Mining Marshall Plan for Northern Ontario

What a difference a decade makes! Ten years ago, according to many in the Toronto media, mining was a sunset industry and a modern industrial country/province should not be in such a supposedly "low tech" sector. Some even thought we should let the industry die and allow lesser developed countries to be the primary suppliers of mineral commodities.

At that time, Ontario budgets were only a billion or two in the red, and its manufacturing sector was the cornerstone of a strong economy. Today, emerging markets like China, India are competing with the United States, Japan, South Korea and other developed nations for access to mineral resources around the world, the basic building blocks of any modern industrialized society. The mining sector has become one of the most strategic sectors of the global economy. And Ontario is a "have not" province.

Currently, Ontario faces a number of key economic problems including an aging workforce, crumbling infrastructure and provincial budget deficits that will not be able to sustain existing social programs. In addition, the South's manufacturing might, which supported Ontario's high standard of living since the 1950s, is under extreme stress due to globalization, a weak U.S. market - the destination of almost 90% of our manufactured goods - and high electricity costs.

Globally, we are witnessing a seismic shift of economic power from the West to the booming Asian economies of the East. In the space of one generation, China has become the second largest economy in the world and is forecast to overtake the United States of America within two or three decades according to many global think-tanks.

Quebec's recently announce $80 billion "Plan Nord" is one of the country's most visionary northern development plans that is taking advantage of this international need for minerals. Not only will this initiative help build the necessary infrastructure to allow future mining and other resource development in that province's north, it is also a bold step in helping alleviate First Nation poverty as well as ensuring vital tax revenue for Quebec's social programs like health and education.

Ontario is still the largest mineral producer in Canada. The sector is worth about $10 billion to the provincial economy with half of all mining production centred in the enormously rich Sudbury Basin. Historically, the rapid growth of the hardrock mining industry throughout northern Ontario and northwest Quebec was the basis of Toronto's financial services sector which even today is responsible for approximately 60% of global mine financing. The province has two globally successful mining supply and service clusters located in Sudbury and the Greater Toronto Area. In addition, Ontario is recognized around the world for its mineral education, research initiatives, environmentally sustainable mining practices and safety standards that are the envy of the world.

However, Ontario's traditional high standing in the well-respected Fraser Institute's annual mining survey has significantly decreased.

With billion-dollar deficits forecast for many years to come, the province needs its own northern initiative: a "Mining Marshall Plan" that will harness the enormous mineral potential located north of the French and Mattawa Rivers - 90% of Ontario's geography.

The following "Mining Marshall Plan" recommendations are a call to action to sustainably develop our vast northern territory, which is almost equal to Germany, France and Ireland combined.

Ontario needs to help build the necessary key transportation routes to develop the North's enormous and strategic mineral potential. These include a railway to the Ring of Fire mining camp and all-weather highways to replace winter ice roads to isolated Aboriginal communities. The first priorities should be regions with high mineral potential. The resulting economic spin-offs throughout the entire province and increased tax revenues will more than justify these public investments.

Ontario must provide more competitive power rates for mining and refining operations. Both Quebec and Manitoba have lower electricity costs for industry. If northern Ontario is to prosper, we must be competitive with these two provinces. The primary reason Xstrata closed the Timmins copper smelter, moving to an older Noranda facility and killing about 600 high paying jobs is the province's high electricity costs. The subsidized rates should also apply to pulp and paper and other forestry mills.

Ensure that the processing of major mineral deposits mined in Ontario be done in the province. However, this processing must be done on an economical basis and include power rates that are competitive to those in Quebec and Manitoba. Perhaps these competitive power rates should be offered in specific zones or regions across the North to further economic development.

Allow the development of peat fuel as a power source for isolated First Nations communities, the Ring of Fire mining camp, and as a partial fuel for the two coal-fired power plants in Thunder Bay and Atikokan. Northern Ontario contains some of the largest peat deposits in the world and this energy source has significant environmentally sustainable benefits. For decades, both Finland and Ireland have used peat for energy production. Many jobs would be created in the north, yet various Ontario government ministries are blocking this industry from starting while Newfoundland is actively supporting the development of its peat deposits. At a time of global energy insecurity Ontario should develop this renewable energy source.

