Why Ontario can’t afford to ignore juniors in the next budget

Doug FordOntario Premier Doug Ford visits the Prospectors and Developers Association of Canada convention in March 2024. Credit: Premier of Ontario Photography

Without a doubt, one of the most important challenges facing the next generation is global warming and the need to decarbonize the transportation sector. This can only happen with the sustainable development of new mines that produce the copper, nickel, cobalt, lithium and other critical minerals that can be found throughout northern Ontario’s rich geology.

However, it is the junior exploration sector that has traditionally found economic mineral deposits that are sold to majors who have the financial capacity to build new mines. This important and vital part of the mining ecosystem is largely being ignored by the Ontario government.

I have been in exploration sector for over 40 years — the last 10 years as head of the Kirkland Lake’s Northern Prospectors Association. As anyone who attended this year’s Prospectors and Developers Association of Canada convention in Toronto knows, the junior exploration sector is not in good health. The challenges facing the sector have the potential to derail Ontario’s much vaunted Critical Minerals Strategy.

While both provincial and federal governments have spent tens of billions of dollars to attract electric vehicle (EV) manufacturing plants, Ontario has done almost nothing to support the companies and prospectors that will find the critical minerals needed to build the batteries essential for these operations.

The struggling exploration sector needs help, but it would only take a fraction of the amount governments have spent to subsidize EV plants. If Ontario wants the materials going into those plants to be sourced locally, the Ford government should include the following strategic exploration investments in its next provincial budget on March 26.

Exploration Incentives

A more competitive financial incentive program is needed to complete with other Canadian jurisdictions. The federal Mineral Exploration Tax Credit (METC) and the Critical Mineral Exploration Tax Credits (CMETC) associated flow-through financing have played a major role in establishing Canada as a destination of choice for global exploration. Quebec, British Columbia, Manitoba and Saskatchewan have more robust provincial incentives programs in the range of 20-30% for both METC and CMETC. In comparison, Ontario currently offers a 5% credit.

To complicate matters, the federal government is considering letting the METC expire at the end of March, which makes it even more imperative for Ontario to increase the provincial METC to a minimum of 20%. This would effectively replace the federal credit and bring it into competitive alignment with other provinces.

Boost OJEP

A well-funded Ontario Junior Exploration Program (OJEP) is badly needed. The current funding formula, which provided $13 million last year, is far too small to make any serious impact on exploration and is unlikely to lead to new deposits. To meet the challenge of finding new critical mineral deposits and advancing those discovered to date, OJEP funding should increase to about $50 million. While that figure may seem like a considerable amount, in the early 1990s, the highly successful OMIP (a previous version of OJEP) received roughly $10 million from the provincial government. Taking inflation into consideration, this program should be budgeted at a minimum of $20 million. However, if governments are serious about fighting climate change, reshoring manufacturing, and North American mineral security of supply, that figure should be increased to $50 million to have a significant impact.

Prospector grants

“Grassroots” exploration is almost entirely being ignored and not being funded. A return to prospector grants incentives, like the highly successful OPAP program of the 1990s is required. To put things into perspective, in 1990, the Ontario government spent $4 million on this vital initiative. Today that number should be closer $8-10 million per year.

Traditional territories maps

With First Nations co-operation, the Ontario government needs to publicly publish clear and distinct maps on Indigenous traditional territories. Juniors want — and are expected to — build positive relationships with Indigenous communities. But it’s extremely difficult to find out which First Nations communities should be contacted when exploration activities are conducted due to overlapping claims.

This information must be communicated to the southern media who have problems discerning which First Nations spokespeople represent which communities. Too often, the media quotes individuals who don’t come from the community impacted by exploration, giving the public the false impression that there aren’t First Nations who support responsible resource development.

In order to see solid results, Ontario needs to make a sustained political commitment to the first three initiatives for at least five years.

Educational initiatives

The Ontario government also needs to implement a sizeable education initiative for First Nations communities – especially in the isolated communities –  to understand the huge differences between junior explorers and major miners, juniors’ needs to raise scarce capital through the financial markets, and the actual environmental impacts of early stage exploration.

It is only when a discovery is FOUND and bought out by a major miner that a significant number of direct and indirect jobs, business opportunities, royalties and other benefits can accrue to Indigenous communities.

This requires access to the land – aside from reserve boundaries and clearly defined sacred areas and burial sites – without onerous demands that would limit juniors from doing what they do best. This is needed to give juniors the best chance to find the future mineral deposits that will bring long-term, high-paying jobs and enormous economic benefits to impoverished First Nations communities. The mining sector is the largest private sector employer of Indigenous people in the country. Mining activity can ultimately help strengthen First Nations communities, allowing more people to stay in their home communities and enjoy a higher standard of living.

Similarly, the Ontario government should consider a large educational program for the general public, municipalities, educational institutions working with various provincial mining organizations.

In the next provincial budget, some focused and strategic investments in junior exploration will ensure the sector remains the healthy and vibrant starting point for a successful Ontario Critical Minerals initiative.

Gino Chitaroni is the president of the Kirkland Lake Northern Prospectors Association.


1 Comment on "Why Ontario can’t afford to ignore juniors in the next budget"

  1. Tristan Childress | March 22, 2024 at 4:54 pm | Reply

    This is a very reasonable ask Gino!

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