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Challenging year in store for Canadian miners – MAC

5th February 2015

By: Henry Lazenby

Creamer Media Deputy Editor: North America

  

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TORONTO (miningweekly.com) – The year ahead will be challenging for the Canadian mining industry, despite a positive long-term outlook for Canadian metals and minerals, a new report by the Mining Association of Canada (MAC) has found.

The organisation’s ‘Facts & Figures 2014’ report released Wednesday revealed that the mining industry contributed greatly to the Canadian economy in a number of essential ways.

"The cyclical nature of our industry means that mining companies are no strangers to the ups and downs in the global market. In the current economic environment, the industry is focused on reducing costs, improving productivity and preparing for the next upswing," MAC president and CEO Pierre Gratton advised.

The report, which drew on the most recent data available from the federal government (mostly 2013), found that despite the volatility seen over the last couple of years, Canada's mining sector contributed $54-billion to the national gross domestic product (GDP) in 2013, up from $52.6-billion in 2012. Mining industry exports accounted for 19.6% of the Canadian total in 2013, which was down slightly from the 20.4% seen the previous year.

A bright spot remained the industry's strong employment figures. According to Natural Resources Canada definitions and data from Statistics Canada, the mining industry employed more than 380 000 people in 2013, accounting for one in every 47 jobs in Canada.

Further, more than 3 400 companies in the country supplied goods and services to the industry, which further extended the economic and employment reach of the Canadian mining industry.

A recent study released by the Canadian Association of Mining Equipment & Services for Export found that in Ontario alone, the mining supplier industry represented 68 000 jobs, contributed 1% to Ontario's GDP and $1.5-billion in government tax revenues.

The MAC pointed out that, however, there were some indicators that revealed that Canada's mining industry might have lost ground recently.

In 2013, exploration investment fell year-over-year by 41% to $2.3-billion. Spending intentions for 2014 expected investment levels to drop even further to $2.1-billion, approaching the low of $1.9-billion seen in 2009, during the global recession.

Notably, in 2013, Canada slipped from being the world's top destination for exploration spending – a position it held for the last decade – to the second spot behind Australia. Exploration spending is an important measure of the financial health of the mineral exploration sector and also assists in predicting the future of Canada's mineral production.

MINING CHALLENGES
The MAC pointed out that the state of the global mining economy was one of the most significant challenges the mining industry had to come to terms with.

Recent uncertainty over the short-term global economic outlook, particularly the softening of China's growth, caused commodity prices to decline in 2014 and volatility was expected to persist in the year ahead.

Despite challenges, the prevailing view was that the industry's economic prospects over the long term remained strong, especially as the middle classes of China, India and other emerging nations continued to grow. 

"Opening the industry to new and growing markets for Canadian minerals and metals is crucial for the industry to thrive. The federal government should continue its robust trade agenda by establishing trade, investment and double taxation agreements, and by providing programmatic support to help companies compete," noted Gratton.

Miners were also dealing with the lack of critical infrastructure.

For any mine to be a successful venture, it required infrastructure such as roads, ports, railways and power grids to operate, which were often not available in the remote and northern regions of Canada.

These areas held significant opportunities for mining development and would provide significant socioeconomic benefits to northern communities.

"The government can advance this nation-building opportunity and meet its stated policy objectives for the North by creating the right fiscal framework to stimulate investment in critical infrastructure that mines and communities will both benefit from," Gratton said.

Meanwhile, recent years had witnessed significant changes to the regulatory regime for mining in Canada. The Canadian Environmental Assessment Act, the Fisheries Act and the Navigation Protection Act were amended in 2012 and a review of the Metal Mining Effluent Regulations was still ongoing.

As regulators transitioned to the new regulatory regime, it was critical that mining projects were reviewed once and that various federal requirements, along with Aboriginal and public considerations, were integrated into a unified, robust and timely process with meaningful consultation.

This would ensure that projects were reviewed effectively, yet efficiently to avoid costly and unnecessary delays owing to overlap with other provincial reviews.

"To adjust to lower prices for some commodities, [and] cope with high operating costs and a still uncertain global economy, it is more critical than ever that government remain focused on expanding Canada's trade network and enhancing the country's overall competitiveness as a destination for new mining development through strategic investments and effective policies.

“We are confident about the future demand for our products and the Canadian mining industry is focusing on getting in shape now to seize the growth opportunities ahead of it,” Gratton commented.

Edited by Tracy Hancock
Creamer Media Contributing Editor

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