COMMENTARY — Ontario’s regulatory process a source of frustration for miners

One of the key determinants of the cost of undertaking mineral exploration and extraction activities is the regulatory process to which these activities must be subjected for approval.

In recent years, that process in Ontario has raised government-Mandated costs at the same time that mining firms have attempted to lower costs and increase productivity.

These costs are measured not only by the taxes and levies paid by mining firms but also by the costs incurred by having to comply with government regulation. Furthermore, the costs of a burdensome regulatory process are also felt in terms of the number of extraction and exploration opportunities forgone by the mining industry in Ontario due to the level and uncertainty of associated costs.

Several issues in this area have generated concern in the province’s mining industry.

* The Canadian Environmental Assessment Act requires that all new mines undergo a federal approval process in addition to those already required provincially. While mining firms support the principle of environmental assessment, the industry has criticized the public hearing process as being duplicative, costly, unduly time-consuming and unnecessarily bureaucratic.

The unpredictability of the process in terms of length of time required and the uncertainty as to whether approval will finally be granted are serious concerns insofar as they affect the willingness of mining firms to develop otherwise attractive properties. According to the House of Commons Standing Committee on Resources, the time required for the panel hearing process was estimated at between 1.5 and 2.5 years.

* Delays in approvals can have a serious impact on return on investment calculations concerning a mine property. Such changes could affect the decision to build a mine in Ontario.

* The Occupational Disease Panel has proposed expanding the category for “industrial diseases,” which would qualify claimants for almost automatic compensation from the Workers’ Compensation Board (WCB). Such a proposal could greatly raise the value of claims for which the WCB would be responsible in the mining industry. Given that Ontario’s unfunded liability for the WCB currently stands at $11.4 billion and that Ontario WCB premiums are already 32% higher than the Canadian average, this proposal could raise the costs of mining in this province significantly and further undermine competitiveness in the industry.

— From a report entitled “The Economic and Fiscal Contribution of the Mining Industry in Ontario,” recently published by the chartered accounting firm Ernst & Young.