NEWS RELEASE: Mining Industry Payments to Canadian Governments Increased by 65% in 2010

OTTAWA, Aug. 4, 2011 /CNW/ – The Mining Association of Canada (MAC) today released its annual report on the level of payments made by the mining industry to Canadian governments.  The report, prepared by ENTRANS Policy Research Group, details the direct revenues that accrue to government from the industry in the form of corporate taxes, royalties and employee income taxes.

“The mining industry makes a significant contribution to Canada’s economy each year,” noted MAC’s President and CEO Pierre Gratton, “ranging from capital investment, stock market activity, Aboriginal community jobs and training, and northern development.  The level of payments made to governments detailed in this study is another useful measure of this contribution, particularly valuable because these revenues are used to support health care, education and other critical government services.”

Highlights from the report include:

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Timmins Unhappy With Canadian Hall of Fame Gold Discoverers Exclusions – by Gregory Reynolds

This column was originally published in the Late Summer, 2010 issue of Highgrader Magazine which is committed to serve the interests of northerners by bringing the issues, concerns and culture of the north to the world through the writings and art of award-winning journalists as well as talented freelance artists, writers and photographers.

Timmins Owes its Very Existence to Six Men Not Three!

Timmins city clerk Jack Watson says with a note of bitterness in his voice:
“We submitted all six and were upset with the decision. We appealed but lost.”

The community that calls itself The City With a Heart of Gold has every right to the motto because literally the ground beneath it, the heart of Mother Earth, has arteries of gold.

There has been gold production in Timmins continuously since 1910 and it will continue for  many more decades. There is no reason for a thriving modern city to be located in the middle of nowhere; there is no port to support international trade, no junction of railways, no meeting of highways that is a destination point.

Yet, Timmins is in the midst of a four-year celebration of 100 years of history and achievements.

No achievement was greater than the exploits of these six men: Sandy McIntyre, Hans Buttner, Harry Preston, John (Jack) Wilson, Benny Hollinger and Alex Gillies.

They discovered in 1909 the gold deposits that became the Big Three producers in Canadian mining history, the Dome (1910-still in production), the Hollinger (1910-1968) and the McIntyre (1912-1988).

Yet earlier this year the Canadian Mining Hall of Fame inducted just three of the six into its illustrious membership. Wilson and Harry Preston found the gold outcrop that was to become the Dome or as its workers fondly called it, The Big Dome. Only Wilson made into the Hall.

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Greenhouse Gas Emissions – No Progress in Policy, Some Progress on the Ground – by Paul Stothart

Paul Stothart is vice president, economic affairs of the Mining Association of Canada. He is responsible for advancing the industry’s interests regarding federal tax, trade, investment, transport and energy issues.

Throughout the history of the global environmental movement, no issue has seen anything approaching the elaborate policy structure and negotiation frameworks that surround the climate change and greenhouse gas mitigation area. 

International climate change policy has been focused around the UN Framework Convention on Climate Change (UNFCCC) and the Intergovernmental Panel on Climate Change (IPCC) for over 20 years.  The IFCC is a United Nations entity created in 1988 that writes extensive reports, drawing upon input from 2500 scientific experts, 800 contributing authors, 450 lead authors, and 620 expert reviewers.  IPCC reports typically stretch into the thousands of pages. 

The UNFCCC has coordinated 15 Conference of the Parties (CoP) sessions over the past fifteen years.  These sessions have in the past featured hundreds of environmental groups, business delegations, and government departments.  Thousands of bureaucrats congregate at CoP sessions, often held in exotic locations that entail enormous travel distances and related airline GHG emissions.  Between CoP sessions, numerous working groups interact and themselves congregate in sub-committee meetings at locations around the world.  There are some 192 countries engaged in the UNFCCC process and these individual countries in turn support their policy discussions and documents with equally substantial resources and bureaucracies.  Some countries, such as Australia and the UK, have created entire government departments around climate change policy. 

In Canada, at least eight “climate change strategies” have been unveiled since the mid-1990s – five by Liberal governments and three by Conservatives – each plan outlining targets, actions, and commitments supported by the loftiest of communications rhetoric and printed on the glossiest of paper.  Through the years, the federal government has outlined plans and processes for clean development mechanisms, offset systems, early action credits, technology funds, reduction targets, emission trading systems, cap and trade systems and carbon taxes.  One particularly memorable offset document contained a 34 page glossary.  The combined worth of these documents, plus a toonie, would today buy a Starbucks coffee. 

