Established in 1980, Northern Ontario Business provides Canadians and international investors with relevant, current and insightful editorial content and business news information about Ontario’s vibrant and resource-rich North. This article was published in the October, 2010 issue.
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Uncertainty in regulations and land tenure worries miners
Ontario may promote itself as being among the best mining jurisdictions in the world, but some industry executives polled in a Fraser Institute survey are second-guessing that blanket statement. A special mid-year report penned by researchers Fred McMahon and Miguel Cervantes raises some red flag issues for investment.
Confidence in Ontario continues to sag due to respondents’ concerns over government policy, dealings with First Nations, and uncertainty over whether a big chunk of Ontario’s untapped mineral resource will be set aside for protection.
“Mining is a long-term endeavor,” said Fred McMahon, vice-president of the Vancouver-based international public policy think tank. “That kind of instability is very damaging.”
Some mining companies accused the McGuinty government of trying to
“kill Ontario” and hinted that antimining environmental activist groups
have considerable weight in shaping public policy.
As commodity prices improve, Mc-Mahon said governments, unions and non-government organizations are finding mining an easy target to tear up existing agreements, drive up costs, and introduce “predatory taxes” that cause instability in investment.
McMahon said these dramatic changes in recent months prompted the Fraser Institute to release its firstever mid-year report card in August.
The survey revealed that as commodity prices recover, 41 of the 51 jurisdictions that miners operate in internationally are becoming “more hostile” and more costly to do business because of new regulatory hurdles and taxes. Alberta, Quebec, Yukon, Saskatchewan, Newfoundland and Labrador were ranked in the top 10 mining jurisdictions in the world.
Compared to a Fraser survey released earlier this year, Ontario edged up marginally in the world rankings from 22nd to 20th.
Quebec, which ranked first earlier this year, dropped to third due to an increase in mining taxes, which companies claim was done without consultation, and worries over pending legislative changes in that province’s mining act.
What’s keeping Ontario down in the rankings is the uncertainty over which lands are being set aside for protection as wilderness or parks.
McMahon had no idea if it’s related to the Ontario government’s controversial Bill 191, the Far North Act which has provoked universal negative reaction from communities, business and First Nations.
There is also concern by miners in their dealings with First Nations and their demands.
Some mining companies accused the McGuinty government of trying to “kill Ontario” and hinted that antimining environmental activist groups have considerable weight in shaping public policy. One said his company would not invest in the “USA, Australia or Ontario.”
The Ontario government’s handling of the controversial Platinex case — where the junior miner surrendered its claims for its base metal project in northwestern Ontario, and dropped lawsuits against the province and a local First Nations band — drew the ire from the head of one unidentified mining company.
The executive said the “uncertainty due to Native demands makes (land) title difficult” and the province’s settlement with Platinex “was bad” and has thrown the whole land title system into question.
The responses weren’t all bad. One company president responded with “nowhere it is easier to work than Ontario” and called the support from all the ministries “great.”
Companies operating in Ontario believe that attitudes toward their industry were becoming “more hostile,” a perception that pushed the province down in the rankings, slightly better than Zimbabwe, the Congo and Bolivia. “It’s not good for Ontario,” said Mc-Mahon.
He added companies are generally concerned that the urban media is only too willing to pick up on “any antimining screed” of environmental groups that are “dogmatically opposed to mining McMahon said the mining industry has to do a better job of defending itself. “Mining has not been particularly good at getting its side of the story out.” McMahon said all industry wants is transparency with a predictable regulatory regime.
He said with companies investing millions before they start to turn a profit, “they need to know what the rules and regulations are, and that they’ll be stable over time.
“Everyone from the most gung-ho miner to the most committed, but sincere, environmentalist should want to see certainty in regulation. Good projects that meet the rules, that create prosperity and jobs, get the go-ahead, and bad projects get rejected.”
McMahon said the survey questions are kept simple and general in nature to encourage feedback. He acknowledges the responses certainly beg for more in-depth follow-up inquiry.
“Why miners believe it’s become more hostile, the survey doesn’t answer.” Peter McBride, manager of communications for the Ontario Mining Association, said in an e-mailed response that while Ontario’s 20th ranking on the report card “does leave room for improvement, it is up to us to work on the government to help move the province closer to the top of this yardstick of mineral investment attractiveness.” McBride added the perceived public image of mining, rules and regulations “are precisely why we need to work with government to bring about positive changes.”