Preamble:   In March 2009, industry ranked Manitoba in 8th place globally in the Fraser Institute’s Survey of Mining Companies 2008/2009. Four years ago it was in 1st place. 

Industry representatives surveyed indicated that the global economic slowdown has cast a pall over the mining industry with the vast majority of mining executives saying they expect a severe pull back in exploration activity and at least 30 per cent of exploration companies going out of business. 

The mineral industry is affected by the current global recession.  Base metal prices have fallen by almost 70% over the past two years and analysts have not yet given assurances that we will be seeing recovery in the near future.

Manitoba’s second largest primary industry, mining, is at risk as Manitoba is the least competitive jurisdiction in Canada, according to the PricewaterhouseCoopers Canadian Mining Taxation: 2007 Edition.

Resolution:   That the Government of Manitoba,

(a)  on a high priority basis demonstrate, from the office of the Premier and throughout, commitment to make Manitoba the best place in the world to engage in the mining business,

(b)  establish a Premier’s Mineral Economic Advisory Council (“MEAC”) to advise government on steps to make Manitoba the best place to do business in mineral exploration and development, value-added processing and manufacturing (“the mineral industry”). Further, that the MEAC consider making recommendations respecting, but not be limited to, the following:

 Regulations

1.      Expediting the permitting process with clear processes and timelines;

2.      Harmonizing the provincial and federal review process, with the objective of making Manitoba the lead jurisdiction;

3.      Developing a “One Window” process for all permitting;

4.      Reducing assessment fees for the next 3-year period given the unusual economic hardships faced by mineral exploration SMEs.

Taxation

5.      Eliminating the cap on the Mineral Exploration Assistance Program (“MEAP”) program and fully funding the program to committed levels;

6.      Further reducing taxes to be competitive to Saskatchewan and Ontario;

7.      In the public interest, government resource revenue sharing with Aboriginal Communities with due regard to the Quebec and British Columbia approaches.

Duty to Consult

8.      Creating clarity about aboriginal consultation standards in Manitoba;

9.      Developing and resourcing a comprehensive mineral industry awareness program targeted at Northern and Aboriginal Communities;

Other

10.  Addressing other matters deemed helpful to accomplish (a) above.

 

Resolution Report:  

The Manitoba Chambers of Commerce produces Resolution reports as part of its commitment to be accountable to its members. The reports are updated as matters unfold and have three components:

MCC Advocacy: Specific activities the MCC has done to help make this Resolution a reality. 

Developments:  Events (e.g. government action, media coverage) that relate to Resolution. 

Current Status: The MCC’s current plans to help make this Resolution a reality. 

Advice, comments, and information sharing are welcome; simply enter a reply at the bottom of this post.

 

MCC Advocacy: 

April 28, 2009: Copies of this Resolution were sent to the Board of the Manitoba Mining Association Inc.; the Assistant Deputy Minister of Science, Technology, Energy and Mines; the Progressive Conservatives and Government staff.   

April 16, May 6 and May 7, 2009: The 2009-2010 Resolutions were posted on the MCC website, listed as part of a comprehensive Report on AGM 2009 and then notice of this story was circulated through the MCC e-Omnibus which is sent to all MCC members, Media and Government.

May 19, 2009: Resolution books were sent to every MLA and every Member of Parliament that hails from Manitoba. The following had this Resolution specifically drawn to their attention with a detailed letter setting out the background to this issue, Government initiatives (where applicable), and an argument for the Resolution:

• The Minister of Science, Technology, Energy and Mines
• The Deputy Minister of Aboriginal and Northern Affairs  

May 27, 2009:  Followed up on Martin Cash’s article (see “Developments” May 27, 2009 below) by forwarding this Resolution to him.

July 15, 2009: The MCC E-Update provided notice of new developments on this issue. The E-Update was circulated sent to all MCC members, Media and Government.

August 19, 2009: The MCC met with the Minister of Science, Energy, Technology and Mines in relation to this issue.

The Minister acknowledged that Manitoba ranked first at one point but we now rank 8^th among 225 jurisdictions in the world. 

Not a bad showing all in all but the Minster confirmed that he has and will continue to work at enhancing Manitoba’s competiveness. For example, he meets regularly with each and every one of Manitoba’s mining companies to get their input on what is needed. 

In terms of positive signs, the Minister also noted mineral exploration in Manitoba this past year was three times the average rate. 

Two locations on the government’s website provide information outlining and explaining the many initiatives the government has undertaken to enhance Manitoba’s mining industry: 

Manitoba’s Mining Advantage: click here.  

