Mining’s gauntlet

It is a puzzle to some investors that mine permitting in Canada can be a merciless running of the gauntlet in one part of the country and a relatively painless experience in another. And many are amazed to learn that projects in remote areas with the fewest jobs are often the most difficult to permit. All we can say is, welcome to Canada, a confederation of provinces and territories as diverse as the politicians who govern them.

Despite all the hoopla about the New Economy, Canada’s real economy (the one that pays the bills) is still highly dependent on natural resources. Some northern and rural areas are solely dependent on mining. Real people in real communities suffer when a mine closes down, or when a new mine can’t get off the drawing board.

Against this backdrop, it’s easy to understand why mining executives and industry organizations are warning that mining investment in Canada is being compromised because of an increasingly complex, costly and inefficient federal and provincial regulatory framework. It’s increasingly adversarial too, with numerous projects ending up in litigation limbo, the Cheviot coal project in Alberta being one recent example.

The adversarial nature of the process isn’t confined to project proponents and their stakeholders. Often, jurisdictional issues pit provinces and territories against Ottawa, or against each other. The Northwest Territories, for example, is less than happy with Ottawa’s heavy-handed approach to resource development. The territories want a larger role in the management of their resources and a bigger share of benefits. Yet, judging by recent permitting experiences, that day may be a long time coming.

The industry’s problems aren’t confined to the permitting process. Last week in Vancouver, the Mining Association of British Columbia (MABC) hauled out some alarming statistics to drive home the grim reality of its struggling mining sector. Annual mineral exploration spending is now a paltry $25 million; in contrast, total exploration spending in 1990 was $268 million. Small wonder the MABC is singing the blues.

MABC President Gary Livingstone says the biggest factor contributing to the downturn is the government’s policy on land-use planning. About half the potential exploration territory is now classified as parkland or special management zones, and many native land claims remain unresolved. While development isn’t precluded in special management zones, investors are nervous because plans to explore these areas are often condemned by preservationist groups.

The MABC and the Mining Association of Canada are both urging the federal and provincial governments to bring some common sense back to the mine development process and remove impediments to growth. What’s required is “not preferential treatment,” says MAC Director David Goldman, “only stable, fair legislation consistently and efficiently applied.”

Time will tell if these governments have the will to provide a policy framework that strengthens the domestic natural resources industry. If they don’t, our guess is that the number of corporate leaders abandoning the status quo parties to support Canadian Alliance leadership candidate Tom Long may increase, triggering a full-scale revolt by the business community. Obviously, Canada’s movers and shakers have grown weary of Ottawa’s ongoing apathy to their concerns.

For those who don’t know, Long is one of the architects of Ontario’s highly successful “common sense revolution.” Critics will sniff and say the business community doesn’t have enough votes to carry Ottawa. That’s what they said in Toronto when the business community supported Mike Harris’ bid to become Ontario’s premier — twice, to be exact. And they were wrong both times, because they forgot that a strong economy is in everyone’s best interest.