February

2017’s big policy developments will impact Canada’s mining competitiveness

There is a bright future ahead if the right policies are in place

By Pierre Gratton

Pierre Gratton

Last year, we saw glimmers of hope in the commodity markets, with prices for many commodities rebounding after a lengthy downturn. But commodity prices are far from the only factor that will determine how companies will perform in 2017 and beyond.

A region’s regulatory and fiscal environments are major considerations when companies decide where to invest their exploration and development dollars. They also directly impact that region’s ability to attract highly mobile global mineral investment. In the year ahead, the Government of Canada is shaking up the policy environment in two key areas: exploring reforms to the federal regulatory process for mining projects and implementing its new pan-Canadian climate change plan. As an association whose focus is on ensuring that good public policy fosters sustainable mining growth in Canada, the year ahead will be a busy one.

The review of the Canadian Environmental Assessment Act (CEAA 2012) is in full swing. In January, the expert panel tasked with reviewing the environmental assessment (EA) process under the Act tabled its report. Their findings could inform sweeping changes to the federal EA process for mining projects. In many respects, this is an opportunity to fix a broken system. The current regime, which was reformed in 2012, has introduced new and significant challenges. We have seen a deterioration of coordination between federal and provincial processes and between federal departments, causing delays and uncertainty. Moreover, CEAA 2012 is structured to assess only large, clearly defined projects like mines, rather than the cumulative effects of other industries’ activities on ecosystems, species or indigenous rights. In doing so, it is placing a disproportionate burden of addressing cumulative effects onto one project and one sector. This is why the Mining Association of Canada (MAC) welcomes the review, albeit with some trepidation, as constant reviews and amendments to key environmental legislation are major sources of uncertainty. However, the current situation is unsustainable.

Another major government priority is climate change. Last April, MAC and its members surprised a lot of people when we came out in support of a broad-based price on carbon. This was part of a suite of policy recommendations we published to help government as it developed its pan-Canadian climate change plan. Our focus throughout 2017 will be to continue pointing to what will make a carbon price regime successful. This includes protecting emissions intensive and trade-exposed (EITE) sectors, like the mining industry. If not addressed, “carbon leakage” will result – the shifting of production and the associated economic benefits from countries that are taking action on climate change to those that are not. Moreover, any climate change policy or plan must also address the unique challenge of climate change in the territories, where there are exceptionally limited opportunities for companies – and communities – to displace diesel.

MAC members are committed to doing their part to improve energy use and reduce emissions. The industry is also doubling down on its innovation efforts both individually and collaboratively through the Canada Mining Innovation Council’s Towards Zero Waste Mining Strategy, which is seeking $50 million of federal government support over five years, starting in 2017.

There is a lot at stake for getting these pieces right as they directly impact Canada’s ability to attract new mineral investment. This is especially important today because Canada has lost ground in this regard recently. Consider that Canada is no longer the top destination for mineral exploration according to the Fraser Institute’s Investment Attractiveness Index, having conceded first place to Western Australia in 2015. Also, spending on off-mine-site exploration work in Canada is expected, once tallied up, to have reached the lowest point in a decade in 2016 to $680 million, compared to a high of $2.8 billion in 2011. Also troubling is the fact that no new mining projects entered federal EA in 2016. Mineral exploration and investment dollars are still being spent, but Canada’s share of that spend is getting smaller and is being shifted to other countries. There is little doubt that the regulatory environment is contributing to this trend.

Fortunately, we see a bright future for the mining industry if the right policies are in place. A thriving mining industry will mean even greater contributions to Canadians. It will also make us effective partners to government as it works to grow the economy, transition to a low-carbon future and close the gap between indigenous and non-indigenous Canadians.

Pierre Gratton is the president and CEO of MAC.           

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