Good afternoon, Madam Chair and committee members. Thank you for this opportunity to speak here today.
For those of you who are not familiar with the Prospectors and Developers Association of Canada, or PDAC, we represent the Canadian mineral exploration and development industry. Our mandate is to support a competitive and responsible industry both at home and abroad, so that our members can continue to discover and develop deposits of the minerals and metals that make modern life possible.
I'd like to begin our conversation today by outlining some of the factors that have helped Canada become a top global destination for mineral exploration investment. This will lead into some reflections on how the ability or inability to access mineral-rich areas can affect the investment decisions that are made by exploration and mining companies. Then, with that context in mind, I'll put forward some basic principles that PDAC hopes will guide federal decision-making processes with respect to the creation of protected areas. I'll conclude with a short discussion of how important it is to find the right balance between conservation and economic development.
As many of you know, Canada is actually a world leader in all aspects of the minerals industry, but particularly exploration. The industry is cyclical, however, and we are currently in the midst of one of the most prolonged downturns in Canadian history. I'll share just one stat to illustrate this. In 2012, over $27 billion Canadian was spent around the world on mineral exploration. In 2015, that number had fallen to just over $11 billion.
Countries compete to attract that investment in order to support the discovery of mineral deposits that might eventually become a mine. Canada and Australia have both been very successful at attracting exploration investment, with Australia currently attracting the largest share of global exploration budgets. It may interest you to know that Canada's share of non-ferrous mineral exploration—that's not including iron, potash, and uranium—has dropped from around 21% to around 14%.
There are a lot of different factors that influence how attractive Canadian jurisdictions are at attracting that investment and those mineral exploration budgets. Canada's geologic endowment is one of our primary competitive advantages over other countries. To capitalize on that advantage, mineral-rich areas need to be open for exploration in order to increase the probability of making a discovery.
One of the points I'd like to impress upon you today is just how difficult and rare it is to actually find economically viable mineral deposits. While there are a lot of mineral deposits in the earth's crust, most are low-quality deposits that are not worth mining. About one in 10,000 exploration projects leads to an actual mine, so the extent to which the land base is actually open will profoundly influence the probability of finding a deposit that could actually become a producing mine.
Not surprisingly, the availability of prospective land also profoundly influences the investment decisions that are made by companies. The geologic potential of a country or jurisdiction accounts for about 60% of the weighting with respect to CEO decisions about where they wish to explore and where they choose to explore. As land withdrawals remove accessibility to prospective areas, Canada becomes a less attractive place to explore, and companies go elsewhere.
Without exploration there aren't new discoveries, and without new discoveries there would eventually be no new mines. This would then mean a loss of the high-paying jobs, business development opportunities, and revenue flows to both communities and governments that are associated with production.
Notwithstanding the importance of land access to sustaining the existence of the industry in Canada and the economic benefits that it generates, PDAC does recognize that there is a diverse range of values associated with the use of land in Canada. We understand that governments must balance these values when making land use decisions, such as the establishment of protected areas. In order to achieve this balance, we believe that land use planning and land withdrawal decisions should be made through processes that are transparent, inclusive, evidence-based, flexible, and holistic.
By “transparent”, we mean that the process by which a decision is made should be clear to all parties and outlined well in advance.
By “inclusive”, we mean the use of multi-stakeholder and aboriginal consultation processes to develop proposals around the establishment of protected areas. Ideally, these would unfold within land use planning and community visioning processes, as are currently taking place in the Northwest Territories and Ontario.
By “evidence-based”, we mean that all decisions should have sound rationales drawn from adequate data as well as from the input from meaningful multi-stakeholder dialogues.
By “holistic”, we mean that decisions should be based on a comprehensive set of information that is comprised of environmental, social, and economic data, including traditional aboriginal knowledge. Economic data should include information on mineral and energy potential as well as other potential economic development opportunities, such as forestry. The interplay between these different types of information is more likely to lead to a sound policy decision.
By “flexible”, the last point, we mean that the process used to create new protected areas and other types of land withdrawals should contain built-in mechanisms for periodic review. The importance of building in flexibility cannot be overstated. For example, 30 years ago nobody would have believed that diamonds could be discovered in Canada. If those diamond-rich parts of the country had been withdrawn without the capacity to go back and reassess those decisions, the lost economic opportunities, for aboriginal communities in particular, would have been profound.
An example of a formal process that incorporates many of those principles is the federal mineral and energy resource assessment process, MERA, which is undertaken whenever a federal national park is proposed. We hope that a similar process would be established for further federal protected areas.
The PDAC also recommends to consider avoiding complete bans on all forms of economic activity unless it is absolutely crucial in protecting critical ecological or cultural areas. Exploration and mining can potentially unfold even near sensitive areas, with appropriate restrictions and mitigation measures. The Prairie Creek project, which is in the middle of Nahanni National Park, is a great example. Conservation and development may not be mutually exclusive if the right regulatory safeguards are in place.
There may be some parties who would prefer not to have mineral potential factored into the decision-making process, arguing that the protection of Canada's natural landscapes and biodiversity should outweigh any economic opportunities that might be lost. In our view, this would be a short-sighted approach to decision-making, in three important ways.
First, the world needs the minerals and metals that we discover in order to improve quality of life globally.
Second, the world also needs those products if it is going to make the transition to a low-carbon economy. Mined materials are crucial for the batteries for electric vehicles and power storage, solar panels, and the rare-earth magnets used in electric cars and wind turbines.
Finally, exploration and mining companies are often the only private sector organizations that are creating economic opportunities in remote, rural, northern, and aboriginal communities.
Recently there was a report by an environmental organization that suggested the Sahtu community in the Northwest Territories should abandon its interest in mining and energy. The Tulita District Land Corporation, which is in the Sahtu region of the NWT, responded with the following statement, which I think is worth sharing today:
There are those who tell us we should turn our backs on industrial development and focus instead on tourism, arts and crafts, forestry, and agriculture. The world is now in the early days of the Fourth Industrial Revolution and yet some apparently want us to return to times from before the First. We cannot do this. Our youth cannot do this. We want to live and work in a rapidly changing modern [environment] and our companies, our families and our governments need income to accomplish that goal. Growing potatoes won’t do it. Developing our petroleum resources will.
We cannot forget the human dimension of land use planning when making decisions about protected areas. An integrated approach is the only way to balance different land use values for current and future generations.
The PDAC looks forward to ongoing dialogue with the Government of Canada on how to establish protected areas while maintaining Canada's position as a top destination for investment in the minerals industry.
Thank you again for your time. I and my colleague, Lesley Williams, are happy to answer further questions at the right time.