Thanks very much.
Good afternoon, Chair and committee members. Thank you for the opportunity to be here today to provide input on behalf of the mineral exploration and development industry.
I would like to begin by acknowledging that we are on the unceded territory of the Algonquin people.
I'm Lisa McDonald, interim executive director at the Prospectors and Developers Association of Canada. I'm joined by my colleague Lesley Williams, our director of policy and programs.
PDAC is the national voice of Canada's mineral exploration and development industry, representing over 8,000 members from Canada and around the world. We support a competitive, responsible mineral industry and encourage leading practices in technical, operational, safety and social performance.
Canada's mineral exploration and mining industry has long been a key economic engine for our country, while also supplying the minerals and metals needed for everyday aspects of life. From northern and remote communities—indigenous communities—to large cities across Canada, the mineral industry generates significant economic and social benefits for Canadians from coast to coast to coast. It employs 634,000 workers across Canada and contributes $96.5 billion to Canada's GDP both directly and indirectly. It is also the largest private sector employer of indigenous peoples on a proportional basis and a key partner of indigenous businesses.
The value of the mineral sector is even more pronounced in northern and remote regions of Canada. In fact, it is the largest private sector economic driver. It accounts for one out of every six jobs just in the three territories and contributes between 13% to 21% of their GDP, with billions of dollars invested in the region, not including north of 60 across the provinces.
The benefits of this type of economic activity expand beyond project sites and direct employment. Capacity-building, business development, revenue for governments and socio-economic contributions that support educational and health outcomes all extend beyond the life of a project.
The mining projects that are typically synonymous with the mineral industry all begin with mineral exploration. Mineral exploration is the first stage of the mineral development sequence. It's a staged process of information gathering over many, many years to assess the mineral potential of a given area with the ultimate hope of discovering an economically viable mineral deposit. It truly is like looking for a needle in a haystack.
Junior exploration companies do the bulk of this work in Canada and have been responsible for more than 70% of all discoveries over the last decade. It is important to note that these companies are small. They have limited budgets and timelines, and the majority do not generate revenue but rather rely on issuing shares to finance their activities. In most cases following a successful discovery, projects are sold by explorers to major companies to mine. Quite simply, without sustained exploration and discovery success, there will be no new mines.
Despite our nation's rich geological endowment, Canada's mineral industry faces strong global competition for investment. Companies and investors have many options when making decisions about what country to explore in, mine or invest in projects. Countries all across the globe compete to attract this investment to their mineral sector. While once dominant, Canada is starting to lose ground to its competitors in a number of areas, indicating its decline in attractiveness as a destination for mineral investment.
Canada's share of mineral exploration investment has declined by nearly one-third over the last decade relative to the rest of the world. It remains challenging to raise critical funding for projects, particularly for early grassroots exploration. Expenditures by companies on this early grassroots exploration have dropped by nearly half. Other indicators of Canada's waning mineral industry competitiveness include declining base metals reserves and protracted timelines to move discoveries into production.
This decline in mineral investment in Canada cannot be primarily attributed to the most recent industry market down cycle. Various factors and policy decisions impact choices made by companies and investors about which jurisdictions to invest in, such as project permitting, taxation and land access, to name a few.
One of the most significant factors with respect to investment decisions is the cost. Remote and northern mineral deposits cost significantly more to explore for, develop and mine. This is increasingly prohibitive.
The cost premium faced by companies exploring and mining in remote and northern Canada is largely due to the lack of transportation and energy infrastructure. Industry research found that mineral exploration can cost up to six times more than in southern Canada, and it can cost up to 2.5 times more to build new mines. PDAC's follow-up study determined that as a result of the cost premium, a high percentage of known deposits remain undeveloped and are effectively stranded. Opportunities remain unrealized.
Quite frankly, it is increasingly too costly for junior exploration companies to continue to explore in these areas. The cost of such activities as intensive aircraft, transportation of large equipment and supplies, and running drills and camps are significantly more expensive in the north. Exploration companies that rely on capital markets for financing are facing more difficulties finding investors for their northern projects. Further, prospective exploration projects are difficult for explorers to sell to larger mining companies for mine development, as the costs to construct and operate a mine in these regions make deposits economically unviable.
Despite the vast mineral potential, companies are turning to other jurisdictions to explore, such as Australia. Instead of investing in Canada's north—injecting money into local businesses and communities and hiring local and indigenous people—companies are choosing to explore elsewhere. Currently, we are not capitalizing on our enviable mineral potential. Given the sector's immense value, what are ultimately at stake are further economic development opportunities for northern and indigenous communities and all of the associated benefits for a prosperous north. Strategic infrastructure is needed to sustain exploration and unlock this potential.
Against this backdrop, PDAC has consistently encouraged government to develop a strong economic policy for the north, particularly by enhancing mineral development through infrastructure investment, a sector that is a proven economic driver and that has even more potential. Some recent initiatives to support infrastructure development include the trade and transportation corridors initiative, or TTCI, and the Canada Infrastructure Bank. That said, the funding requirements for some of the much-needed infrastructure proposals through TTCI exceed the amount allotted. Further uncertainties remain with respect to the Canada Infrastructure Bank and its role with respect to the north.
As such, we continue to advocate for increased strategic investments in critical transportation and energy infrastructure to enable the discovery and development of mineral resources, reduce costs, and provide alternatives to carbon-based fuels; for funding for the infrastructure proposals that have been submitted by the three territories; and for clarity on the Canada Infrastructure Bank and ensuring that there is a distinct northern focus. Otherwise, we strongly encourage the establishment of a distinct northern investment fund.
As our research shows, reducing the costs of operating in the territories by just 10% through strategic infrastructure investments could spur exploration activity in the region and help with advancing five or six new mines. Enhanced northern infrastructure would enable increased mineral development that supports northern and indigenous employment and business development as well as revenue generation for governments and improved socio-economic conditions for people in the north.
Thank you for the opportunity to appear here today. We would be pleased to answer your questions.