Paul Stothart is vice president, economic affairs of the Mining Association of Canada. He is responsible for advancing the industry’s interests regarding federal tax, trade, investment, transport and energy issues.

The climate change issue has always been unique among environmental challenges in that, more than any other issue, it is a direct byproduct of our modern lives.

Other high profile environmental issues generally have a limited set of contributors and an obvious choice of fixes. Depletion of the stratospheric ozone layer, for example, implicated emitters of chlorofluorocarbons and was addressed through technological improvements to air conditioners and refrigerators.

Acid rain was caused by pollution from a relative handful of coal-fired power plants and smelters and was addressed through introduction of technologies to reduce sulphur dioxide emissions. Local water pollution problems, such as in the Great Lakes or nearby rivers, also offer relatively easy solutions—invest in better wastewater treatment, some new storm sewers, and a few marine regulations, and the problem is on the way to resolution.

Unfortunately, climate change does not hold the promise of such an easy fix. Indeed, in one critically important respect, it resides at the opposite end of the spectrum from previous environmental challenges. Simply put, climate change is caused not by a few “bad actors” but by the everyday actions of average people.

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December 18, 2008
The Honourable James Flaherty
Minister of Finance
Finance Canada
L’Esplanade Laurier
140 O’Connor Street
Ottawa, ON K1A 0G5

Dear Minister Flaherty:

I would like to take this opportunity to provide you with the views of the Canadian mining industry in light of the significant turbulence that has affected our sector and the broader global economy in recent months. This follows from our earlier letter, sent to you on August 15th.

The Mining Association of Canada (MAC) is the national organization of the Canadian mining industry, comprising companies engaged in mineral exploration, mining, smelting, refining and semi-fabrication. As detailed in our earlier letter, the industry contributed $42 billion to Canada’s GDP in 2007, employed 363,000 workers in the four phases and paid approximately $10 billion in taxes and royalties. While important in remote and northern communities, the industry also generates prosperity in our cities – for example, Toronto features a hub of expertise in mining finance, Vancouver in exploration, Montreal in aluminium and iron ore, Edmonton in oil sands and Saskatoon in uranium and potash. Over 3000 suppliers draw benefit from the industry, including engineering and environmental firms, railroads, ports, and equipment companies.

The mining industry has been severely impacted by the major dislocations seen in the global economy since September. The global nickel price has fallen from over $16 per pound in 2007 to less than $5 at present. Uranium has fallen from $99 to $55, aluminum from $1.20 to $0.80, and copper from $3.20 to $1.70 per pound. US market demand has plummeted and Chinese market demand shows negative signals. Canadian operating mines have been closed, planned mine expansions have been deferred or cancelled, and investment in processing facilities has been postponed. Many important companies have seen stock price declines exceeding 50% and in some cases over 90% – all firms are engaged in serious cost-control measures.

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www.mining.ca

The Mining Association of Canada (MAC) is a national organization of the Canadian mining industry.  The organization comprises companies engaged in mineral exploration, mining, smelting, refining and semi-fabrication.  Member companies account for the vast majority of Canada’s output of metals and major industrial minerals.
 
Based in Ottawa, the Mining Association of Canada was originally incorporated as “Canadian Metal Mining Association” under the Companies Act of Canada with Letters Patent granted on January 16, 1935.

MAC’s mission is to promote, through the collective action of members, the growth and development of Canada’s mining and mineral-processing industry, for the benefit of all Canadians. The Association’s broad functions are to promote the interests of the industry nationally and internationally, to work with governments on policies affecting minerals, to inform the public and to promote cooperation between member firms to solve common problems. The MAC works closely with provincial and other industry groups across Canada and in other countries.

The primary role of MAC is the presentation of industry information and views to the federal government. Over the years, ongoing representations have been made to succeeding governments and parliamentary committees.

MAC believes that a constructive business environment in Canada depends on public understanding of Canada’s major industries.
The organization also provides information about the mining industry to the media and to schools, libraries and other publics. Aside from responding to many enquiries, MAC has an extensive publications program.

The Canadian and international mining industries are enjoying buoyant times. As shown in the adjacent table, while the specific figures vary by mineral, overall prices have grown by roughly two-fold to five-fold over the past five years.

In some instances, prices have continued to increase through 2007. Gold, for example, has increased in value by another 35 per cent since 2006 — to around $850 per ounce. Copper is expected to climb another 50 per cent to 450 cents per pound in 2008 according to Bloomsburg projections. Nickel and zinc prices generally levelled off or declined in the latter part of 2007.

At these high price levels, exploration spending, both globally and in Canada, has increased significantly as companies seek to find new mineral reserves. Global exploration spending has grown exponentially from $2.4 billion in 2003 to $10.5 billion in 2007.

Merger and acquisition activity has also exploded in recent years. In Canada, Xstrata bought Falconbridge for $20 billion, CVRD bought Inco for a similar amount, and Rio Tinto bought Alcan for $38 billion. Read the rest of this entry »