Patrick Moore, founding member and former president of
Greenpeace, supports the mining sector. This is the same
Patrick Moore, who, with his band of Rainbow Warriors forced
the American and French governments to stop nuclear testing,
shamed the Russians and Japanese to halt factory whaling and
were a nightmare for Newfoundland sealers.
He lightheartedly quipped that all his life, he had been
against many issues so he finally decided to be in favour of
something. He stated the obvious fact that the world's real
needs for food, energy and building materials cannot be met
without a growing mining sector.
Moore gave an engaging luncheon speech at the Prospectors
and Developers of Canada (PDAC) convention, last Wednesday that
highlighted the many benefits the mining sector brings to
impoverished lesser-developed countries around the world and
the hypocrisy of many in the NGO environmental movements.
He mentioned that many of the environmental extremists who
focus on greenhouse gasses and global warming are adamantly
again nuclear energy and hydro-electric dams - the two sources
of clean energy that can significantly help in solving these
problems.
During the past decade the mining industry has embraced many
sound practices in water shed management, land restoration and
pollution reduction that have significantly reduced their
impact on the environment. In addition, sustainable mining
initiatives in the social arena - the most challenging part of
this new strategy - helps build up local capacity, through
education, health care and economic diversification
initiatives.
Moore gave many examples of corporate socially responsible
practices that gold producer Newmont Mining initiated at its
operations in Indonesia, Ghana and Peru. It was a very
eye-opening speech from a Canadian environmental icon.
I have been attending PDAC conventions for about half a
decade and have regularly witnessed the industry's commitment
to incorporating green mining practices throughout all phases
of development.
However, it is only the major mining corporations that have
operating facilities and cash flow that can afford to pay for
these worthwhile projects. The junior mining sector is an
entirely different part the business and the general public has
difficulty understanding the distinctions between the two.
Junior mineral exploration companies continue to discover
much of Canada's mineral wealth. More than 50 percent of
exploration expenditures are conducted by junior companies.
Large mining companies spend much of their exploration dollars
delineating existing mines and less for finding brand new
deposits.
The appearance of a junior exploration company is just the
preliminary start of the mining process. Often, many people
assume that if a junior miner is working near their community,
then a mine will soon follow. This is wrong as only one out of
every 1,000 discoveries becomes a commercial operation. It
usually takes at least 10 years before production starts due to
the many federal and provincial regulatory hurdles that could
be easily streamlined.
Junior exploration is comparable to the research and
development of the mining industry. This part of the sector
would be considered "research at the lab bench" if it were a
manufacturing company. Most juniors would be defined by the
federal government as small or medium enterprises (SMEs).
Very, few junior explorationists have producing mines that
contribute to their cash flow. Almost all of these companies
rely entirely on the financial capital markets for their
operating funds. They sell shares to finance the different
stages of their exploration programs. Financings tend to be
small and relatively frequent. About sixty-four percent of
financings are for less than $250,000.
They use the most modern, high-tech methods available and
conduct their activities in an environmentally sustainable
manner. In 2004, Wallbridge Mining Company Ltd., a local based
junior, was presented with an Environmental Award by
Prospectors and Developers Association of Canada for its
exemplary care of and commitment to preserving the natural and
local environment during exploratory drilling on Windy Lake,
located in the Sudbury Basin.
When junior exploration companies are working near First Nation
communities, employing aboriginals is one of their top
priorities. NRCan research indicates that there are
approximately 1,200 aboriginal communities located within 200
kilometres of some 2,100 exploration properties across Canada.
Canada is the premier destination of global exploration
budgets due to the effectiveness of the "super" flow-through
share program. The Metals Economics Group, a globally respected
world leader in mining industry intelligence, attributes
Canada's top spot for exploration expenditures, in part, due to
the "super" flow-through share program.
Fully 62 percent of the 1,440 exploration companies
worldwide are Canadian. They are entrepreneurial risk-takers,
the envy of the global mining industry. I have talked to many
foreign mining representatives who all admire the current good
government policies that support this dynamic part of the
mining sector.
Yet significant federal tax problems and possible changes
may push many of these companies to leave Canada and explore in
more mine friendly jurisdictions. The "super" flow-through
program expires at the end of the month, and many feel the
Harper government will not extend it. This is a major mistake
as exploring near aboriginal communities has become very risky
due to unsettled land claims. The "super" flow- through program
helps reduce much of that risk.
Another issue surrounding exploration near First Nations communities is the requirement of extensive baseline environmental work and community consultations. These are very expensive costs that cannot qualify for Canadian Exploration Expense deductions. Canada's mining tax regime regulations have not kept up with current industry good practices that embrace a commitment to achieve a social license to operate.
Impoverished Third-World living conditions are all too common
in First Nations communities across northern Canada. The
federal government has utterly failed in addressing these
appalling circumstances. Recently, the Assembly of First
Nations National Chief Phil Fontaine has publicly stated that
the private sector may be the only hope in reducing poverty in
aboriginal communities. Mining is the only well-paying economic
activity that can develop in these isolated regions.
Unfortunately, federal government tax policies are hindering
not helping the one industry that can accomplish these goals
and provide desperately needed jobs for the next generation of
aboriginal youth.
Stan Sudol is a Toronto-base communications consultant and policy analyst who writes extensively on mining issues. [email protected]