Mr. Speaker, that is the message I wish to convey today through this motion, which says:
That, in the opinion of this House, the government should consider revitalizing investment in exploration in Canada and in Quebec by providing for fiscal incentives, including flow-through shares.
We have noted for a long time how little mining exploration is done in both Quebec and Canada. Therefore, we must act quickly to revitalize mining exploration throughout this country in order to replenish ore reserves in this industry. This situation is mainly due to the fact that junior mining companies, which underpin mining exploration, cannot raise enough public funds to carry out their exploration work, while major companies, which have the money needed for exploration, spend an increasingly important part of their exploration budget in developing countries.
The advantage is that those countries already have listed minable sites, while Canada offers few new deposits ready for mining. I remind the House that the committee on natural resources held hearings on this matter last fall and made nine recommendations that were supported by all the parties represented on this committee.
Unfortunately, the government decided to disregard all the work done by the committee and all the evidence we heard there. That is how this government operates. It has given the fifth report of the committee entitled "Lifting Canadian Mining Off the Rocks" the following response: "Keeping Canadian Mining on the Rocks".
I doubt that, by rejecting almost all of the recommendations in this report, the ministers, both of finance and of natural resources, were really aware of the true effect of their decisions on mining exploration in Canada and in Quebec.
All the stakeholders in mining exploration are disappointed that this government did not agree with any of their recommendations, that were based on their expertise and knowledge of mining. I would like to remind the government that more than a quarter of Canadian trade is based on the natural resource sector and that it is time that the government saw the mining industry as an important means of ensuring economic development in our society by achieving the national priorities, which are, according to the Liberal government, employment and growth.
Mines that will be closing in a few years as a result of the depletion of their reserves will not be replaced if new sites are not discovered. This will cause major layoffs and will have a very negative impact on the Canadian economy, especially in mining regions, where metal processing, transportation and other infrastructures will be hard hit.
An immediate response is needed if we are to reverse this trend by the year 2000, since it takes five to seven years on average between the discovery of a mine and start up of production. Failing this, the industry will gradually disappear. Renewal of the reserves is urgently needed; the mining industry is facing one of the hardest challenges it has had to deal with in many years.
As a result of the shift of mining investment to other countries, Canada's known mineral reserves have decreased. In 1992, 28 mines closed and only 8 opened. There are many reasons for this, but the trend must be reversed or the industry will be totally gone within twenty years.
Base metal reserves have been decreasing since 1980 and are unlikely to be replaced at an adequate rate in the near future. The industry has done its part. On numerous occasions it has voiced its concerns to the Government of Canada, which rather than facilitating the process of adapting to the new international competition, particularly from third world countries, has in fact added to the problems by allowing the investment climate in the mining sector to deteriorate compared to the competition.
The industry is working hard to ensure its survival. The economic and political context has not kept pace in order to encourage the industry to remain in Canada. Declining mining investments in our country are linked to a number of growing concerns.
To name but a few of those concerns: heavy financial burdens, compared to the countries of the south of course, particularly taxes and charges unrelated to profits; uncertainty and delays in environmental assessment and approval procedures; regulatory overlap between levels of government and between departments, creating needless difficulties; reduced access; uncertainty about tenure of mineral titles; and lastly, increased financial requirements to guarantee restoration.
For there to be any recovery in the mining industry, an incentive plan must be promoted for mining exploration in Canada, similar but better controlled than the one in place in the 1980s.
Even if base metal reserves are in decline, there is still immense geological potential in Canada, Quebec in particular. The recent opening of the Louvicourt Mine in my riding confirms the potential of the mining industry in Quebec and Abitibi and the expertise of those who discovered, developed and financed the mine and those who now operate it.
It also confirms that governments were right to create the flow-through share system, which helped to finance the initial exploration work leading to the discovery of the mine in 1989.
This particular mine, with $300 million invested to bring it to the production stage, will provide more than 350 direct jobs for the next fifteen years at least. It is the result of a joint effort during the eighties by the federal and Quebec governments to encourage mineral exploration on sites of former mines that were no longer in production and thus deemed unlikely to have sufficient potential as a source of major new discoveries.
New technologies and adequate funding were instrumental in discovering this copper, zinc, gold and silver mine, whose mineral extraction capacity is assessed at 4,000 tonnes per day, while recent finds near the site may extend the lifespan of this mine to 25 years. Its potential classifies Louvicourt as a world class mine.
Three more major projects will start up in my region in the next two years, thanks to the same flow-through shares from the eighties, and I am referring to the Grevet, Raglan and Troilus projects. Raglan in northern Quebec is becoming the largest potential site for copper ore in Canada.
The role of mineral exploration is to find other Louvicourts or Raglans. The average lifespan of a mine is about 11 years, and since it takes between five and ten years from the discovery of a mine to the production stage, we must start today to find the mines of the year 2000.
Many world class mines remain to be discovered in Quebec. This is clear from the examples I just mentioned. Only a small portion of Quebec's territory has been developed, and we could discover mines of this calibre, in practically any mining region in Quebec and Canada.
We have the human and technological resources to make further discoveries. For some years, however, the amount of exploration has been insufficient to renew mineral reserves because of competition from those same Third World countries and insufficient levels of public funding. The discovery of new mines is synonymous with economic development.
