New Roads to Riches – by Sheldon Gordon (Lexpert Business of Law – September 22, 2017)

In a depressed market for commodities, mining companies will have to rely on government funding, P3s and the ambition of local communities to get their projects off the ground.

THE CANADIAN MINING INDUSTRY’S success depends on its capacity to move its output to markets efficiently, at competitive prices and via modern infrastructure such as railways, roads and ports. Power generation is also critical. Mines in northern Canada face a special challenge because of the lack of electrical grid capacity.

The slump in world commodity prices from their peaks of 2011 has put a damper on the mining sector in general and on mining infrastructure procurement in particular. There is cautious optimism regarding mining plays in 2017, but nothing like the exuberance that would be triggered by a sustained rally in precious and base metals.

“I think prices need to go up a little bit more and hold for a little bit longer,” says Erik Goldsilver, a partner at Borden Ladner Gervais LLP in Toronto. “The increase in prices we’ve seen over the past six to 12 months is positive, but there’s still some room to grow.”

“Since the downturn,” says Crae Garrett, a partner at Norton Rose Fulbright Canada LLP in Calgary, “many mining companies have tightened their belts and haven’t done any development. The public sector has been driving whatever infrastructure development has taken place for the mining sector — as the benefits outlast the projects.”

As for private investment in mining transport, “a lot of the in-production mining activity already has its infrastructure,” says Garrett, “so you’re looking way more at exploration plays, and they always get hit more in a downturn.”

According to the Mining Association of Canada, Canada no longer attracts the single largest share of total global mineral exploration spending, a ranking it lost to Australia in 2015. Says Goldsilver: “There are probably many reasons — government regulation, the Canadian dollar, more mature projects here in Canada.”

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