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Diamonds and Gold – A Common Past, Present and Future – by By Paul Stothart

Paul Stothart is vice-president, economic affairs of the Mining Association of Canada. He is responsible for advancing the industry’s interests regarding federal tax, trade, investment, transport and energy issues. www.mining.ca

With due respect to cobalt and coal, it is fair to state that diamonds and gold are the world’s two most prestigious minerals.  They are the minerals that hold the deepest emotional meaning among consumers, with traditional and cultural ties to commitment, union, luck, love and marriage.  They are also the minerals that are most indicative of personal wealth, affluence, sophistication and social status.  These two minerals and the corresponding industries have long shared a number of similarities in terms of the surrounding market-drivers, price mark-ups and social pressures.     

For example, the fundamental driver of the global market in both gold and diamonds is jewelry.  According to the World Gold Council, fully 68% of the world’s demand for gold over the past five years was for use in jewelry.  While the delineation is less exact in diamonds, it is estimated that gem-quality diamonds used in jewelry account for over 80% of the value of the world diamond market. 

A second point, and the converse from the above, is to note that the industrial application market for diamonds and gold is relatively modest in size.  Only 14% of world gold demand stems from industrial uses (while the remaining 18% is for investment purposes).  While there are important industrial uses in dental, electronics, medical and environmental fields, and growing potential in nanotechnology, these industrial uses for gold face the challenge of being commercially feasible at raw material price points that are currently well north of $1000 per ounce. 

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Improving the Effectiveness of Foreign Aid Through Mining Development – by Paul Stothart

Paul Stothart is vice-president, economic affairs of the Mining Association of Canada. He is responsible for advancing the industry’s interests regarding federal tax, trade, investment, transport and energy issues. www.mining.ca

The Canadian development aid community, like many aid providers around the world, is often described as slow, inefficient and disorganized.  In a recent article in the Globe and Mail, aid consultant Ian Smillie noted that it takes Canada’s official agency CIDA an average of almost four years to move an aid project from concept to approval, while projects sent to the CIDA Minister for approval are often returned for revision a dozen times.   

It is important to note that the leveling of criticism toward Canada’s aid agency is not particularly new, nor is it restricted to the present government.  Many past studies and evaluations have lamented the inefficiency of global aid delivery.  A recent report provided to Australia’s foreign minister concluded that the performance of AusAID suffers from having no clear objective.  Globally, western democratic countries have spent $2300 billion on foreign aid over the last five decades with minimal progress.  Aid systems seem incapable of delivering cheap medicines to children or inexpensive bed nets to families to prevent malaria deaths.  Extreme poverty and preventable diseases continue to kill thousands of men, women and children each year in developing countries despite these hundreds of billions of dollars in aid flow. 

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The 2008/2009 Mining Bust – Is There Light at the End of This tunnel? – by Paul Stothart

Paul Stothart is vice-president, economic affairs of the Mining Association of Canada. He is responsible for advancing the industry’s interests regarding federal tax, trade, investment, transport and energy issues. www.mining.ca This column was originally published November, 2009. This column was originally published in May, 2009.

Amidst the doom and gloom of present economic times, it can be difficult to find signs of optimism that could generate light at the end of the proverbial tunnel. While economic predictions can be easily contradicted, it seems evident that there are some positives emerging from the present recession and that, more importantly, mineral prices are destined to rebound in the not-too-distant future.

Sanity is returning to input costs and waiting lists

The business environment that existed until mid-2008 was one of frenzy, cost explosion and waiting lists. Companies seeking to buy mining equipment were assigned lengthy delivery times. Basics such as large tires for mining trucks carried a one-year or longer delivery lead time. As noted in 2005 by the president of a Virginia machinery company, “there are eight people trying to get the same tire.”

Capital projects that began with cost budgets in the hundreds of millions ended with budgets in the billions. Companies reported that capital investment cost projections were doubling or more during the 2005 to 2007 timeframe. The need for $16 per hour fast food workers in oil sands country was going unmet. Marine shipping costs and timelines were expanding rapidly.

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The Mining Economic Downturn — Two Unknowns – by Paul Stohart

Paul Stothart is vice-president, economic affairs of the Mining Association of Canada. He is responsible for advancing the industry’s interests regarding federal tax, trade, investment, transport and energy issues. www.mining.ca This column was originally published November, 2009. This column was originally published in February, 2009

To mining company managers, an economic downturn is old hat. Typically, a few years of economic growth lead to a year or two of stagnation and low mineral demand and prices. Mining projects are put on hold until the price and availability of labour and materials return to a sound
footing. Other variables, such as wars, strikes and technological shifts can exacerbate or mitigate this cyclical movement of mineral prices.

The current economic turmoil, however, is not a traditional business cycle. Yes, the real economy is slowing in a traditional manner. Manufacturing is in recession and high overheated costs have dampened investment in natural resource development. Falling mineral and stock
prices have made the raising of new equity capital and exploration financing unfeasible.