The Far North Act is detested by northern Ontario's Aboriginal communities and most of the general population in the North. Conversely, southern environmentalists praise the legislation. If the Conservatives come to power, the Act will be withdrawn. The NDP would rewrite the Act to bring in First Nation's participation. If the Liberals are re-elected than the implementation of the Act should be very flexible. A thorough geoscience assessment must be conducted of any lands designated for parks and local Aboriginal communities must be consulted and allowed a veto.

When the private sector commits billions to develop mineral resources, the interest on that capital is enormous. Unnecessary and wasteful permitting delays not only cost mining companies but delay much needed tax revenue to the provincial economy. A reasonably short provincial commission on mining regulation should be established. It takes almost 10 years to build the average underground mine in Ontario due to an overburden of red tape. Any duplication between the provincial and federal levels should be eliminated. Mining development must be done in an environmentally sustainable manner. However, that development can be done in a much more efficient and cost effective way.

There must be an immediate provincial commitment to invest millions for building the necessary infrastructure (working water treatment plants, high quality schools and training facilities, medical centres, and perhaps even motels) in the five First Nations communities closest to the Ring of Fire mining camp. Then over the next decade repeat this development strategy in the other Aboriginal communities across the North. By increasing the capacity of First Nations communities to significantly benefit from mineral exploration and development - which should be a government, not industry, responsibility - resource conflicts will be less likely to rise up.

Northern Ontario is the hard-rock mining heartland of the Americas. Sudbury with its 12 working mines is the epicenter and is among the top three concentrations of underground mines in the world. Only South Africa's platinum producing district, the Bushveld, and the Witwatersrand gold mining region have more mines than Sudbury. Consolidate Ontario's post-secondary mining programs (engineering and geology) at Sudbury's Laurentian University and turn it into an international Harvard of hardrock mining to take advantage of the communi ty's mining expertise. This would save the province money by eliminating duplicate programs in universities in Toronto and Kingston. Ensure that Aboriginal outreach programs entice native students into mining engineering and geology as most of the new mines in the Far North will be on traditional Aboriginal territories.

Northern Ontario's mining supply and service industry is worth approximately $6 billon in sales annually, has over 500 companies located primarily Sudbury, Timmins, North Bay and Thunder Bay and employ over 25,000 people. The province should encourage the purchase of mining goods and services on a regional basis from the North. In addition, a significant increase in resources should be committed to further market the region's mining expertise and services on a global scale.

The multi-million dollar Northern Ontario Heritage Fund should be mandated to focus primarily on economic development initiatives that may include health care and education. The Fund should ensure all communities have modern, industrial parks to accommodate projected growth in the region's booming supply and service sector as well as updated telecommunications and small airport infrastructure across the North.

Currently Ontario provides a 5% flow-through share tax credit for mineral exploration in the province. Both British Columbia and Manitoba offer significantly higher rates. Considering the huge economic dividends from building new mines, Ontario should double its flow-through share tax credit to 10%.

The Ontario Mineral Deposit Inventory documents more than 200 known rare element and rare earth element mineral occurrences across the province. Ontario should implement a strategic rare earth elements strategy by allowing additional flow-through tax breaks for junior companies exploring for these vital minerals that are essential for modern 21^st Century manufacturing. Triple the flow-through share tax credit to 15% for companies conducting rare earth exploration.

The underground activities of mineral development are impossible to tax. This has always caused much concern in mining communities as the surface facilities that are subject to municipal taxes, are only a small part of the operations. Mining activities cause enormous wear on road and other infrastructure. The provincial government should allow mining municipalities to levy a small additional tax (perhaps 0.5%) on the profit of local mining operations that will go directly to host communities for road, drinking water or wastewater treatment facilities. High mineral prices due to China's voracious appetite will allow mining companies to comfortably absorb this small tax increase, notwithstanding their expected howls of protest. Well maintained infrastructure is essential for efficient and profitable mining operations.

Mining in Ontario has one of the best safety records among industrial sectors. It has a better safety record than the electrical, pulp and paper, forestry, health care, construction, agriculture and transportation industries and continues to improve. The province should lower Workplace Safety and Insurance Board premiums to reflect this improving safety record.

There is enormous geological potential in Ontario's vast north. The Ontario Geological Survey has been under-funded for many years. The province must significantly increase geoscience budgets. For every dollar spent on geological mapping initiatives, five dollars come back to the provincial economy. In every major mining jurisdiction around the world, this is the primary responsibility of the host country. Ontario must step up and start pulling its weight to remain globally competitive and attract exploration investment with a long-term, systematic, well-funded geoscience strategy.

