Once the dominant global mining nation in mineral production, mining finance, mining services and supplies, Canada is falling behind other countries as its competitiveness continues to erode, the Mining Association of Canada (MAC) has warned.
In its latest edition of its yearly ‘Facts and Figures’ report, the MAC warns that Canada is losing out on its ability to seize new opportunities for growth, urging the federal and provincial governments to take action to reverse the trend.
One of the most pressing issues of concern for the mining industry is the decline in mining projects, MAC president and CEO Pierre Gratton said on Thursday.
The report highlights that the value of total projects planned and under construction from 2018 to 2028 has reduced by 55% since 2014, from $160-billion to $72-billion.
Capital investment in the mining sector has declined each year since 2012, with investment intentions for 2018 in line with this trend, falling to $11.1-billion. This, the MAC says, is particularly concerning given mineral and metal prices for a number of commodities have been rising since the start of 2016.
Only four new mining projects, all gold mines, were submitted for federal environmental assessment in 2017 – far below highs seen in 2012 to 2014.
Gratton said that the fall in mining investments underlined the fact that Canada’s economic prospects were uncertain.
“Australia, in contrast, continues to make significant inroads in mining, and in 2017, foreign direct investment (FDI) in Australia was A$315-billion, or 37% of the country's total. In Canada, by contrast, mining FDI was $28.2-billion, or 2.5%, of the total," he pointed out.
"Much needs to be done to boost our domestic and international competitiveness in order for Canada to reclaim its position as the global leader in the mining sector."
The report also highlights that, over the past five years, Canada has lost ranking for 7 out of 16 commodities for which it had been a top-five producer. The country remained the world's top destination for nonferrous exploration spending in 2017, but it continued to cede market share to other jurisdictions, including Australia. This marks the sixth consecutive year that Canada's share of international exploration investment has fallen.
In 2016, InfoMine, a mining database, reported that Australia's identified mining supply sector surpassed that of Canada's, bumping Canada to third place. In 2017, this gap expanded with Australia adding more than 200 firms to its list. In 2018, Canada was trailing by nearly 800 firms, only adding two firms year-over-year.
Mining innovation dollars are steadily flowing out of Canada to countries such as Australia, Germany and South Africa.
"Overall, this report illustrates what we've known for some time. For decades, our industry has been a leader in the production of minerals and metals. A leader in mining services and supplies. A leader in mine finance. A leader in sustainability and safety, but that position is in jeopardy and will be lost without continued, decisive action at both the federal and provincial levels," said Gratton.
He said that the initiatives put forth by federal and some provincial governments were positive, including the renewal of the mineral exploration tax credit for a five-year term, enhanced accelerated capital cost allowances and in the Canadian minerals and metals plan.
Despite these concerns, the MAC points out that the mining industry remains a strong contributor to the economy.
The mining industry directly employs 426 000 workers across the country in mineral extraction, smelting, fabrication and manufacturing, and indirectly employs an additional 208 000.
In 2017, the minerals sector directly and indirectly contributed $97-billion, or 5%, to Canada's total nominal gross domestic product.
The average pay for a mining worker in 2017 exceeded $117 000 a year, which surpassed the average earnings of workers in the forestry, manufacturing, finance and construction sectors respectively.
The TSX and TSX-V are the world's number-one mining and exploration listing venues, where nearly one-third, or $8.5-billion, of the world's total equity capital was raised in 2017.