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. www.mining.ca This column was originally published November, 2009.

Late summer and fall are always busy times for the mining industry on the economic policy front. Typically, the Mining Association of Canada releases its annual “Facts & Figures” report in August and also prepares a formal industry submission in advance of the meeting of federal, provincial and territorial energy and mines ministers held each fall. The federal government’s pre-budget process also starts in late summer, launched with a submission deadline set by the Finance Committee. The key messages reflected in MAC’s ministerial comments, pre-budget views and “Facts & Figures 2009” follow.

The mining industry is important to the economy

The industry, as defined by Natural Resources Canada, contributes $40 billion to Canada’s GDP, employs 350,000 people, pays approximately $13.5 billion in taxes and royalties, contributes 19 per cent of Canadian exports and generates business for 3,140 supplier companies. It creates value in urban, rural and remote regions and its products are fundamental to modern life and to the emergence of clean energy technologies.

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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. www.mining.ca This column was originally published January, 2009.

Few subjects are receiving as much attention in the daily media as that of our societal need to move towards a clean energy economy. This theme was fundamental to the platforms of all the Canadian federal parties in the recent election — each featuring an array of programs supporting this transition.

In the United States, the platform of President-elect Obama talks extensively of hybrid vehicles, electricity from renewable sources, low carbon standards and the ultimate objective of eliminating oil imports from the Middle East and Venezuela within a decade. Republicans in Washington talk of nuclear power, carbon capture and sequestration and battery development, among other initiatives.

Beyond the political and media coverage, it is evident that few subjects offer comparable transformative potential as changes to the world’s energy infrastructure. Developed economies have been driven for two centuries by the industrial combustion of fossil fuel — indeed there has long existed a direct macro-economic correlation of living standards with per-capita energy consumption.

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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. www.mining.ca This column was originally published October, 2009.

The development of the western oil sands constitutes one of the world’s most significant economic stories of recent decades. Technological advances and increases in crude oil prices from $20 per barrel in the 1990s to $140 in mid-2008 together reinforced the oil sands’ economic viability and, through hundreds of billions of dollars of investment, sustained its production growth from test-well quantities to volumes exceeding one million barrels per day.

As with any source of energy, the process of extracting oil from oil sands raises a range of environmental issues. Its rapid development has served to position this sector as target number one among some environmental groups. In this respect, it is important that NGOs and public policy stakeholders not ignore some key realities.

Economic contribution

Oil sands development has increased wealth and economic activity in western Canada during the past decade, creating 200,000 jobs, including many in central Canada that helped to offset job losses in the manufacturing sector. It is also estimated that each direct job translates to nine additional jobs among suppliers and indirect beneficiaries. Read the rest of this entry »

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. www.mining.ca This column was originally published December, 2009.

There are a number of interesting public policy issues surrounding Canada’s mining industry relating to areas such as social license, tax competitiveness, tailings management, air pollutants, land access and Aboriginal relations. One emerging policy issue that has not attracted much attention in the industry or media relates to a growing movement towards raw materials protectionism by a number of developing countries, most significantly China.

At the root of the raw materials protectionism issue is the fact that many countries are engaged in a battle to secure a steady, or better yet, growing supply of raw materials. Towards this end, any key raw materials that these countries can get their hands on, in the form of concentrate, scrap or recycled material, are jealously guarded.

In the case of China, a broad array of export taxes, quotas and licensing requirements are used to obstruct raw materials exports so as to ensure the maximum supply for domestic usage.

According to a study by ITS Global consultants, in recent years these measures have been used to maximize domestic supply of aluminum, antimony, bauxite, nickel, scrap, iron ore, coal, coke, platinum, copper, tungsten, zinc, manganese, molybdenum and rare earth elements.

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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.

Few subjects are receiving as much attention in the daily media as that of our societal need to move towards a clean energy economy. This theme was fundamental to the platforms of all the Canadian federal parties in the recent election — each featuring an array of programs supporting this transition. In the United States, the platform of President-elect Obama talks extensively of hybrid vehicles, electricity from renewable sources, low carbon standards and the ultimate objective of eliminating oil imports from the Middle East and Venezuela within a decade. Republicans in Washington talk of nuclear power, carbon capture and sequestration and battery development, among other initiatives.

Beyond the political and media coverage, it is evident that few subjects offer comparable transformative potential as changes to the world’s energy infrastructure. Developed economies have been driven for two centuries by the industrial combustion of fossil fuel — indeed there has long existed a direct macro-economic correlation of living standards with per-capita energy consumption. Societies that have been able to efficiently generate and transport energy from fossil sources have become far wealthier than those that cannot. To shift away from this dependency, even in a gradual manner, requires major changes in our underlying financial, fiscal and technological practices.