Currently, most Ontario high school students graduate with no knowledge of the importance of mining to our high standard of living. Introduce a "mining in society" course that is mandatory throughout the Ontario high school system. This proposed course should highlight the opportunities and challenges of this vital sector that is the fundamental basis of all the products we take for granted. It should include historical, union/social, environmental and Aboriginal issues as well as point out the highly skilled technical jobs needed by the sector. A current earth and space science Grade 12 course touches on geoscience but omits many mining issues and is optional.

Junior mineral exploration companies, the lifeblood of the sector, continue to discover much of Canada's mineral wealth. More than 50% of exploration expenditures are conducted by junior companies, of whom the vast majority rely entirely on the financial capital markets for their operating funds. Only one out of every 1,000 discoveries becomes a commercial operation, and that usually takes 10 years before production starts.

Provincial regulations mandate that junior mining companies must consult with Aboriginal communities before exploration work begins. However, there is still much misunderstanding of the exact definition of "consultation". The Ontario government should convene all First Nations chiefs from communities north of the French and Mattawa Rivers and designated representatives from the junior sector to clearly define "consultation". If the junior exploration sector is not allowed to have access to land or impeded by other constraints, Aboriginal communities will not be able to improve their living standards from the extraordinary job and financial benefits of mine development.

Although the next two initiatives are a federal responsibility, I have decided to include them in this list. Economic clusters are regional or local groups of related industries and institutions that significantly help create wealth, largely through innovation and the global export of goods and services. Internationally respected Harvard professor Michael Porter is a keen promoter of the ability of clusters to drive high valued economic development. Sudbury has four significant clusters focused on mineral production, mining research, mining education and mining supply and services that could be significantly enhanced through provincial and federal initiatives.

Relocate the mining activities of the Geological Survey of Canada to Sudbury. The Ontario Geological Survey is already located in the city and the synergy between those two organizations would further enhance the community's reputation as a cluster of mining expertise around the world and help establish Laurentian University as a global centre of geoscience excellence.

Last year, Rio Tinto donated $10 million for underground mining research at Laurentian's Centre for Excellence in Mining Innovation (CEMI). Vale and Xstrata conduct significant mining research in Sudbury. To further grow the research cluster in this community, the richest mining district in North America, the Harper Conservatives should relocate all federal mining research initiatives to Sudbury and help create a "Silicon Valley" of the mining sector.

The urbanizing and industrializing economies of China, India, Brazil and many other developing countries are creating a tsunami of metal demand that current global mineral production will be hard pressed to meet. The United States, China, Japan and South Korea are all putting more resources towards their strategic mineral stockpiles to ensure security of metal supply for their respective manufacturing sectors. Mining in Ontario is conducted in an environmentally sustainable manner with emphasis on worker safety and Aboriginal consultation and participation.

As an aging provincial population puts more financial pressures on unsustainable health and social programs, combined with a sluggish manufacturing sector, Ontario must look north and develop its vast mineral deposits.

In addition, this will provide much needed employment to impoverished First Nations communities with rapidly growing young populations. The mining industry is the largest private sector employer of Aboriginals in Canada and there ar e many, many success stories across the country ranging from Vale's Labrador's Voisey's Bay mining camp and Xstrata's Raglan development in Quebec to the Cameco's uranium mines in northern Saskatchewan and the diamond deposits in the Northwest Territories.

The world is experiencing the biggest commodity super cycle in the history of mankind. According to John McGagh, head of innovation, at Rio Tinto, the world's third largest mining company, "In the next 25 years, demand for metals could meet or exceed what we have used since the beginning of the industrial revolution."

Mark Carney, the Bank of Canada governor has publicly stated, "Even though history teaches that all booms are finite, this one could go on for some time."

Northern Ontario is geologically rich and immense. There is enough territory to be shared by both environmentalists and mining sector. To ignore the vast mineral potential of the North would short-change the entire province, especially the next generation.

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* Stan Sudol is a Toronto-based communications consultant and strategist who writes extensively on the mining sector. www.RepublicOfMining.com Feel free to send any other suggestions on how to improve the mining sector in Ontario. stan.sudol@republicofmining.com