Ontario mining state of play – by Douglas Morrison (Northern Ontario Business – August 28, 2015)

Established in 1980, Northern Ontario Business provides Canadians and international investors with relevant, current and insightful editorial content and business news information about Ontario’s vibrant and resource-rich North.

Douglas Morrison is the President and CEO of the Sudbury-based Centre for Excellence in Mining Innovation (CEMI) and network director, Ultra-Deep Mining Network.

Ontario will have to confront a decline in the mining industry over the next five to 10 years. Major mining operations, such as Kidd Creek in Timmins, will close in five years’ time and there are no major operations of this scale in development, or new deposits of this scale being drilled off.

Moreover, the Prospectors and Developers Association of Canada (PDAC) has documented a large decrease in prospecting activity in the province. An operation of the scale of Kidd Creek takes about 10 years to bring into steady-state production — so if we started building one tomorrow, there would still be a production gap of at least five years.

In Ontario we have the largest, most comprehensive and most coherent mining service and supply sector anywhere in the world. This sector of the industry provides three to four jobs for every direct job in active mining operations, but as the total amount of mining production in Ontario decreases, the service and supply sector must contract also.

It is easy to say that since demand for metals is down, we shouldn’t worry — just wait for the upturn in the global economy and we will ride the wave to renewed success. This is very unlikely to happen — the erosion of capacity in Ontario will make it all the more difficult for us to recover. We have serious competitors in every mining jurisdiction in the world that would like to capture a larger market share from us.

Another common view is that the ore deposits cannot be moved, so mining companies have to come here to do the mining. But mines require capital — a lot of capital — and although the mineral deposits cannot be relocated, the capital that drives them into production can and will move to wherever in the world it will provide a better return on investment. If the mines in Ontario cannot compete, the capital will move to other countries in the world and our mineral deposits will stay in the ground.

Some would say that the problems are because many of the larger mining companies are foreign-owned; this is not true — every mining company must employ its capital effectively, Canadian or not. Others will complain that Canadian mining companies must compete against mines in countries where the regulations on health and safety and environmental protection are much more lenient. But the countries where this is true are also the countries that are spending many millions of dollars to improve — and they are catching up fast.

For the rest of this column, click here: http://www.northernontariobusiness.com/columns/unassigned/2015/09/Ontario-mining-state-of-play.aspx

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