The market potential for new products and technologies associated with such a shift is staggering.

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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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 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.

During the past five years of strong growth in mineral prices, the mineral exploration community in Canada has been facing an increasingly difficult challenge — namely, how to find resources in promising northern regions where underlying mineral data is either weak or non-existent.

The federal government has been under-investing in its geological mapping responsibilities for some 20 years, with annual spending declining from $98 million in 1988 to $50 million in 2007. This decline has been equally dramatic at the provincial and territorial government levels. One interesting consequence of this neglect is that some 73 per cent of Nunavut, for example, is unmapped or poorly mapped and, at present investment levels, the first full mapping of the territory would not be finished for 80 years.

Given such a weak foundation of data, private companies are less able to undertake effective exploration programs. While exploring for minerals is, to some extent, akin to “searching for a needle in a haystack,” it is the public policy investment in basic geological survey work that allows those accessing the data to at least find where the haystacks are. In view of the high level of interest in diamonds, uranium, base metals and other northern resources, one must question the public good served by this pattern.

Questions of national sovereignty in the North are also raised by this under-investment.

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Paul Stothart - Vice President, Economic Affairs - Mining Association of Canada

For a number of reasons, natural resource development in the Canadian North is emerging as one of our country’s most exciting economic policy issues. Climate change, the human resources gap, high mineral prices, potential economic benefits to aboriginal groups, northern sovereignty, and the efficiency of environmental review processes are among those national issues that are closely integrated with northern resources and that will influence the pace of development.

The relationship between natural resources and northern development has been hit and miss throughout Canada’s history. It presently remains very unclear whether the necessary array of variables will fall into place, leading to a sustained boom in northern economic development, or whether key pieces will go missing and the full long-term economic potential will again be missed. In this sense, one could logically have either an optimistic or pessimistic take on future developments.

On the positive side, there are three general variables that should lend an air of optimism. First, the level of mineral exploration spending underway in northern Canada can best be described as staggering. Driven by historically high global mineral price levels, companies will spend some $440 million in the three northern territories on mineral exploration and deposit appraisal in 2007, up from $160 million five years earlier. Approximately one of every 20 dollars in mineral exploration worldwide is being spent in the three Canadian territories. Companies are seeking potential developments in uranium, diamonds, gold, and other minerals in northern Canada.

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Paul Stothart - Mining Association of Canada

Few energy sources attract the controversy that is associated with nuclear energy and the fuel it requires – uranium. The spectre of potential radioactive accidents and leakages has long been presented by environmental groups as a cause for opposition, as has the technical and social challenge of long-term waste management. A number of governments over the years, ranging from nations such as Germany to provinces such as British Columbia and Nova Scotia, have introduced policies specifically prohibiting uranium mining and/or nuclear reactor development.

Available evidence suggests that these opponents are generally engaging in exercises of political hypocrisy. No energy source is without environmental and social consequence. Fossil fuel combustion has links to smog, acid rain and attendant health concerns. Wind energy requires large land masses, creates noise pollution and poses a hazard to birds — all to generate minor amounts of unreliable power. Hydro-power requires large-scale flooding, ecosystem destruction and resultant mercury releases. Even supposedly clean ethanol is proving to be disruptive to world food prices while presenting a marginal (or by some studies, negative) benefit regarding greenhouse gas (GHG) emissions relative to gasoline. On the health and safety front, in terms of worker and population impacts, few if any major energy sources measure up to the record of nuclear energy.

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Paul Stothart - Mining Association of Canada

Arguably the single most significant development in the Canadian economy over the past decade has been the emergence of the western oil sands as a creator of jobs, exports, tax revenues, and wealth.

Technological advances since the 1970s have made the recovery and processing of oil sands financially feasible. Increases in world oil prices, from the $20 to $30 level of decades past to the $60 to $70 range today, have further enhanced the economic viability of these projects. Political rhetoric about Canada as “an energy superpower” and talk of “reserves larger than Saudi Arabia’s” speak to the emergence of the oil sands.

It is difficult to over-state the magnitude of this development. On a macro scale, it has served to increase wealth and economic activity in western Canada. On a micro scale, the city of Fort McMurray has grown from a population of some 20,000 two decades ago to 75,000 today. The 200,000 jobs that have been created in the oil sands over the past decade is of similar magnitude to the job losses seen within the central Canadian manufacturing sector— in effect creating a job cushion for the entire country.

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