Canadians have long prospered on the backs of those who dug for buried treasure in this country. But with southern metal deposits increasingly hard to find, the treasure is up north these days, and increasingly difficult and pricey to get to.
According to a new industry study, the cost to explore and build new mines is as much as 2.5 times higher in Canada’s far North than in the south, due to a lack of access, power lines, and just about everything you need to extract and ship tonnes of ore.
“There are no roads, so you have to build roads,” says Pierre Gratton, CEO of the Mining Association of Canada, which produced the study along with the Prospectors & Developers Association of Canada, the Association of Consulting Engineering Companies, the NWT & Nunavut Chamber of Mines, and the Yukon Chamber of Mines.
“Depending on the nature of your commodity, you may need shipping. So base metals and precious metals, you often need some kind of port infrastructure. So you have to put that in. There’s air strips. You just keep adding it.”
And it does add up. The cost of permitting and building a large-scale mine (to say nothing of the challenge of finding the deposit) can run into the billions of dollars before a single nugget or ingot ever comes out of the ground.
But it can pay off as well. Canada’s mining industry contributed some $54 billion to the country’s GDP in 2013, and is the cornerstone industry of communities across the country. After all, Canada’s often called a ‘rocks and trees’ economy (though these days it’s often used as a criticism of Canada’s inability to evolve).
The problem is that the rocks in the southern part of the country are increasingly hard to find, and this is an issue for an industry where they judge you not by what you are producing, but what you have in the ground for future production.
Meanwhile, massive deposits such as the chromite and copper in the “Ring of Fire” region near James Bay remain isolated and unmined.
“That’s not to say there aren’t opportunities in the south, but it’s far more known, far more discovered, and the giants are up north,” says Gratton.
Ideally for the industry, federal and provincial governments would be building the infrastructure. But doing so is a pricey gamble for cash-strapped governments, particularly when the ebb and flow of commodity prices can spell the end of a project and leave you with a road to nowhere.
So the Mining Association and its partners are calling for some financial help from federal, provincial and territorial governments, including higher tax credits on exploration, capital pending, and certain infrastructure investments in remote areas, and incentives for drilling early-stage projects.
They’d also like to see the creation of a northern infrastructure investment bank to provide long-term financing for resource-related infrastructure projects in the territories.
“What we hear of course is that governments do want to take advantage of that northern wealth. They have to put their money where their mouth is, or industry will invest elsewhere,” says Gratton.
It’s no secret that Stephen Harper likes the north, or at least travelling there. And in an election year, the miners hope someone is paying attention.