This article was originally published in the March 14, 2007 edition of Northern Life – Sudbury’s Community Newspaper. It is being posted for archival purposes.
Stan Sudol is a Toronto-based communications consultant, who writes extensively about mining issues.([email protected])
Patrick Moore, founding member and former president of Greenpeace, supports the mining sector. This is the same Patrick Moore, who, with his band of Rainbow Warriors forced the American and French governments to stop nuclear testing, shamed the Russians and Japanese to halt factory whaling and were a nightmare for Newfoundland sealers.
He lightheartedly quipped that all his life, he had been against many issues so he finally decided to be in favour of something. He stated the obvious fact that the world’s real needs for food, energy and building materials cannot be met without a growing mining sector. Moore gave an engaging luncheon speech at the Prospectors and Developers of Canada (PDAC) convention, last Wednesday that highlighted the many benefits the mining sector brings to impoverished lesser-developed countries around the world and the hypocrisy of many in the NGO environmental movements.
He mentioned that many of the environmental extremists who focus on greenhouse gasses and global warming are adamantly again nuclear energy and hydro-electric dams – the two sources of clean energy that can significantly help in solving these problems. During the past decade the mining industry has embraced many sound practices in water shed management, land restoration and pollution reduction that have significantly reduced their impact on the environment. In addition, sustainable mining initiatives in the social arena – the most challenging part of this new strategy – helps build up local capacity, through education, health care and economic diversification initiatives.
Moore gave many examples of corporate socially responsible practices that gold producer Newmont Mining initiated at its operations in Indonesia, Ghana and Peru. It was a very eye-opening speech from a Canadian environmental icon.
I have been attending PDAC conventions for about half a decade and have regularly witnessed the industry’s commitment to incorporating green mining practices throughout all phases of development.
However, it is only the major mining corporations that have operating facilities and cash flow that can afford to pay for these worthwhile projects. The junior mining sector is an entirely different part the business and the general public has difficulty understanding the distinctions between the two.
Junior mineral exploration companies continue to discover much of Canada’s mineral wealth. More than 50 percent of exploration expenditures are conducted by junior companies. Large mining companies spend much of their exploration dollars delineating existing mines and less for finding brand new deposits.
The appearance of a junior exploration company is just the preliminary start of the mining process. Often, many people assume that if a junior miner is working near their community, then a mine will soon follow. This is wrong as only one out of every 1,000 discoveries becomes a commercial operation. It usually takes at least 10 years before production starts due to the many federal and provincial regulatory hurdles that could be easily streamlined.
Junior exploration is comparable to the research and development of the mining industry. This part of the sector would be considered “research at the lab bench” if it were a manufacturing company. Most juniors would be defined by the federal government as small or medium enterprises (SMEs).
Very, few junior explorationists have producing mines that contribute to their cash flow. Almost all of these companies rely entirely on the financial capital markets for their operating funds. They sell shares to finance the different stages of their exploration programs. Financings tend to be small and relatively frequent. About sixty-four percent of financings are for less than $250,000. They use the most modern, high-tech methods available and conduct their activities in an environmentally sustainable manner. In 2004, Wallbridge Mining Company Ltd., a local based junior, was presented with an Environmental Award by Prospectors and Developers Association of Canada for its exemplary care of and commitment to preserving the natural and local environment during exploratory drilling on Windy Lake, located in the Sudbury Basin.
When junior exploration companies are working near First Nation communities, employing aboriginals is one of their top priorities. NRCan research indicates that there are approximately 1,200 aboriginal communities located within 200 kilometres of some 2,100 exploration properties across Canada.
Canada is the premier destination of global exploration budgets due to the effectiveness of the “super” flow-through share program. The Metals Economics Group, a globally respected world leader in mining industry intelligence, attributes Canada’s top spot for exploration expenditures, in part, due to the “super” flow-through share program.
Fully 62 percent of the 1,440 exploration companies worldwide are Canadian. They are entrepreneurial risk-takers, the envy of the global mining industry. I have talked to many foreign mining representatives who all admire the current good government policies that support this dynamic part of the mining sector.
Yet significant federal tax problems and possible changes may push many of these companies to leave Canada and explore in more mine friendly jurisdictions. The “super” flow-through program expires at the end of the month, and many feel the Harper government will not extend it. This is a major mistake as exploring near aboriginal communities has become very risky due to unsettled land claims. The “super” flowthrough program helps reduce much of that risk.
Another issue surrounding exploration near First Nations communities is the requirement of extensive baseline environmental work and community consultations. These are very expensive costs that cannot qualify for Canadian Exploration Expense deductions. Canada’s mining tax regime regulations have not kept up with current industry good practices that embrace a commitment to achieve a social license to operate. Impoverished Third-World living conditions are all too common in First Nations communities across northern Canada. The federal government has utterly failed in addressing these appalling circumstances.
Recently, the Assembly of First Nations National Chief Phil Fontaine has publicly stated that the private sector may be the only hope in reducing poverty in aboriginal communities. Mining is the only well-paying economic activity that can develop in these isolated regions.
Unfortunately, federal government tax policies are hindering not helping the one industry that can accomplish these goals and provide desperately needed jobs for the next generation of aboriginal youth.
Stan Sudol is a Toronto-based communications consultant and policy analyst who writes a column on mining issues. [email protected]