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MAC laments Canada’s declining mining competitiveness

17th February 2017

By: Henry Lazenby

Creamer Media Deputy Editor: North America

     

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VANCOUVER (miningweekly.com) – Canada's mining competitiveness is declining, while exploration and mining investment dollars are flowing offshore, a new report by the Mining Association of Canada (MAC) has found.

“Very simply, Canada is not as attractive as it used to be for mineral investment and competition for those dollars is growing globally. The recent elimination of federal mining tax incentives, regulatory delays and uncertainty, combined with major infrastructure deficits in northern Canada, are all contributing factors that can explain Canada's declining attractiveness,” MAC president and CEO Pierre Gratton said in a press release issued on Thursday.

He believes “the time is now to put the right policy pieces in place to better compete for those investments and regain our leadership in mining”.

While cautious optimism is returning to the global mining industry, which could spur mining companies to make new and significant investments, MAC’s ‘Facts & Figures 2016’ report notes several indicators that underpin Canada’s declining competitiveness.

Foreign direct investment into Canada’s mining sector dropped by more than 50% year-on-year in 2015, the latest full year for which figures are available. This is disproportionate to Canadian mining direct investment abroad, which only experienced a 6% decline, according to the report.

This imbalance indicates that companies are investing in project development, but may be less interested in doing so in Canada. The country also no longer attracts the single-largest share of total global mineral exploration spending, having conceded first place to Australia in 2015. Further, no new mining projects entered the federal environmental assessment stage in 2016. If these trends continue, there will be fewer discoveries made and fewer projects that become operational mines in Canada, MAC warns.

“The policy landscape in Canada is full of uncertainty as we await the outcomes of major government decisions. The federal government is reviewing federal environmental legislation, is implementing a Pan-Canadian climate change policy, and is working to address long-standing transportation and infrastructure issues.

“These are all necessary and positive steps, but they must result in boosting Canada’s attractiveness as a place to do business. At risk is a key sector of our economy, and one that leads the world in sustainable mining practices,” Gratton notes.

SIGNIFICANT EMPLOYMENT
MAC’s report also revealed the mining industry remains a strong contributor to the Canadian economy despite the downturn in 2015. The industry directly employed more than 370 000 people across Canada and remained the largest private sector employer of Aboriginal people on a proportional basis.

Further, 190 000 people worked indirectly in mining, with more than 3 700 companies supplying goods and services to the Canadian mining industry. In 2015, the mining industry accounted for $56-billion of Canada’s gross domestic product and minerals and metals accounted for 19% of Canadian goods exports.

POLICY IMPROVEMENT
The MAC outlined several policy areas that could help improve Canada’s mining competitiveness. This includes improving the federal project review process – the process should be effective and timely, from pre-environmental assessment (EA) to post-EA permitting, with meaningful consultation with Aboriginal communities.

The MAC pointed out that investment in critical infrastructure in remote and northern regions is critical to unlock the country's economic potential. Introducing strategic tax measures and ensuring the new Canada Infrastructure Bank has a strong economic development focus for northern Canada will be key, the association says.

Further, improving access to trade will ensure trade policies provide access to new and important markets, including China, and improve Canada’s transportation network to more efficiently move mineral and metal products to market.

The federal government can address climate change while protecting Canadian businesses, the MAC says. By adopting policies that lead to meaningful reduction in greenhouse-gas emissions, government can, in turn, protect emissions-intensive and trade-exposed industries (EITI), like the mining industry. Failing to protect EITI sectors in this way will result in "carbon leakage" – the shifting of production and the associated economic benefits from countries that are acting on climate, to those that are not.

TECHNOLOGY FORWARDS
Meanwhile, the Canada Mining Innovation Council is seeking a C$50-million investment for the Canadian government's ‘Towards Zero Waste Mining’ innovation strategy, to accelerate the adoption of disruptive technologies that will support the transition to a lower carbon future.

Looking forward, the Canadian mining industry’s economic prospects are strong over the long term, if not uniform, across all commodities. The MAC says the prevailing view is that the longer-term fundamentals are solid.

As the middle classes of the world’s most populous countries continue to emerge, and as their consumption patterns more closely resemble those of western industrialised countries, growth is poised to return.

“These opportunities cannot be taken for granted, however, nor can the robust economic contributions of the sector to Canadians and the Canadian economy. Impending decisions about environmental, Indigenous, transportation, tax and other mineral policies will significantly affect Canada’s readiness to capitalise on and benefit from these opportunities when the next upswing begins,” according to the report.

Edited by Chanel de Bruyn
Creamer Media Senior Deputy Editor Online

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