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Ontario mining: a catalyst for a new economy

  Undoubtedly, our world is changing. However, some fundamentals remain the same. To build a strong, innovative and value-added economy, we need a solid base.
            Chris Hodgson

Undoubtedly, our world is changing. However, some fundamentals remain the same. To build a strong, innovative and value-added economy, we need a solid base. For geographical and historical reasons, mining has provided us with that base for a very long time. If we are smart about it, it will continue to do so in the Ontario of tomorrow.

Our geography is a blessing, but it also presents challenges. The vast majority of Ontarians live in the southern urban centers and we sometimes forget that Northern Ontario constitutes 87 per cent (802,000 square kilometres) of the land area in this province. This huge, relatively isolated area holds distinctive advantage, both in its resource wealth and human potential. A successful future-oriented strategy for Ontario needs to foster broad-scale regional development and social capital across the province. To flip around an argument presented by Richard Florida and Roger Martin in their government-commissioned report, Ontario in the Creative Age, we can achieve an economic transformation by supporting and developing highly competitive base industries like mining, which will drive development along the production chain, transforming and improving productivity and wages in service industries and ultimately bolstering highly innovative creative industries throughout the province, enabling a self-reinforcing upward cycle of innovation and smart, equitable growth.

Mining is an important economic contributor, as well as an engine for regional development and value-add generation. Though the number fluctuates with various commodity price changes, mining in Ontario had revenues of $9.6 billion in 2008. Given that 80 per cent of mineral output is exported to markets in the United States, Europe and Asia, the mining industry contributes immensely to improving Ontario’s international balance of trade.

The industry provides a major boost to our financial sector, which is based in urban centers that are far away from any actual mining. The Toronto Stock Exchange (TSX) is currently the leading global mining exchange, listing 57 per cent of the world’s public mining companies and raising more mining equity capital than any other exchange.

Mining is an industry which is active in all parts of the province. Diverse communities such as Windsor, Goderich, Perth, Midland, Sudbury, Timmins, Red Lake, Kirkland Lake, Marathon, North Bay and Attawapiskat all have mining as an important contributor to their local economies.  In some parts of the province, especially in the Far North, mineral resource development is critical to creating employment and entrepreneurial spin-off opportunities.

As the largest private sector employer of Aboriginals in Canada, mining makes a significant contribution to the well-being and development of remote communities.

Partially due to its exceptional level of productivity (each employee produces more than $500,000 worth of mineral products annually), the industry only employs about 25,000 people directly. However, the total for direct and indirect employment is 100,000, while the mineral sector cluster employs close to 200,000 people in the province. 

This progression is illustrative of the exponential benefits that mining generates. According to a study by University of Toronto economists Peter Dungan and Steve Murphy, the combined direct, indirect and induced effects of a single “representative mine” are extremely large, with the output of that single mine contributing $278 million to Ontario's economy and $84 million to government revenues annually – something to be noted as our province begins to wrestle with its staggering deficit. Moreover, the study demonstrates that mining is an activity which has, in the economic sense, less "leakage" than other sectors. A large percentage of the benefits of the economic development of a mine stay local, fueling induced economic activity that is difficult to quantify, but visible in communities with successful mining operations.

Other tangible benefits are a direct result of modern mining’s commitment to the principle of sustainability. Mining companies make many direct contributions to the well-being of their communities – for instance, in the provision of medical centres, sports facilities and community centres. They also fund schools, universities, colleges and research facilities, building their competitive advantage by supporting centres of creativity and innovation. The industry invests in its – and by extension, our – future in other ways as well – $1.7 billion annually in construction, equipment, exploration and research and development – $2,300 annually in safety training per employee, $130 million in environmental protection and more.

It is obvious that Ontario has some major advantages that it can leverage to build sustainable prosperity that is broadly shared. However, the not-so-new reality, brought home to us clearly by recent events, is that we must succeed in a fiercely competitive and increasingly mobile global market. The static nature of mines should not fool us into thinking that mining companies will remain in unsupportive jurisdictions. Complacency is not an option.

There are steps that the government can take to ensure Ontario is in an optimal position to take advantage of the next upswing in commodity prices to begin constructing its new economy. A basic foundation of mining success in Ontario – the thing that can set us apart and give us an advantage over some other jurisdictions with significant mineral potential – is certainty of the rule of law and regulatory efficiency. These need to be maintained and enhanced if we wish to continue to reap the benefits responsible mining can bring. Twenty-first century infrastructure is needed to ensure the connectivity that will allow for the transfer of knowledge, innovation and wealth to all geographic areas and sectors in the province. To be truly proactive, the government should set a clear development target, akin to the conservation targets in the Far North, which will focus efforts on opening ten new mines in the next ten years. It should also spearhead the establishment of a research, development and manufacturing base in Ontario that will turn our mineral wealth into green products and technologies that will support the lifestyles of the future.

There is no getting around the fact that without mining, we would neither be able to maintain our current lifestyles nor make way for the greener ones of the future. Mining produces the building blocks of everything from your kitchen sink to wind turbines, hybrid cars, nanotechnology and beyond – where human imagination and ingenuity have yet to take us. As a society, we must get beyond the old mindset that mining is somehow an obsolete sunset industry. What is obsolete is our approach, which fails to integrate it into our overall economic and creative potential. Other global players are way ahead of us on this. Keith Bradsher of The International Herald Tribune recently reported on how China is “using its dominance in mining an obscure class of minerals (rare-earth elements) to strengthen its emerging lead in many alternative energy technologies, from wind turbines to hybrid cars.” As rising oil prices and changing social values make eco-efficiency an essential element of global competitiveness, Ontario must take the long view and act to integrate its mineral wealth advantage into a sustainable industrial and innovation strategy.

For its part, industry must seize the opportunity provided by a welcome business environment to strive to achieve levels of performance that are outstanding in global terms. With the right incentives in place, the Ontario mining industry has every right to aspire to a leadership position by being the cleanest, most productive, technologically-advanced and socially responsible in the world. This is the only sure way to achieve resilience from economic shocks and ensure lasting prosperity for all.

Chris Hodgson is the President of the Ontario Mining Association.