In Canada and overseas, mine development has been postponed or cancelled and companies have entered a “batten down the hatches” mode. Credit Suisse estimates that $50 billion in capital spending in mining — two-thirds of announced global commitments — would be delayed in 2009. Beyond this cyclical slowness, though, two new variables make the present downturn tougher to gauge and recovery time frames more difficult to predict.

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Key Economic Points About the Canadian Mining Sector – by Paul Stothart

Paul Stothart is vice-president, economic affairs of the Mining Association of Canada. He is responsible for advancing the industry’s interests regarding federal tax, trade, investment, transport and energy issues. www.mining.ca This column was originally published November, 2009.

Late summer and fall are always busy times for the mining industry on the economic policy front. Typically, the Mining Association of Canada releases its annual “Facts & Figures” report in August and also prepares a formal industry submission in advance of the meeting of federal, provincial and territorial energy and mines ministers held each fall. The federal government’s pre-budget process also starts in late summer, launched with a submission deadline set by the Finance Committee. The key messages reflected in MAC’s ministerial comments, pre-budget views and “Facts & Figures 2009” follow.

The mining industry is important to the economy

The industry, as defined by Natural Resources Canada, contributes $40 billion to Canada’s GDP, employs 350,000 people, pays approximately $13.5 billion in taxes and royalties, contributes 19 per cent of Canadian exports and generates business for 3,140 supplier companies. It creates value in urban, rural and remote regions and its products are fundamental to modern life and to the emergence of clean energy technologies.

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Mining as a Core Supplier to the Global Clean Energy Revolution – by Paul Stothart

Paul Stothart is vice-president, economic affairs of the Mining Association of Canada. He is responsible for advancing the industry’s interests regarding federal tax, trade, investment, transport and energy issues. www.mining.ca This column was originally published January, 2009.

Few subjects are receiving as much attention in the daily media as that of our societal need to move towards a clean energy economy. This theme was fundamental to the platforms of all the Canadian federal parties in the recent election — each featuring an array of programs supporting this transition.

In the United States, the platform of President-elect Obama talks extensively of hybrid vehicles, electricity from renewable sources, low carbon standards and the ultimate objective of eliminating oil imports from the Middle East and Venezuela within a decade. Republicans in Washington talk of nuclear power, carbon capture and sequestration and battery development, among other initiatives.

Beyond the political and media coverage, it is evident that few subjects offer comparable transformative potential as changes to the world’s energy infrastructure. Developed economies have been driven for two centuries by the industrial combustion of fossil fuel — indeed there has long existed a direct macro-economic correlation of living standards with per-capita energy consumption.

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The Oil Sands and Climate Change — Some Important Considerations – Paul Stothart

Paul Stothart is vice president, economic affairs of the Mining Association of Canada. He is responsible for advancing the industry’s interests regarding federal tax, trade, investment, transport and energy issues. www.mining.ca This column was originally published October, 2009.

The development of the western oil sands constitutes one of the world’s most significant economic stories of recent decades. Technological advances and increases in crude oil prices from $20 per barrel in the 1990s to $140 in mid-2008 together reinforced the oil sands’ economic viability and, through hundreds of billions of dollars of investment, sustained its production growth from test-well quantities to volumes exceeding one million barrels per day.

As with any source of energy, the process of extracting oil from oil sands raises a range of environmental issues. Its rapid development has served to position this sector as target number one among some environmental groups. In this respect, it is important that NGOs and public policy stakeholders not ignore some key realities.

Economic contribution

Oil sands development has increased wealth and economic activity in western Canada during the past decade, creating 200,000 jobs, including many in central Canada that helped to offset job losses in the manufacturing sector. It is also estimated that each direct job translates to nine additional jobs among suppliers and indirect beneficiaries.

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Raw Materials Protectionism Around the World – Paul Stothart

Paul Stothart is vice president, economic affairs of the Mining Association of Canada. He is responsible for advancing the industry’s interests regarding federal tax, trade, investment, transport and energy issues. www.mining.ca This column was originally published December, 2009.

There are a number of interesting public policy issues surrounding Canada’s mining industry relating to areas such as social license, tax competitiveness, tailings management, air pollutants, land access and Aboriginal relations. One emerging policy issue that has not attracted much attention in the industry or media relates to a growing movement towards raw materials protectionism by a number of developing countries, most significantly China.

At the root of the raw materials protectionism issue is the fact that many countries are engaged in a battle to secure a steady, or better yet, growing supply of raw materials. Towards this end, any key raw materials that these countries can get their hands on, in the form of concentrate, scrap or recycled material, are jealously guarded.

In the case of China, a broad array of export taxes, quotas and licensing requirements are used to obstruct raw materials exports so as to ensure the maximum supply for domestic usage.

According to a study by ITS Global consultants, in recent years these measures have been used to maximize domestic supply of aluminum, antimony, bauxite, nickel, scrap, iron ore, coal, coke, platinum, copper, tungsten, zinc, manganese, molybdenum and rare earth elements.

