ontarians the opportunity to responsibly avail themselves of their mineral heritage could have adverse implications for the economic diversification and long-term sustainability of Northern communities.
We believe that our recommendations are consistent with and will promote the continued exploration and development of the province’s mineral endowment in an environmentally, socially and economically sustainable manner.
We trust that you, Premier McGuinty and your cabinet colleagues, will find the OMICC’s position instructive as your government proceeds with the Far North Planning Initiative. We would be pleased to answer any questions or provide further information that might be of assistance.
Thank you for the opportunity to contribute to this important initiative. We are committed to work with the government and the First Nations to maximize the utilization of the province’s rich mineral endowment to create prosperity for all Ontarians while preserving our environment and respecting our heritage.