The road to recovery for Ontario's mining sector is paved in gold
Ontario is one of the top mining jurisdictions in the world. In recent years, the jurisdiction has been in a downturn.
The province, which is home to more than 40 operating mines, is the largest producer of gold, nickel, copper and platinum metals in Canada. Ontario’s mineral production is valued at $9.2 billion with more than $4 billion annually invested in research and development (R&D), exploration, construction and equipment.
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In a recent article by NorthernLife.ca, industry stakeholders agreed that Ontario is falling behind as a mining jurisdiction. The article spotlights that while the province has shifted its focus to the Ring of Fire, which many believe is moving slower than anticipated, key figures see the government neglecting other parts of the province.
“All we hear about is the Ring of Fire. Let me explain something about the Ring of Fire. It's not the only thing going on in this province. I'm sick to death of it,” said Gino Chitaroni, president of the Northern Prospectors Association.
“We have a lot of projects out there that could be economic very shortly, but we have to encourage them,” Chitaroni said. “I don't see it happening.”
To learn how Ontario is challenging the situation, we interviewed Michael Gravelle, Ontario Minister of Northern Development and Mines to discuss how Ontario is working to improve its current situation and reestablish itself as the powerhouse mining jurisdiction we all know.
Fall from grace
According to the Fraser Institute Annual Survey of Mining Companies: 2014, Ontario ranked #23 internationally for investment attractiveness, falling nine spots from last year. The province ranked #9 among the top 10 attractive mining jurisdictions in Canada despite being one of Canada’s geographically larger jurisdictions.
The survey, which was comprised of 122 jurisdictions worldwide, included comments such as:
“Revision of the Mining Act to include near-veto powers against exploration of First Nation traditional land use areas contrary to treaty assurances.”
“Provincial regulations different from federal regulations. Government entities not addressing First Nations consultation issues.”
“Lack of transparency, extreme conflict over land use with First Nations groups, high costs of permitting and new poorly organized regulations.”
“Poor decisions on infrastructure and lack of provincial First Nations agreements related to developments in the Ring of Fire.”
“Abandoning the mining industry and forcing it to deal directly with native groups, and providing support to native groups for negotiations, but not to junior mining companies.”
While Canada’s overall scores improved significantly in 2014, by almost 10 points, Ontario remained in the bottom category. One of the biggest problems for the province, especially with junior miners, has been raising capital.
“Globally, the junior exploration sector is experiencing difficulty raising capital because of a decline in investments resulting from lower commodity prices,” said Garry Clark, executive director of the Ontario Prospectors Association.
He continues, “While Ontario remains the top exploration jurisdiction in Canada, exploration spending in Ontario is down. Spending totaled $600 million in 2013 and $507 million in 2014, compared with $962 million in 2012.”
In addition, Ontario’s two largest mineral exports, gold and nickel, endured some of the most volatile commodity prices in recent years.
Despite the disappointing rankings, no other mining jurisdiction in the world has the level of mining expertise found in Ontario.
“It is important to understand the significance of the mining industry to Ontario’s economy,” said Gravelle. “There are 42 operating mines right now, and more people employed in the mining sector than there were 10 years ago. The mining supply and service sector employs 50,000 people. Nearly 25 percent of all exploration in Canada is done in Ontario.”
The mining sector for Ontario has been off to a great start in 2015. Earlier this year, the province announced its intentions to renew its mineral development strategy, which was first established in 2006. Needless to say, it couldn’t have come at a better time.
“Since I was re-appointed Minister of Northern Development and Mines in 2013, we have focused much effort on putting the necessary building blocks in place to foster private sector investment and secure future economic opportunity for First Nations and Northern Ontario,” said Gravelle.
The province’s Ring of Fire project, which is located in Northern Ontario, has dealt with lingering issues including a lack of infrastructure commitments from industry or government.
Global engineering firm Hatch sees the Ring of Fire as one of the most exciting areas of opportunity for the company in Ontario.
“There are many challenges presented by the geography, lack of infrastructure and social licensing which require new ways of thinking, and that makes it so exciting,” explained Jan Kwak, Hatch’s managing director of mining and minerals processing.
“For instance, a construction strategy would probably require starting in the winter when the ground is frozen and it is easier to transport materials to the site. During the winter, we would need to create an island of solid ground where we can set up camp, store material and equipment, and use as a base to expand from when the ground thaws in summer.”
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To combat this, the government has established the ROF Infrastructure Development Corporation to provide $1 billion for investment in everything from infrastructure, signing of the landmark Framework Agreement with Chiefs of the Matawa First Nations as well as supporting education, training and health care initiatives for the First Nations.
According to Gravelle, Ontario’s government has taken important steps to modernize the province’s Mining Act to maintain a vibrant and competitive mineral development sector.
“Ontario’s clear laws and updated mining regulations are part of our commitment to promote mineral exploration and development, while respecting Aboriginal and treaty rights as well as the environment. Since updated regulations became mandatory we’ve worked closely with industry to guide them as they adapt to the process. I believe our province provides operational certainty for industry, just one reason why we have remained a leader in exploration spending.”
