Published on February 15, 2017 In The Telegram
To say that that the past few years have been a tumultuous time for the Canadian mining sector is to put it mildly; the number of shuttered mines, mass layoffs and lost investment due to a sharp downturn in the markets has exacted a toll on countless communities throughout the country. After a six-year decline that appears to have bottomed-out in 2015-16, commodities are now on the uptick, and with it, the potential for major job creation and economic development. With this resurgence in the industry, mining companies that have positioned themselves strategically during the lean years, and that have also aligned with supportive government policies, are now in a strong place to succeed.
In a free-market environment, a coordinated relationship between the private and public sectors is vital for our collective economic well-being. And given its level of involvement from taxation to regulation and everything in between, government decision-making can either make or break certain sectors of our economy. Strategic industry/government partnership is an arrangement that, when working well, can deliver prosperity to its people; when it is not, it can result in policies and decisions that create loss of confidence from investors and job creators, leading to disastrous consequences and lost opportunities.
As the Chairman and CEO of a multi-billion dollar iron ore project that is based in Labrador and straddles the Quebec border, I can only look longingly to the province of Quebec and its government that well understands the critical relationship between the private and public sectors. While Newfoundland and Labrador is as prosperous in its abundance of natural resources as its provincial neighbour, unlike Quebec, it has failed to realize anything close to its potential for the industry. Its citizens and economy are suffering as a result; unemployment is the highest in the country and the economic forecast for the Province remains bleak. It does not have to be that way. Those employed in mining enjoy the highest wages and salaries of all industrial sectors in Canada with an average annual pay of more than $100,000. In 2014, mining not only contributed $57 billion to Canada’s GDP, and payments made to the federal and provincial governments totaled more than $71 billion in taxes and royalties over the last decade.
The Quebec Government has recognized that the mining sector is a key component of the Province’s economy, that, when supported by sound public policies, not only stimulates job creation, but also ensures prosperity for its citizens. Quebec’s Plan Nord bet heavily on the return of a robust mining industry, at a time when the bottom was still falling-out. The Plan called for strategic investments in public infrastructure and a renewed partnership with industry. As a result of its gamble, the Province has obtained badly needed foreign and domestic investment, and has paved the way for more jobs, growth and development.
There are many recent examples of how this long-term vision and partnership with industry have paid-off, not just for the government, but for workers, taxpayers and citizens of Quebec: Through an agreement with Tata Steel, the Government of Quebec pledged $175 million in support of a direct shipping iron ore project, and in return received a $1 billion investment from the Company, along with the creation of 550 well-paying jobs; Champion Iron and Resources Quebec partnered together in a $26million financing arrangement for the Bloom Lake mine assets, giving new life to that project and providing badly needed jobs for the region, as well as environmental reclamation of the area; Resources Quebec and Mason Graphite, also concluded a $13 million arrangement last year for the continued development of the Lac Guéret graphite mine near Baie-Comeau; Stornoway Diamonds, with $325 million in support from both Resources Quebec and Caisse de dépôt et placement du Quebec, was able to finance the construction of the $1 billion Renard Diamond Project in the James Bay Region. And those are just a few examples. The actual list could fill several pages.
Quebec, by its actions and its deeds should be held-up as a model. When long-term planning and sound policies are put into practice, Quebec has proven it can yield great results; a stark contrast to that of its northeastern provincial neighbor.