Incentives for Mining in Manitoba: click here. 

 

Developments:

May 27, 2009: The Winnipeg Free Press published an article by Marin Cash entitled “Mining sector reels under low prices: Lack of cash for explorations troubling.” That article is reproduced here in its entirety:

You don’t have to tell Mike Hoffman about how the low metals prices have screwed up the mining industry.

The CEO of Crowflight Minerals completed the $140-million construction of the Bucko Lake nickel mine near Wabowden just as metal prices collapsed last fall.

The mine is on the verge of commercial production, but it may also be on the verge of suspending production.

“Ever since the prices dropped really low late last year we discuss it (suspending operations) all the time, to be honest,” Hoffman said on Tuesday.

But a new report by Ernst & Young suggests that the collapse in metals prices that caused a decline in global production and a dramatic reduction — almost a cessation — in exploration will lead to “severe supply constraints developing in many metals and minerals.”

The report notes that previous recessions have shown that metal supply exceeded demand for only a short time.

And since it takes seven to 10 years to bring a mine into production, the Ernst & Young report, called Mining and Metals in Adversity, says the severe supply constraint could “potentially cause prices to soar to new heights.”

It may or may not come quickly enough for Crowflight.

“It is what it is,” Hoffman said philosophically. “But there is a human cost. The mine now has a major impact on the community of Wabowden and Cross Lake.”

The mine employs about 160 people, most of them from the region and about 60 per cent of aboriginal heritage.

Nickel prices were up over $6 a pound on Tuesday, continuing a solid upward trend from $4.25 two months ago, but still a long way from the $25 peak in early 2007.

But investors continue to stay clear of the sector, making it virtually impossible for junior companies to raise money for exploration.

The Ernst & Young report says the ranks of the 1,000-plus junior companies listed on the TSX Venture Exchange “are likely to be severely reduced this year.”

HudBay Minerals Inc., the company that owns and operates the integrated base metals mining and processing operation in Flin Flon, may be one of the companies best positioned as far as the Ernst & Young analysis goes.

On Tuesday it closed on the sale of its 16.7 per cent stake in Lundin Mining Corp. for a before-tax gain of approximately $100 million.

That $100 million can be added to close to $700 million in cash on its books. The company is stepping up exploration work at Lalor near Snow Lake, which has the potential to be developed into a major gold and zinc mine.

But work on Lalor is one of the few highlights in the mineral exploration scene in Manitoba.

Total exploration spending this year will likely come in at just a little better than half as much as it was last year, falling from $141 million to $78 million.

But Chris Beaumont-Smith, acting manager of mineral policy and business development for the province, said even with the decline in exploration spending, Manitoba is increasing its per capita share of total exploration spending across the country.

Changes in the scale of mineral exploration in Manitoba take place much like the way the rest of the provincial economy performs — without many peaks or valleys.

There are some who are concerned that that’s not good enough and the province needs to become better positioned for when global metal supplies are depleted and prices rebound.

Ed Huebert, executive vice-president of the Mining Association of Manitoba, said up until the middle of this decade, exploration activity in Saskatchewan was only about 15 per cent more than in Manitoba.

Since then annual spending in Saskatchewan is about triple Manitoba’s.

“We’ve been flat as a pea on a plate,” Huebert said.

Even though the province’s mining tax rate came down slightly in the last provincial budget, he said rates are not competitive with neighbouring provinces.

 

Mining in Manitoba

$3 billion — Value of mineral production (including oil) in 2007

Less than $2.5 billion — Estimated value of production in 2009

Six per cent — Portion of provincial GDP from mineral production

More than 10 per cent — Share of total provincial exports from minerals

5,200 — Number of people directly employed in the sector

$570 million — Capital spending in the mining sector in 2008

July 14, 2009: The Manitoba Government issued a news release entitled “Spring Offering for Mineral Assistance Supports $12 Million in Mineral Exploration” that stated as follows:

The provincial government will provide $1.1 million from this year’s first offering of the Mineral Exploration Assistance Program (MEAP) to set in motion 25 mineral exploration projects generating about $12.7 million in expenditures, Science, Technology, Energy and Mines Minister Jim Rondeau announced today.

“It’s gratifying to see that companies continue to choose Manitoba to invest in mineral exploration,” said Rondeau. “We know MEAP plays a significant role in attracting companies to the province and that historically every MEAP dollar in support returns just over nine dollars in company spending for exploration in Manitoba.”

The minister noted total company spending on exploration in the province for 2009 is forecasted at $77.4 million which is well above the 10-year average of $52.2 million. Rondeau also noted that three new companies have been attracted in part by MEAP’s financial assistance to explore in Manitoba for the first time.

