Two approaches to northern [Ontario] mines – Thunder Bay Chronicle-Journal Editorial (October 19, 2012)

The Thunder Bay Chronicle-Journal is the daily newspaper of Northwestern Ontario.

IT has become standard procedure for campaigning politicians to change their minds once in office — if they ever had any intention of keeping some promises in the first place. “Read my lips, no new taxes,” was George H.W. Bush’s way of phrasing it, but many seeking office in Canada have done the same. Departing Ontario Premier Dalton McGuinty said as much in advance of the 2003 election campaign, only to introduce the Ontario Health Premium, the largest tax increase in post-war Ontario.

Pauline Marois sees things another way, at least in so far as northern Quebec is concerned. Running against Liberal Jean Charest, the Parti Quebecois leader had little good to say about his signature regional development policy, Plan Nord, which seeks to stimulate industrial activity north of the 49th parallel. But now that Marois is premier, and with mining potential that may be on a par with that in Northern Ontario, Marois is allowing for the possibility of tax incentives to attract mining projects to Quebec’s Far North.

The difference between Quebec and Ontario’s approach is important because it signals the McGuinty government’s unwillingness to engage in hard bargaining in spite of holding the high cards.

Marois has stipulated that in order to be eligible for the tax credits she once eschewed, mining companies would have to process their ore in Quebec. This, of course, results in far greater economic benefit to the host region and province than if raw ore is shipped elsewhere — usually to low-cost, low-wage places chosen by companies to maximize profits.

This has become a key question concerning the fate of the so-called Ring of Fire mineral deposits far to the north of Lake Superior. At least it is a question posed by those who want Ontario to make the most of the immense economic activity that will flow from a dozen or more major mineral finds now being explored or developed. But the provincial government has so far refused to make Ontario processing a requirement of Ontario mining permits.

CBC recently reported that Cliffs Natural Resources has not necessarily settled on Sudbury as the site for its chromite smelter as the company seeks the best deal it can get, especially around energy pricing. Quebec’s hydro prices are considerably lower than Ontario’s. With Marois musing aloud about tax credits in return for localized mineral processing, the possibility may occur to Cliffs to build a smelter in northern Quebec to process Northern Ontario minerals for the sake of cheap energy alone. A side deal for partial tax relief for building a smelter in Quebec, even though it wouldn’t process Quebec ore, does not seem beyond consideration by the PQ.

Quebec’s new government has also proposed making mining companies share more of their royalties with the province and get something in return for public investments in roads and other infrastructure needed to access remote mining sites and get the ore out.

A study conducted by Lakehead University predicts the total value of metals and mineral potential from among just nine proven and promising deposits at $135 billion. It foresees creation of more than 20,000 jobs, much the same as Quebec does under Plan Nord. But Quebec appears determined to make more of its northern mining potential than Ontario does by requiring more of the companies that want the ore in return for tax credits and cheaper electricity pricing. Ontario could learn something, even from the sovereigntist PQ.