Uncertainty continues to plague Canada’s mining industry
In a recent Financial Post article, Rio Tinto CEO Jean-Sebastien Jacques commented on the state of Canada’s mining industry: “You know mining well and you understand its value, but to be very frank it has been getting harder to do business here over the years—from employee relations to tax to managing land access.”
Interestingly, Jacques' concerns are consistent with those raised by mining executives in our 2016 Survey of Mining Companies.
While Canada performs relatively well in offering an attractive policy environment for mining exploration, a number of Canadian provinces and territories continue to fall behind. In fact, Australia surpassed Canada as the most attractive region in the world for mining investment in 2015. It seems that policy uncertainty in Canada is the main source of pain for mining executives.
In the 2016 survey Saskatchewan and Manitoba rank number one and two in overall attractiveness for investment. Quebec also ranks in the global top 10, followed by Ontario (18) and British Columbia (27)—although both Ontario and B.C. dropped in the rankings compared to last year.
Despite the relatively strong performance of these provinces compared to their international competitors, a number of policy issues continue to hamper Canada’s mining industry. For example, in every Canadian province and territory included in the survey, uncertainty stemming from disputed land claims or regulation is among the top two greatest deterrents to investment.
In B.C. and Quebec (two jurisdictions where Rio Tinto operates) both mining explorers and producers view policy uncertainty as a hindrance to investment. More specifically, in B.C., 72 per cent of explorers indicate that uncertainty from disputed land-claims deters investment, compared to 61 per cent of producers. In addition, 49 per cent of responding explorers and 36 per cent of producers in B.C. indicate that uncertainty resulting from existing regulations deters them from investing in the province.
Canada’s attractive geology will continue to present ample opportunities for explorers and miners to invest large sums of money throughout the country. However, uncertainty can divert mining investment elsewhere, leading to fewer jobs and reduced revenue for provinces and territories.
It’s time to think about how Canada can keep mining opportunities within our borders. Simply put, if provinces and territories are eager to attract more investment in mining, and the high-paying jobs associated with such activities, reducing uncertainty would be a step in the right direction.
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