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PDAC welcomes Feds’ attention to lack of investment in mining sector

Don Wall
PDAC welcomes Feds’ attention to lack of investment in mining sector
DON WALL — The annual Mineral Exploration and Mining Convention held by the Prospectors and Developers Association of Canada in Toronto is the biggest of its type in the world with over 100,000 in attendance most years. Pictured: stakeholders gathering March 2 for day two of the conference.

It was all hands-on deck for the federal cabinet at the Prospectors and Developers Association of Canada (PDAC) annual conference in Toronto, reflecting both the importance of the sector to Canada’s economy and concerns over slippage in exploration and mine development in recent years.

The governing Liberals sent four cabinet ministers, including Prime Minister Justin Trudeau, and several parliamentary secretaries on top of significant sponsorship supporting the Invest in Canada forum at the PDAC Mineral Exploration and Mining Convention.

Statistics from the Mining Association of Canada show that direct investment into Canada has remained stagnant since 2007 while global investment has risen more than threefold. And while 2019 saw a small increase in the value of mining projects planned and under construction from 2019 to 2029, the total 10-year projected value of $80 billion remains 50 per cent below the 2014 level of $160 billion.

The biggest reason for the leakage is uncertainty, remarked convention delegate MaryAnn Mihychuk, a career mining geologist and former minister of employment, workforce and labour early in the Trudeau government’s tenure.

Investors are fearful of the roadblocks to project payoff Canada puts up, the ex-politician from Manitoba said.

 

The government is listening…and that bodes well for our industry,

— Felix Lee

Prospectors and Developers Association of Canada

 

“The mining sector been extremely important to Canada for jobs, for economic growth, for construction obviously and all the spinoffs, but also to provide revenues for the southern cities like Toronto to build hospitals and infrastructure and our quality of life,” Mihychuk said, adding the flow of Canadian and global investment funds to other jurisdictions “should be a concern to all of us.”

“And one of the reasons is a sense of uncertainty. The average cost of a mine these days is a billion dollars. If you are not sure you can get the mine into production and provide some sort of return for the people that are buying shares, investors will not invest in Canada.”

Felix Lee, the 37th president of PDAC, acknowledged that exploration and development dollars are down but said that could turn around quickly if there were signs that Canada had found a path forward to resolving key issues.

“It is important to remember, when it comes to exploration dollars, the dollars are quite mobile,” he said. “One jurisdiction may be doing well today and then they suddenly change something and it becomes slightly less attractive than another jurisdiction.”

Globally, there was an uptick in financing activity from 2016 to 2018 but it dropped in 2018 and 2019, Lee noted. Not only is there less financing for mine development, but there is less exploration, which is a separate concern, since without exploration there are fewer discoveries and thus a reduction in mines put into development.

Canada’s mining fundamentals remain very strong, Lee said, but the financiers are looking for leadership from the federal government that Canada will resolve land access issues and set a clear path for a greener future for the sector.

“It was very encouraging what I saw in terms of the federal government presence culminating with the prime minister coming,” he said referring to Trudeau’s address on the transition to more sustainable mining. “The government is listening…and that bodes well for our industry in terms of garnering the government support necessary to kick-start the industry to get exploration and money into the industry again.

The conference, said Trudeau, “highlights the kind of future Canadians are building across the country. A future where innovation creates good jobs for people, where we grow the economy while protecting our environment. A future where Canada is the best place in the world to invest.”

The green transition, access to land and Indigenous participation in the industry are all linked and have been ongoing concerns as PDAC has undertaken advocacy with the government over the years, Lee said. He praised recent federal initiatives such as the Canada–U.S. Joint Action Plan on Critical Minerals Collaboration, focused on securing supply chains for minerals needed for important manufacturing sectors, as well as the Canadian Minerals and Metals Plan, which identifies strategic directions that governments and stakeholders can pursue to promote industry competitiveness.

Federal investment in infrastructure is always on the table, Lee said.

“The message to the government about making more investments in infrastructure is something that the PDAC has been putting to the government for a very long time,” he said. “Canada’s North and the more remote regions are suffering from a significant infrastructure deficit. Canada’s North has 40 per cent of our land mass, and within that land mass, there are 200 known deposits but they remain undeveloped simply because of a lack of infrastructure.”

 

Follow the author on Twitter @DonWall_DCN.

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