“Rockcliff was attracted to explore in mine-friendly Manitoba partly due to the existence of the Mineral Exploration Assistance Program,” said Peter Wood, vice-president, exploration of Rockcliff Resources. “This provincial program provides an important source of funds that help us continue to explore our Snow Lake Project properties, especially now during these difficult economic times.”

MEAP was recently renewed for an additional three years starting with the April 2008 offering and will offer $2.5 million of assistance annually through two offerings per year.

MEAP provides assistance of up to 25 per cent of approved eligible expenses to a maximum of $300,000. There are higher levels of assistance, up to 35 per cent to a maximum of $400,000, to encourage exploration in under-explored frontier regions and to help sustain mining communities such as Lynn Lake, Leaf Rapids and Snow Lake.

Ten of the 25 projects are in the Lynn Lake/Leaf Rapids, Snow Lake and northern areas including the Far North, Northern Superior and the Hudson Bay Lowland.

“Mineral exploration benefits the economies of rural and northern communities,” said Rondeau. “It is important to support the mining industry as it searches for new ore bodies to mine that will create new jobs and business opportunities for Manitobans, and that’s exactly what MEAP is doing.”

To view a list of the approved MEAP projects and a map showing the project locations, visit: www.gov.mb.ca/stem/mrd/busdev/incentives.

Background Information: 

MEAP Details

. The companies are exploring for a variety of commodities including a number of projects for gold, copper-zinc and nickel. There is also one project each for diamonds and potash.

. Exploration activity remains strong for base metals and gold which represent 92 per cent of the proposed MEAP projects:

- 40 per cent (10 projects) for gold;

- 28 per cent (seven projects) for copper-zinc; and

- 24 per cent (six projects) for nickel.

. Since 1999, up to and including the November 2008 offering:

- 521 exploration projects have been completed,

- $168.7 million in exploration expenditures have been reported,

- $18.3 million in exploration expenditures were funded under the program, and

- every one dollar in MEAP assistance paid generates $9.20 in exploration expenditures.

. Manitoba recently announced other supports for exploration and mining in Budget 2009 including a new progressive mining tax rate of 10 to 17 per cent from the current 18 per cent level, and a significant increase to the Mineral Exploration Tax Credit to more effectively stimulate investment in junior exploration companies operating in Manitoba.

. Increased exploration activity boosts local economies, contributes to the province’s geo-science knowledge-base and identifies new ore bodies that have the potential to be Manitoba’s next mine.

Mineral Industry Activity

. Over the last 10 years, exploration expenditures in Manitoba have averaged $52.25 million annually. This year’s activity is expected to surpass the average with expenditures upwards of $77.4 million.

. The mineral industry is Manitoba’s second-largest primary resource sector and employs approximately 5,200 people directly and 18,000 indirectly through spinoff business, many of them in the northern regions.

. Crowflight Minerals’ Bucko Lake Nickel Project at Wabowden, which received MEAP support during the exploration stage, achieved full commercial production in June 2009. The mining operation has bolstered northern economic and social development by providing jobs for about 120 people including local residents who received mill-processing and underground mine training to work at the mine.

. HudBay Minerals plans to spend $13 million in 2009 to advance exploration on its 2007 Lalor zinc-copper discovery near Snow Lake. The discovery garnered the 2009 Prospectors and Developers Association of Canada’s award for the most significant Canadian mineral discovery and continues to receive MEAP support. 

July 14, 2009: The PC Caucus issued a news release entitled “NDP Delays Costs Jobs: Another missed opportunity for the mining industry: Cullen”.

The release stated as follows:  

Despite claims by the NDP that mineral exploration in Manitoba is a priority, a black cloud still hangs over the industry, forcing companies like CanAlaska Uranium Ltd. to choose other locations to set up new exploration sites.

In a recent news release, Peter Dasler, P. Geo., President and CEO of CanAlaska said government delays awarding exploration permits has prompted his company – a multi-million dollar company – to choose Saskatchewan over Manitoba for a new exploration site.

“…due to continual delays encountered since the Fall of 2007 with the award of exploration permits by the Government of Manitoba arising from prolonged consultations with native communities, both CanAlaska and ERI have opted to initiate their cooperation by first conducting uranium exploration in Saskatchewan,” he said.

Mining is Manitoba’s second largest primary industry, employing more than 5,000 people, accounts for four per cent of our GDP, and makes up 12.5 per cent of our total annual exports. That’s why Progressive Conservative Critic for Mines, Cliff Cullen, says the NDP needs to end the foot dragging on the duty to consult with First Nations communities. Otherwise, more opportunities will be lost to other provinces. 

