Get rich quick . . .without making money

The mining industry has been a whipping boy for environmentalists and anti-mining organizations for the past decade, but a recent column titled “They get the gold, we get the shaft,” in The National Post, takes the exercise to a mean-spirited extreme.

We could just shrug off the mounds of misinformation amassed by Lawrence Solomon, executive director of Urban Renaissance Institute, who accused an entire industry of making bank robbers look like bumbling fools. We could roll our eyes, sigh and move on . . . and we will, but not without trying to correct a few of the missive’s most egregious fallacies first.

To hear Solomon tell the get-rich-quick tale, the pillaging industry takes far more from the Canadian economy than it returns, with short-sighted federal and provincial governments acting as aiders and abettors. On the one hand, he accuses the industry of having all sorts of underhanded means to “strike it rich,” mostly at the public’s expense. On the other hand, he says the entire mining sector represents a mere 1% slice of the country’s gross domestic product. “Worse, that slice is one of the least profitable,” earning only $1.2 billion in an average year, “an amount exceeded by the tab mining companies leave behind for taxpayers to pick up.”

It took some doing to follow the logic, because getting rich quick from an unprofitable industry seemed like a contradiction in terms. But it isn’t really, Solomon points out, not when an industry has a big bag of “secrets” that must be closely guarded, “for fear others will jump its claims.”

The first “secret” is to get governments to pick up the cost of geological surveys and infrastructure, such as mining roads, to the tune of about $400 million per year. That one had us puzzled, because we couldn’t think of any mining road any government had paid for in the past decade. As for geological surveys, what is being said here? That we shouldn’t know where the next earthquake might hit, where volcanoes might erupt, or where valuable oil and gas resources might lie hidden?

The suggestion that the Geological Survey of Canada and its provincial counterparts are pawns of the mining industry is insulting. Credible geoscientific information benefits all Canadians. Indeed, the surveys are more important than ever, providing a crucial baseline against which we can measure environmental and climatic changes.

Furthermore, much of the basic mapping of the nation’s geology has already been done, freeing the surveys to collect information related to public safety and land-planning. Research into the environment has been greatly increased, along with research into natural hazards, such as earthquakes, landslides, magnetic storms, volcanoes, floods and ground instability. Industry-related research has been greatly reduced, kept alive in some cases by cost-sharing programs and collaboration initiatives. Solomon is way off base on this “secret.”

He’s way off base on mining’s economic contribution too. In 1998, minerals and metals exports were valued at $45.2 billion, representing 14.2% of the nation’s total exports. The industry contributed $26.5 billion to the Canadian economy in 1998, an amount equal to 3.7% of the gross domestic product. The $1.2 billion quoted by Solomon reflects the industry’s trade surplus, which, in 1998, represented 6.5% of Canada’s $19.6-billion trade surplus.

We could go on refuting other inaccuracies in Solomon’s missive, which cited all manner of tax incentives and environmental rules which, he says, have made Canada “the destination of choice for big-time polluters skilled at extracting incentives for governments.” But to do so would take up the entire newspaper.

Solomon is right about a few things though. Mining has not been highly profitable for quite some time — a consequence mainly of declining commodity prices and increasing oversupply. It hasn’t always been the most savvy either, sometimes getting caught up in its own hype and paying too much for projects that fail to produce as much profit as expected. Admittedly, the mining industry has a predilection for optimism, and yet, given the ups and downs of metals prices and investor sentiment, this can only be seen as a necessary survival mechanism.

The industry also has its rogues and rascals and spectacular failures, too. We’ve watched companies such as Royal Oak Mines start off promisingly only to sink in a sea of reckless debt, leaving environmental liabilities and unpaid bills behind. But to lump in the entire industry as corporate ne’er-do-wells is to go too far.

The mining industry helped build this nation and it remains a major contributor to the standard of living most Canadians take for granted. Given that, it’s hard to get kicked in the teeth and stay quiet. We had to say something, even if to the converted.