Another important aspect for Ontario’s recovery is incentives. The need to support companies at different stages of the industry cycle is vital for Ontario’s resurgence.
“We have flow-through share financing of public companies which serves as a permanent tax credit for individual investors as well as a tool for junior exploration companies to raise funds,” said Gravelle.
“Our government also works with industry associations to support mineral development and exploration activities with grants to prospectors through the Ontario Exploration Corporation. Not to mention, the Ontario Geological Survey has world class open data sets which make valuable geological information easily accessible to industry as they work to identify mineral exploration targets.”
One of the many bright spots for Ontario is its innovation in new technologies. The province has been actively involved in newer technologies in the mineral sector that are being used globally to make mines safer, green and more efficient.
“The mining supply and services sector in Ontario is of enormous economic significance, generating a direct economic impact of $6.6 billion in gross output value,” said Gravelle. “Our government recognizes the value of maintaining our position as a global leader in mining sector innovations. That’s why we’ve committed in excess of $4.5 million in the past five years to support mining supply and services companies in expanding their export capacity and increase sales to international markets.”
According to Gravelle, to maintain its competiveness, Ontario needs to maintain a business climate that attracts investment
“I certainly recognize that it is vital that Ontario maintain a business climate that attracts investment and I believe we’re doing just that. For example, one of the most important indicators of investment attractiveness is exploration spending and, from this measure, it’s clear that Ontario remains a leader.”
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He added, “We are the top jurisdiction in Canada and among the top jurisdictions in the world. In fact, the size of Ontario’s provincial mineral industry is comparable to the mineral industry of entire countries around the world.”
It’s true. In 2003, exploration expenditures in Ontario were $193 million; in 2014, that figure was over a half billion dollars. The mineral production side reached $11 billion in 2014, up from $7.1 billion ten years ago.
“I believe our province is very well positioned for a bright future in mineral development. To ensure that our large, industrial partners continue to be competitive globally, we announced on April 7, 2015 that the Northern Industrial Electricity Rate (NIER) program, a $120 million program to reduce electricity costs for large, industrial companies, would be permanently funded,” Gravelle said.
Moving forward, Ontario is expected to improve greatly. There are a significant amount of new gold districts opening up in Ontario, including an array of new mines set to open in the next two years.
“As Minister and most importantly, as a Northerner, I have a deep appreciation of the tremendous economic potential of the vast resources that are located primarily in the Northern part of the province. Our government has been driving economic development in Ontario with a major focus on the mining sector—an industry of tremendous significance to our economy,” said Gravelle.
“My mandate is to increase the prosperity of Northern Ontario and lead a mineral sector that is healthy, competitive and sustainable. And I’m proud to say that we are succeeding—Northern Ontario is well positioned as a world class destination for investment.”
Zimbabwe targets £8.8bn mining industry by 2023
Zimbabwe’s government plans to fast-track exploration, evaluation and digitalisation of selected reserved mining areas under the Ministry of Mines and Mining Development as part of wider measures to achieve a £8.8 billion mining industry by 2023, according to a senior government minister.
Information Minister Monica Mutsvangwa said other plans include stopping the issuance of special grants in the reserved areas under the Ministry of Mines and Mining Development until the exploration and evaluation is complete and a robust value addition program for diamonds is implemented.
Mutsvangwa was speaking at a post-cabinet media briefing on December 15.
She adds that the issuance and renewal of special grants for energy should also be based on the financial and technical capacity to value add all types of coal, as well as for ideal exploration of Coal Bed Methane.
For renewal of special grants, consideration should take into account the period the Special Grant has been held as well as plans with milestones for value addition of the special grant, Mutsvangwa says. She adds that the Zimbabwean government expects gold to drive the mining sector in order to achieve the ambitious target, with the precious metal expected to contribute approximately £2.96 billion to the overall target.
Mining is one of Zimbabwe’s major contributors to its economy, alongside agriculture, which is the mainstay. The mining sector accounted for more than 60 percent of the country’s foreign currency receipts in 2019, and contributed around 16 percent to national Gross Domestic Product, the Chamber of Mines says.
The country’s mining industry is focused on a diverse range of small to medium mining operations. The most important minerals produced in Zimbabwe include gold, asbestos, chromite, coal and base metals.
Zimbabwe expects its economy to expand by 7.4 percent in 2021 from a projected contraction of 4.5 percent this year, due to the effects of drought and the COVID-19 global pandemic.
When presenting the 2021 National Budget in November this year, Finance and Economic Development Minister, Professor Mthuli Ncube, said that the mining sector is projected to rebound by 11 percent next year after surviving a COVID-19 induced shock that saw the sector contract by 4.7 percent in 2020. In September, mining bans in national parks were introduced, according to news agencies.
He added that the National Budget would allocate £1 billion towards the operations of the ministry for planning, promotion and exploration, data capturing, and automation, among other key mining processes.
Other factors necessary for the achievement of the £8.8 billion target include a stable macroeconomic environment, policy consistency, and availability of long-term capital to fund mining projects along the entire mineral value chain, the minister said.
Stopping "illicit financial flows" from gold smuggling is another key issue to address, according to media reports.