Manitoba mining industry losing its lustre
Uncertainty, high taxes take bite out of viability
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Hey there, time traveller!
This article was published 24/05/2018 (1659 days ago), so information in it may no longer be current.
It’s no secret the mining industry in Manitoba is experiencing tough times. What’s also becoming clear is there is growing frustration within the industry over the slow response from the province.
There are numerous reasons for the downturn — including the coincidental timing of the end-of-life cycles for a couple of mines and the lengthy slump in commodity prices.
But there has been concern for some time over lagging exploration activity, high tax rates and a persistent feeling that the province is not as engaged as it should be in the development of an industry that has contributed significantly to the economic development of the province.
Rather than double down on efforts to shore up the industry and attract new exploration, many in the industry are more concerned than ever that mining has become a low priority for the PC government.
“Amongst our membership, there is a feeling that our industry is in a precarious position in Manitoba, and the signals we are getting is that the province is not supportive,” Andrea McLandress, executive director of the Mining Association of Manitoba Inc., said.
Those are strong words from a typically conservative industry group which has worked closely with the provincial government for decades.
But some of those “signals” are fairly obvious. The budget for the resource-development division of the Department of Growth Enterprise and Trade is down almost $1 million this year, senior management positions in the department are being left unfilled and one position has recently been filled by someone with no experience in the sector. Spending on the geological survey, crucial for the attraction of new exploration, is down eight per cent this year.
As if to acknowledge both the precariousness of the industry’s situation and the dive it’s taken in the government’s list of priorities, the province recently announced it will no longer hold the annual Manitoba Mining and Minerals Convention it has held for decades, passing it off to the Manitoba Prospectors and Developers Association.
“It was not a complete surprise,” association president Ken Klyne said. “There has been rumours. We are just organizing some meetings now to see if the organization is up for it.”
There is no argument the industry is troubled. At the beginning of last year, there were seven active mines in the province (not counting quarries and peat moss mines). The Birchtree nickel mine in Thompson closed last year, the True North gold mine in Bissett closed at the beginning of this year and the Reed Lake copper mine is closing at the end of the year. The 777 mine in Flin Flon is slated to close in 2021. Vale’s nickel smelter and refinery in Thompson will close this year. The north will lose about 1,200 jobs over the course of a couple of years.
But there is no consensus as to what could turn things around.
Mineral-exploration spending in Manitoba — vital to the future of the industry as it takes from 10 to 15 years to go from prospecting, to exploration, to project development — has been lagging far behind other provinces with similarly rich mineral resources, like Saskatchewan, for a few years. Manitoba mining tax rates are higher than in Saskatchewan and Ontario, and ongoing uncertainty around the resolution of disputed land claims and protected areas continues to plague the province.
In an article after the release of the Fraser Institute’s annual survey of mining companies this year — which saw Manitoba fall from second to 18th position in the ranking of the relative attractiveness of mining jurisdictions — Ken Green, one of the authors of the report, wrote, “Mining investors have a gloomy outlook for Manitoba’s mining industry compared to other provinces, as policy uncertainty is deterring investment.”
“It’s death by 1,000 cuts,” is how one former veteran Manitoba mining industry official put it.
There is clearly no silver bullet.
McLandress said the industry’s message to government has been pretty consistent over the years.
“We are looking for changes to the tax structure, some clarity and simplification on regulatory requirements and better transportation infrastructure,” she said.
Ryan Land, manager of corporate affairs and organizational development at Vale’s Manitoba operations in Thompson, said modest early retirement incentives and fairly rigorous re-training initiatives are softening the impact of job losses occurring in Thompson.
“Not to minimize by any extent the effect on people, but I think morale is on a bit of an uptick,” he said. “It turns out there is still a community here.”
But he bemoans the fact there is no longer a provincial ministry with the sole responsibility of mineral development. (For many years, there was a stand-alone Department of Natural Resources with its own deputy and assistant deputy ministers. Since the election of the current Progressive Conservative government, those responsibilities have become part of Growth, Enterprise and Trade.)
“We understand and support the province’s efforts in trying to figure out an economic development strategy in the north,” he said, referring to the Look North initiative that continues to bring community leaders together in the north to mine fresh ideas.
“But the real work is about creating the competitive conditions to attract investments within existing companies, so that the companies operating here today can make the business case to attract investment in our operations,” he said. “And step two is to create conditions to have new exploration happening in the province. What we need to do in the province is get more drills turning.”
Blaine Pedersen, minister of growth enterprise and trade, acknowledged that the minerals resource branch is undergoing a transformation with the goal of “re-prioritizing and re-energizing” it.
“There is going to be lots of positive things happening here,” Pedersen said. “We are going to empower the people who are working in the department to be able to do their jobs better and work closer with the industry. Yes, it has been tough times. We think we are coming out of the tougher times.”
A process to create a new First Nations mineral-development protocol — headed by Ron Evans, former grand chief of the Assembly of Manitoba Chiefs, and Jim Downey, former deputy premier and cabinet minister — is just wrapping up its work.
“We are trying to remain optimistic,” McLandress said. “With the Look North process, and with the First Nations mining protocol, we are looking to see what happens in the next few months.”
Martin Cash has been writing a column and business news at the Free Press since 1989. Over those years he’s written through a number of business cycles and the rise and fall (and rise) in fortunes of many local businesses.