The National Post is Canada’s second largest national paper.
Mark Zastre is Global Mining Leader, Grant Thornton International.
Mining ventures need infrastructure to proceed yet governments stymie their development through regulations and impediments
Canada’s long-awaited mining powerhouse, the Ring of Fire, promised major economic development and employment opportunities for northern Ontario. Communities rushed to ready themselves for the coming boom in jobs and lobbied hard for the placement of the sought-after chromite smelters and associated infrastructure.
But despite its promises and potential, the Ring of Fire has fallen victim to delays and setbacks, sparking an industry-wide debate of who is to blame. The mining industry has grown increasingly uncertain about investing in Canada and has identified the provincial and federal governments, Aboriginal communities, commodity prices, and the environmental lobby as major contributing factors to this uncertainty.
Beyond the speculation of the causes of the Ring of Fire delays however, new data collected in the Grant Thornton International 2014 Global Mining Survey paints a larger picture of the infrastructure challenges faced by this industry and demonstrates that delays are not unique to the Ring of Fire, but rather threaten the sustainability of the broader Canadian mining industry.
Building and maintaining adequate infrastructure has been of paramount importance to much of Canada’s economic development and the need for investment in infrastructure to advance remote mining projects is not exclusive to Canada. World class deposits in Africa and Australia, for example, are as equally remote as some of Canada’s resources and similarly require railroads, ports, bridges, transmission lines, and haul roads to get product to market.
The increasingly cumbersome Canadian regulatory environment and public scrutiny of new linear infrastructure corridors that compound the existing physical and financial challenges contribute to deterioration in Canada’s competitiveness in the global capital marketplace. Pipelines used to ship oil and gas experience a very similar challenge. Without a diversified pipeline network, new oil and gas developments become less likely. Likewise, without access to markets via physical infrastructure, there will be fewer new mining projects, employment and spin-off economic activity. According to our report, 76% of Canadian junior miners indicate that their projects either cannot move forward or cannot reach their full potential in a reasonable timeframe without significant additional infrastructure developments.
For all the announcements about infrastructure investments by federal and provincial governments, staggeringly only 3% of Canadian junior miners believe they receive adequate support from the federal government for their mining businesses and only 26% report provincial support. While both levels of government have expressed their desire to support mining projects across the country, in order to execute on that they need to support new infrastructure developments.
This support must come in the form of both financial investment and the investment of intangible resources and supports, such as efficient permitting and approval processes, to create a political environment that drives economic growth by encouraging mining investment.
For the rest of this article, click here: http://opinion.financialpost.com/2014/03/03/ring-of-regulations/