Need Recognition for Mining Supply and Service Companies – Dick DeStefano

Dick DeStefano - Executive Director of SAMSSAI had the good fortune to spend a day with mining colleagues and mining supply and service leaders in a workshop in Sudbury sponsored by NORCAT and The Conference Board of Canada to discuss the lack of recognition and the importance of mining and related services within the national and provincial political context.

It was clear that mining as a national strategic asset receives little acknowledgement from all senior levels of government. Note the recent mining takeovers. What is more distressing is the almost total dismissal of the mining supply side within policy discussions.

It is frustrating to sit in rational discussion about industries that generate jobs and innovative products to a booming natural resource sector and find that all Canadian related mining services/products can’t be catalogued and identified within government statistics and profiles.

The Sudbury Area Mining Supply & Service Association (SAMSSA) has a specific interest in promoting the vitality and value of its regional critical mass of technological mining expertise within the domestic and international mining spectrum. Without FedNor assistance, SAMSSA as a regional association would have difficulty promoting its tools, talent and technology domestically and globally.

Northern Ontario boasts about its huge concentration of mining expertise as one of the best in the world but governments have not taken steps to nurture the sector on a policy level.

In a statement contained in the workshop materials, it was noted:

“The mining supply and service industry supports the mining industry at all steps in the mining process, from exploration through development, extraction, smelting and refining through to materials production and advanced technologies emanating from the suppliers  who create efficiencies and sustainability. “

As someone stated at the workshop, “What is missing in this formula that they (governments) don’t understand?”

According to Natural Resources Canada, ten countries generally account for 90% of the world’s supply of mining products.  But in the case of more specialized products, there may be as few as five – Canada appears to rank among the top three or four, depending on the specific market.

“By and large, Canadian mining supply companies have not yet made a major mark in international markets with the exception of a few specific verticals. This is to be expected, since most Canadian companies in the mining supply sector are small & medium sized companies (SMEs) and may not have yet had the contacts or opportunities to expand significantly into global markets.”

Based on recent member activities, SAMSSA has found that this trend has slightly improved in 2007 due to an increased comfort with and understanding of global opportunities.

In 2005, mineral resource development in Canada consumed $8.4 billion in goods and services.  $1.4 billion (17 per cent) was spent on scientific, technical, engineering, environmental, feasibility or related goods for exploration, deposit appraisal and mine development and $3 billion (36 per cent) was spent repairing existing production capacity.
This represents overall growth of 47 per cent from 1997.

We know that the industry and the market place understands the importance of mining supply and services within the value added chain, but where are the important provincial and federal support systems and policies available to increase expansion and maintain this important economic driver within the economy?

While SAMSSA applauds the recent efforts in August 2007 to establish the Canadian Mining Innovation Council (CMIC) with leadership from Natural Resources Canada, there is another agenda that needs immediate attention.

The SMEs in Northern Ontario and Canada need financial support to market their presence globally. They need increased incentives to go global, tax relief to allow reinvestments of profits to build and grow their companies, incentives for training and skills development programs for new employees and acknowledgement that the mining supply and service companies are an essential economic driver that adds wealth to the Canadian economy.

With thanks to The Conference Board of Canada for its efforts and Adventus Research Inc. for its valuable background information.

Dick DeStefano is the Executive Director of Sudbury Area Supply and Services Association (SAMSSA)