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Mining as a Core Supplier to the Global Clean Energy Revolution – by Paul Stothart

Paul Stothart is vice president, economic affairs of the Mining Association of Canada. He is responsible for advancing the industry’s interests regarding federal tax, trade, investment, transport and energy issues.

Few subjects are receiving as much attention in the daily media as that of our societal need to move towards a clean energy economy. This theme was fundamental to the platforms of all the Canadian federal parties in the recent election — each featuring an array of programs supporting this transition. In the United States, the platform of President-elect Obama talks extensively of hybrid vehicles, electricity from renewable sources, low carbon standards and the ultimate objective of eliminating oil imports from the Middle East and Venezuela within a decade. Republicans in Washington talk of nuclear power, carbon capture and sequestration and battery development, among other initiatives.

Beyond the political and media coverage, it is evident that few subjects offer comparable transformative potential as changes to the world’s energy infrastructure. Developed economies have been driven for two centuries by the industrial combustion of fossil fuel — indeed there has long existed a direct macro-economic correlation of living standards with per-capita energy consumption. Societies that have been able to efficiently generate and transport energy from fossil sources have become far wealthier than those that cannot. To shift away from this dependency, even in a gradual manner, requires major changes in our underlying financial, fiscal and technological practices.

The market potential for new products and technologies associated with such a shift is staggering.

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The Canadian Government’s Flawed Climate Change and Clean Air Plan Avoids Economic Reality – by Paul Stothart

Paul Stothart is vice president, economic affairs of the Mining Association of Canada. He is responsible for advancing the industry’s interests regarding federal tax, trade, investment, transport and energy issues.

The climate change issue has always been unique among environmental challenges in that, more than any other issue, it is a direct byproduct of our modern lives.

Other high profile environmental issues generally have a limited set of contributors and an obvious choice of fixes. Depletion of the stratospheric ozone layer, for example, implicated emitters of chlorofluorocarbons and was addressed through technological improvements to air conditioners and refrigerators.

Acid rain was caused by pollution from a relative handful of coal-fired power plants and smelters and was addressed through introduction of technologies to reduce sulphur dioxide emissions. Local water pollution problems, such as in the Great Lakes or nearby rivers, also offer relatively easy solutions—invest in better wastewater treatment, some new storm sewers, and a few marine regulations, and the problem is on the way to resolution.

Unfortunately, climate change does not hold the promise of such an easy fix. Indeed, in one critically important respect, it resides at the opposite end of the spectrum from previous environmental challenges. Simply put, climate change is caused not by a few “bad actors” but by the everyday actions of average people.

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Mining Association of Canada – Pre-Budget Submission – President and CEO Gordon R. Peeling

December 18, 2008
The Honourable James Flaherty
Minister of Finance
Finance Canada
L’Esplanade Laurier
140 O’Connor Street
Ottawa, ON K1A 0G5

Dear Minister Flaherty:

I would like to take this opportunity to provide you with the views of the Canadian mining industry in light of the significant turbulence that has affected our sector and the broader global economy in recent months. This follows from our earlier letter, sent to you on August 15th.

The Mining Association of Canada (MAC) is the national organization of the Canadian mining industry, comprising companies engaged in mineral exploration, mining, smelting, refining and semi-fabrication. As detailed in our earlier letter, the industry contributed $42 billion to Canada’s GDP in 2007, employed 363,000 workers in the four phases and paid approximately $10 billion in taxes and royalties. While important in remote and northern communities, the industry also generates prosperity in our cities – for example, Toronto features a hub of expertise in mining finance, Vancouver in exploration, Montreal in aluminium and iron ore, Edmonton in oil sands and Saskatoon in uranium and potash. Over 3000 suppliers draw benefit from the industry, including engineering and environmental firms, railroads, ports, and equipment companies.

The mining industry has been severely impacted by the major dislocations seen in the global economy since September. The global nickel price has fallen from over $16 per pound in 2007 to less than $5 at present. Uranium has fallen from $99 to $55, aluminum from $1.20 to $0.80, and copper from $3.20 to $1.70 per pound. US market demand has plummeted and Chinese market demand shows negative signals. Canadian operating mines have been closed, planned mine expansions have been deferred or cancelled, and investment in processing facilities has been postponed. Many important companies have seen stock price declines exceeding 50% and in some cases over 90% – all firms are engaged in serious cost-control measures.

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The Mining Association of Canada

www.mining.ca The Mining Association of Canada (MAC) is a national organization of the Canadian mining industry.  The organization comprises companies engaged in mineral exploration, mining, smelting, refining and semi-fabrication.  Member companies account for the vast majority of Canada’s output of metals and major industrial minerals.   Based in Ottawa, the Mining Association of Canada was …

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