Louvicourt and Raglan are a clear indication that the federal government should increase tax incentives, already provided by the Quebec government, for preliminary mineral exploration in order to replace base metal reserves which are running out in this country.
The lack of mineral exploration in Canada is particularly disturbing, considering the general uncertainty as to Canada's commitment to encouraging mineral exploration and mining operations within its territory.
The uncertainty rises from the fact that regulations for access to sites are becoming increasingly restrictive, while environmental regulations or criteria are subject to duplication or diverging interpretations. In addition, obtaining an operating permit has become an increasingly lengthy process.
Exploration companies can no longer be sure that their exploration rights automatically include mining rights. The impression is that they have the right to engage in exploration, but until they have spent millions of dollars to identify an economically viable ore body, they do not know whether they will be able to extract ore and under what conditions.
In this context, there are three ways in which we could deal with the problem: re-establish public financing of mining exploration; improve the efficiency of exploration and make Canada more attractive to investors in the mining sector by improving fiscal, environmental and access regulations.
The flow-through share system has shown over the years that, at least in Quebec, it has made a significant contribution to the discovery of a number of mines. If we consider the 26 base metal or precious metal mines that were in production in Quebec in 1994, flow-through shares were either entirely or partly responsible for financing the discovery of 14 of these mines. Still in the case of base or precious metals, this applies to the discovery of nine out of ten mining projects now in the development or pre-production stage.
Considering these discoveries, the flow-through share system has shown it is worthwhile for governments, since it generates major economic spinoffs.
Already in September 1982, a report on the Canadian mineral industry identified five areas of urgency requiring immediate government intervention; there was urgency then, they said. They were: preventing further erosion of Canada's economic competitiveness in certain key areas of mineral production, including those of copper and nickel; halting and reversing the depletion of mineral reserves; finding new ideas and developing technologies, policies and programs to encourage greater efficiency in mining exploration; reversing the apparent trend of mining investors, including Canadian multinationals, to drop Canada in favour of countries in Latin America, Asia or the Pacific and other areas of development in the world where resources are plentiful; and, finally, generally creating a political and regulatory context better suited to maintain industry viability and stimulate investment in mining exploration.
After 13 years of work by various committees on natural resources and others and with similar conclusions for problems which do not seem to have been resolved and after two federal governments, we are at practically the same point, hence the urgency and the need to act.
If Canada remains at the forefront in the metals market, it is due to the low cost of its mining operations attibutable in large measure to the high level of industry productivity.
The Canadian mineral industry therefore managed to increase its productivity significantly through the rationalization necessitated by the recession in the 1980s.
All of the sectors of the mining industry have significantly increased their productivity by adopting new technologies and mining methods, developed, for the most part, in Canada.
We must therefore support the industry's effort so as to avoid a decline in mine reserves and prepare new deposits for mining to replace those that will eventually be used up.
For many years, the Association des prospecteurs du Québec has been calling in vain for three measures that would promote mining exploration: extension of the expenditure period to 12 months in the year following the year in which the equity was raised and harmonization by Ottawa; a federal measure whereby only the capital gain over and above the net purchase cost would be taxable, something the PDAC is also calling for-Quebec already has a similar measure-; and greater deductibility of exploration expenses federally-the rate is currently 100 per cent federally and 175 per cent in Quebec.
Carrying part of work funded in one year over to the next would not mean any additional expense to the public purse.
To administer this measure, the Association des prospecteurs du Québec proposes a trust mechanism under a mandate conferred by the governments on private sector organizations, which would ensure technical and financial expenditures were justified. The users would pay the costs of the trust.
I have just given a long list of measures which would assist the mining industry and which would meet the demands of various groups. Not all are easy to implement in these times of severe government cutbacks.
However, a large number of them would not cost the public anything and could be very profitable in the medium run. The government must learn to distinguish between measures which involve expenditures and measures which yield dividends for the public purse.
It is essential to restore a climate conducive to mining investment in Canada and in Quebec. According to Natural Resources Canada, data dating back to June 1994 indicate that Canada's investment in exploration barely reaches 17 per cent of world spending in that field, while it was 23 per cent in 1991. We have good grounds to believe that within five years, if nothing is done to create a favourable climate for mining investment in Canada, this figure could drop to 10 per cent.
Such data clearly suggest that Canada must do something fast to reverse this trend. The various levels of government will have to work together to improve fiscal and environmental regulations, as well as regulations governing access to land for the mining exploration industry.
The mining industry can still contribute to the economic development of a country, as many South American countries which rely on the expertise and the financing of Canada to develop their economies have discovered. They know how to attract mining and exploration companies.
The present outflow of exploration funds and the selling of our expertise to foreign countries will lead, in Canada in the years to come, to a reduction of employment in the mining industry and in associated industries like transportation, and therefore to a reduction of the share of the mining sector in the Canadian GNP.
I hope that the measures I just proposed, as well as those proposed by the House of Commons Standing Committee on Natural Resources will be considered and implemented as soon as possible. In Canada and Quebec, we have the mining potential, the technical know-how and the money to allow our mining industry to increase its economic contribution, but the government has to be willing to do its part.