“The duty to consult with First Nations communities is an issue that the NDP has failed to address – and now we seen jobs more being lost to Saskatchewan,” Cullen. “While there is programming in place to support the increased exploration potential in Manitoba, over the last 10 years, Manitoba has slipped to last place when it comes to competitive corporate income and mining tax provisions. That puts us at a disadvantage.”

For more information, please contact: 

Liz Peters, Media Relations Director, PC Caucus

Office: (204) 945-5519  Cellular: (204) 791-8221

E-mail: liz.peters@leg.gov.mb.ca

August 31 to September 1, 2009: A meeting of Canada’s Mines Ministers took place and wrapped up with the following news release:

Canada’s Mines Ministers Discuss a Sustainable Recovery for the Mining Sector

ST. JOHN’S - Mines Ministers from across Canada concluded two days of discussions today in St. John’s at their annual conference hosted by the Honourable Kathy Dunderdale, Minister of Natural Resources for Newfoundland and Labrador. The ministers discussed global economic developments, their impacts on the mining sector and how to best position the country and industry to capitalize on a sustainable economic recovery.

“Our country is fortunate to have vast mineral and abundant energy resources that can be developed to create jobs and prosperity across Canada,” said the Honourable Lisa Raitt, Canada’s Minister of Natural Resources. “But to maintain this advantage and position ourselves to fully benefit from the economic recovery, we must continue to be at the forefront in developing and deploying new technologies, in advancing research and development and innovation, and in developing solutions to a variety of regulatory, social and environmental challenges.”

The ministers moved forward on key issues related to the long-term success of the sector, in particular: the current investment climate, social responsibility, regulatory performance, and research and innovation.
 
“As provincial and territorial governments, we are working to ensure we continue to have a competitive business climate that promotes and fosters investment and exploration in our areas as these markets rebound,” said Minister Dunderdale. “We must focus on streamlining governmental regulatory processes, addressing current and evolving issues and pursuing innovation so that we can maintain a strong and competitive mining industry in Canada that is responsive to global commodity demands.”

Ministers agreed to endorse the collaborative efforts aimed at leveraging Canada’s comparative advantage in an internationally competitive mining industry.

The ministers identified regulatory restructuring as the top priority to position Canada for the recovery. This will significantly enhance the certainty, accountability and effectiveness of Canada’s regulatory system. 

The ministers agreed to:

1. Continue to work with stakeholders on opportunities to improve environmental and social performance. The ministers recognized that continued performance improvement and communicating successes are essential for the industry to maintain a social license to operate. The ministers also agreed to release the report from the Social Licence Task Team.  
2. Drive action to improve Canada’s regulatory system to support the competitiveness and sustained growth of mining industry. Ministers expressed strong support for a one-project/one-assessment approach for the environmental assessment process. They tasked senior officials to work with their counterparts responsible for environmental assessment and related regulatory approvals on fundamentally improving performance, and report back at EMMC 2010.
3. Reaffirm their support for the continued work of the National Orphaned and Abandoned Mines Initiative. The ministers agreed to release the 2002-2008 NOAMI Performance Report.
4. Recognize the Green Mining Initiative as an example of a pan-Canadian collaborative effort to improve the mining sector’s environmental performance and create green technology opportunities for Canadian businesses.
5. Support the continued work of the Canadian Mining Innovation Council, which represents an opportunity for governments and industry to promote innovation and the development of the highly qualified people needed to ensure the sector’s long-term competitiveness and responsibility.

The mines ministers also accepted the invitation from Minister Simard to convene in September, 2010, in Quebec City for the 2010 Energy and Mines Ministers’ Conference.

October 16, 2009: The Government of Manitoba issues a news release entitled “Manitoba Rated Second In Canada For Competitiveness In Mining Taxes.”

The release relates to the  PricewaterhouseCoopers (PWC) 2009 Canadian mining tax report and can be accessed here.

January 22, 2010: The Government of Manitoba issued a news release entitled, “Province Boosts Mineral Exploration With $1.4-Million Assistance Program: Mining Industry Flourishing In Northern Manitoba: Chomiak. 

Click here to read the contents of this news release.

 

Final Report:

While reports have indicated that Manitoba’s competitiveness for mining is high, there is reason to believe it has slipped as of late.

A new Minister is in charge of this portfolio and it is understood that he is reviewing the situation with industry and is open to government action to enhance Manitoba’s competitiveness.

This Resolution has been a qualified success.