Ontario’s mining sector creates considerable prosperity and economic opportunity in the province. In 2014, based on preliminary estimates, mining companies are expected to have spent $507 million on exploration in the province, down from a 10-year high of $1.07 billion in 2011.
Ontario also has extensive chromite and nickel deposits in the vaunted Ring of Fire worth an estimated $60 billion, providing the province with significant economic opportunities.
While the global commodity downturn is certainly hampering the amount being spent on exploration in the province, Ontario’s policy attractiveness has also been on the decline, something noted in last month’s Ontario auditor general’s (AG) report on the province’s mines and minerals programs.
Some of the AG’s findings include:
• The Ministry of Northern Development and Mines has been ineffective at attracting investors.
• The process of getting geoscience information to the industry has been slow.
• There has been a lack of clarity on the duty to consult with aboriginal communities, which has slowed investment.
• There has been little infrastructure development in the Ring of Fire.
The AG report came to similar conclusions as the Fraser Institute’s most recent Survey of Mining Companies, finding that growing policy uncertainty may be deterring investment in the province.
In 2011, when spending peaked in Ontario, the province was ranked as the ninth most attractive jurisdiction in the world for mining investment, based on the survey’s Investment Attractiveness Index, which combines company executives’ perceptions of both policy and mineral potential. Fast forward to 2014 and Ontario has dropped down to 23rd in the world.
When looking into which specific areas of policy act as the largest barriers, regulation and uncertainty in land-use stand out.
For example, about 66 per cent of miners perceived uncertainty from disputed land claims to be a deterrent to investment, with 37 per cent stating that it was a) a strong deterrent or b) a reason to not invest at all. More telling about the province’s decline in investment attractiveness is that over the last 10 years, from 2005 to 2014, the percentage of respondents who found uncertainty regarding the administration, interpretation and enforcement of existing regulations to be a deterrent to investment, has increased from 23 per cent to 49 per cent.
These results echo the AG’s concern that uncertainty and a lack of clarity may be deterring investment in the province. Indeed, survey respondents specifically noted that a lack of certainty on the requirements of consultation with aboriginals was acting as a barrier to investment.
And these are only some of the issues that are directly related to mining. Other issues like high electricity costs are also deterring investment in Ontario.
With a lot of economic potential at stake in mineral deposits like Ontario’s $60 billion Ring of Fire, it appears that there’s growing room for improvement in the province’s policy environment.
Perhaps the province’s recently released Mineral Development Strategy will help alleviate some of the uncertainty and concerns that investors have.
For the original source of this article, click here: http://www.fraserinstitute.org/blogs/uncertainty-deterring-mining-investment-in-ontario