Mr. Chair,
distinguished committee members,
clerk, and fellow witnesses, my name is Brendan Marshall and I am the senior director of economic and northern affairs for the Mining Association of Canada. MAC is the national voice for Canada's mining and mineral processing industry, representing 38 members engaged in exploration, mining, smelting, and semi-fabrication across a host of commodities.
Our president and CEO, Pierre Gratton, was unable to be here today as he is currently in Botswana delivering a workshop on our “towards sustainable mining” initiative. He sends his regrets.
The global mining sector is struggling through a significant downturn in commodity prices, triggered by economic volatility and the consequences of an oversupplied market during the lengthy upswing of the past decade.
While adept at controlling costs and steering through uncertainty, the downward pressure on mineral prices is real and companies are feeling it. Many commodity prices have declined. From winter 2011 highs, both nickel and copper have fallen, losing nearly 70% and 50% of their value respectively. Similar trends with subtle variations are seen in silver, uranium, and potash, with the most dramatic swings in iron ore and coal.
While downward pressure is pervasive across many commodities, some sectors of the industry are seeing improvements. For example, the price of gold has jumped nearly 15% from roughly $1,050 an ounce in early December to $1,210 an ounce in mid-February. The important context is the impact on the low Canadian dollar trading at 73¢ U.S., providing relief where costs are in Canadian dollars and revenues are in the greenback.
Despite challenges, the Canadian industry remains an economic stalwart, contributing more than $57 billion in GDP. That's 3.4% of the national GDP in 2014, employing 375,000 people, and paying an estimated $71 billion in taxes and royalties to governments over the decade leading through 2012. Canada remains home to the greatest number of publicly listed mining companies in the world. Government has contributed positively, in some respects, with policy developments and investments supporting the growth of Canada's mining sector.
While the government should stay the course in these developments, proactive policy measures are needed to maintain the Canadian mining industry's global leadership into the future by enhancing the already strong synergy between mining and indigenous Canadians.
Mining companies have developed progressive relationships with many indigenous communities. Over the past decade, the Canadian mining industry has increasingly embraced the signing of impact benefit agreements. Beyond employment and training, more recent IBAs promote business opportunities through set-aside contracts and joint ventures. They also provide for environmental monitoring and include direct payment and resource sharing arrangements, among other provisions. Partially, as a result of the strength of this growing partnership, and partially due to the nearness of 1,200 aboriginal communities to 180 mining operations and 2,500 exploration properties, proportionally, the mining industry is the largest private sector employer of indigenous people in Canada.
We commend the new government's commitments to renew Canada's relationships with aboriginal peoples and support its election platform's commitment to increase funding for indigenous education and training. Moving forward with a reconciliation agenda, the government should renew and enhance funding for the skills and partnership fund and the aboriginal skills and employment training strategy after they expire in March 2016.
The government has stated it will review a resource development regulatory permitting processes to enhance public confidence. We look forward to working as a constructive partner to government in carrying out this policy directive. The 2012 changes in federal environmental and regulatory legislation did not reduce federal oversight of mining projects but created transition problems. The resulting uncertainty, delays, and costs fell disproportionately on the mining sector. In all these processes, mining projects account for 70% to 100% of total applications. To avoid such problems, it is critical that any future changes be informed by meaningful consultation and make adequate provision for transition and departmental capacity to manage transition and deliver implementation.
With regard to clean technology and innovation, in 2013 Canadian mining and metal companies invested $677 million in research and development, surpassing that of the machinery sector, the pharmaceutical sector, and the wood products and paper sector. In 2013 the industry employed 4,560 people in research and development. This is more than the pharmaceutical and forestry sectors, which both receive extensive financial and policy support from the government.
Canadian Mining Innovation Council is a non-profit organization that was created by industry, government, and academia to fundamentally transform the minerals industry through innovation. CMIC created an innovation strategy for industry called “towards zero waste mining”. The business case and resulting technology road maps identify transformational goals and projects that will lead to significant reductions in mining waste in the next five years, including greenhouse gas emissions reduction and clean technology development.
The government should allocate $50 million to CMIC as a component of the $200-million campaign commitment to support the development of green technology.
In regard to addressing the costs of operating in remote and northern Canada, as Chief Clarence Louie wrote in the National Aboriginal Economic Development Board's recent report:
Canada's North is facing a significant infrastructure deficit—one that is a major barrier to improving the quality of life in northern Indigenous communities and acts as the predominant barrier to economic and business development in the region.... Bold investment in large nation-building infrastructure is required alongside increased investment in community level infrastructure to support Northern communities.
The mining industry is ideally situated to generate significant and meaningful employment, business, and other social and economic opportunities for indigenous and northern Canadians. Overcoming the infrastructure deficit is key to unlocking these opportunities.
As a priority, government should establish a remote and northern fund within the context of the proposed Canada infrastructure bank, designed on the highly successful Alaska Industrial Development and Export Authority, and also consider ways that fiscal policy can level the playing field for companies that operate in remote and northern regions.
Thank you for the opportunity to be with you today. I look forward to taking any of your questions.
