Editorial The one per cent solution

The longevity of any mining venture is of prime importance to miners and investors alike. Miners want a secure job in a stable community where they can raise their families and investors want to own shares in a long-term producer to take advantage of swings in metals prices when they occur. So, too, should this long-term view be of concern to our legislators, even though their terms in office are sometimes more short-lived than the average mine.

With this in mind, we suggest the Ontario government bargain with mining companies planning to open new mines, expand existing ones or reopen old ones. Instead of simply giving them a 3-year tax-free holiday, we suggest companies be given the holiday only if they agree to re-invest one per cent of their revenues into mining technology research. The majority of the mines expected to take advantage of the tax holiday are gold producers, which need little more incentive to make a production decision than the rising price of the yellow metal. But the rest of the industry should get something in the bargain. Plowing money back into the industry through research is a start.

The Mining Technology Council of Canada, made up of representatives from the government, universities and the industry, would indubitably welcome such a move. It was created recently to act as a research broker to manage mining research in Canada — most of which is centred in Ontario. Patrick MacCulloch, president of bp Canada and chairman of the council, initiated the call to mining companies to contribute at least one per cent of their revenues to research. “We need this to counteract political action taken in other countries that is designed to manage resources for non-economic advantage,” he told delegates last month at the annual meeting of the Canadian Institute of Mining and Metallurgy.

For the Ontario government, a “one-per-cent solution” in place of a 20% tax would be a small but welcome precedent-setting gesture. By itself, a 3-year tax-free holiday looks too much like a fast way for the government to get votes in northern Ontario. But if it were coupled with the one-per-cent solution advocated mainly by the established, largely base metals, producers in the industry (who stand to gain very little from the tax holiday alone), it would display strong, decisive leadership with a view to the future.