Killing the Goose that Lays the Mineral Sector’s Golden Eggs – The Industry’s Bad Reputation – by Jean-Francois Minardi

Jean-Francois Minardi is a senior policy analyst with the Fraser Institute,

The mining industry is under attack everywhere in Canada, even in the country’s friendliest location, Quebec.

Gone are the days when activists offered constructive criticism that allowed the industry to improve its corporate social responsibility profile and improve environmental standards in mining projects. Today anti-mining activists advocate one thing: an outright destruction of the mining industry.

Nowhere is this attitude more prevalent than in a recent report from the Institute for Research and Socio-Economic Information (IRIS), an organization whose self-described purpose is “to provide an opposite point of view to the neoliberal view,” that suggested nothing less than an end to mining in Quebec. Their simplistic argument can be summed up as, “the economic, social and environmental costs of the mining industry seem to outweigh the benefits, and the economic prospects of the sector in the coming years are not promising.”

Yet, according to the mining associations of Quebec – the Association minière du Québec and the Association de l’exploration minière du Québec – the IRIS study is riddled with factual errors that undermine its conclusions.

Rather, the study presents a radical agenda to destroy the mining industry, a “salami-slice” strategy that aims to eliminate mining, slice after slice, until nothing remains. Initially the goal is to reduce the competitiveness of the mining industry by increasing the burden of taxation and regulation, leaving Quebec miners at a disadvantage with the rest of the world and thus scaring [away] investment.

Next, the study’s author proposes to nationalize the mining industry. She writes, “The nationalization of the sector should also be an opportunity to submit mining to higher social and environmental standards…” Aside from the inefficiencies and politicization inherent in nationalization, the move would be a regulatory disaster.

Governments cannot properly regulate themselves. Look at the dismal history of the Cape Breton coal mines where governments spent hundreds of millions of taxpayer dollars to mine the second most polluting coal in North America. The most polluting was a government-owned mine in New Brunswick.

If the study’s suggestions were actually implemented, Quebec would in little time plummet to the bottom of the rankings in the “Annual Survey of Mining Companies”, joining such economic standouts as Zimbabwe, Ecuador and Venezuela.

Once the mining sector is decimated, the IRIS study suggests it will be “… desirable to consider a gradual conversion to … other more promising and cleaner economic sectors, like the environment industry.”

This plan seems to be based more on fantasy than reality. The idea that the magic wand of government will be able to replace thousands of mining jobs with green jobs in the regions of Quebec seems far-fetched and has all the trappings of an economic disaster financed by the taxpayer. The likely result would be the emergence of ghost towns in rural Quebec. Anti-mining groups based in Montreal and Quebec City may not mind, but it would be catastrophic for the regions.

What the anti-mining activists fail to acknowledge is the substantial contribution of the mining industry to the Quebec economy. Mining represents 2.4% of Quebec’s gross domestic product and more than 52,000 jobs. The value of exports from the mineral sector grew on average by 8.2% since 2000, reaching $8 billion in 2008. And the sector has provided the Quebec government with annual net tax revenue of $281 million since 2000.

The truth is that industrial minerals are omnipresent in our everyday lives and a world without them is simply impossible. The demand of industrializing countries will grow in the future and it would be absurd for the Quebec economy to not cash in on this potential windfall.

The interests of average Quebecers are best served by creating wealth, not destroying it. The mining industry generates wealth for Quebecers. The province has a strong mining tradition in places like Côte-Nord and Abitibi-Témiscamingue and an exceptional mineral potential especially if one considers the new deposits on the relatively unexplored territories of James Bay and Nunavik in northern Quebec.

The mining community is striving to improve its environmental record and trumped-up, ill-considered accusations and over-the-top rhetoric should not be an excuse to kill the goose that lays the golden eggs.