THUNDER BAY – A comprehensive study of nine mining projects currently underway in Northwestern Ontario predicts these mines will yield $136 billion in mined product and provide 13,149 jobs to Northwestern Ontarians.
The study was commissioned by Ambassadors Northwest and conducted by a group comprised of University and College professors led by Bahram Dadgostar, Ph.D. in a report released today titled Mining in Northwestern Ontario: Opportunities and Challenges.
The report aimed to provide Government, Aboriginal peoples, industry stakeholders and community leaders with an estimate of the potential economic, employment and revenue benefits, along with challenges related to relationship and partnership building, labour market dynamics and rail, road and electrical infrastructure.
“There has never been a comprehensive study of this nature. We have prepared an integrated analysis of economic, government, social and infrastructure elements in our
findings”, said Bahram Dadgostar, Ph.D. study team lead.
In terms of dollar value, employment and tax revenue, the economic analysis revealed
that the potential worth of the mineral deposits in NWO is substantial including:
• A total value of the un-mined metals and minerals of $USD135.40 billion for these
nine mines utilizing June 1, 2012 commodity prices;
• The direct, indirect and induced employment created for the Province of Ontario is
expected to total 23,588 new positions, a total of 13,149 of these new positions are
expected to remain in Northwestern Ontario;
• The potential tax revenue for all three levels of government is conservatively
estimated to exceed $CAD 16 billion over the average operating life of approximately 17.5 years.
The study found that “It is imperative that the Federal Government take a leadership role regarding Aboriginal involvement”.
The study also identifies three major issues facing the development of mining in this
region including Aboriginal involvement, labour market dynamics, and infrastructure
in terms of rail, roads, and electrical power.
“It is our hope that this study will provide significant insight into the integrated nature of mining development and compliment the work currently underway for the cities mining readiness strategy”, said Camillo Lento, Ph.D., CA, CFE.
This study demonstrates that the extent of the projected wealth, the positive economic
and social benefits and the expected taxes that could be generated by these nine mines
“Existing operating mines and other advanced exploration projects are not considered within this analysis. If these operations had been included, a much greater economic impact would have resulted”, said said Nikola Gradojevic, Ph.D., M.Sc.Eng.
Executive Summary: This study provides an economic analysis of the immediate opportunities and challenges to further developing the mining industry in Northwestern Ontario (NWO).
This study is organized as follows:
(1) an introduction to the study and brief background to the mining industry in NWO,
(2) the economic impact of further development with consideration for:
(a) the value of the un-mined minerals and metals,
(b) employment economic impact,
(c) projected government revenue
(3) the present and future challenges facing mining with consideration for:
(a) Aboriginal involvement,
(b) labour market dynamics, and
Environmental impacts are beyond the scope of this study.
There are a number of mining projects currently underway in NWO. This study focuses
solely on nine selected projects to provide Government, Aboriginal peoples, industry
stakeholders and community leaders with an estimate of the potential economic benefits immediately available when additional growth in the mining sector is fostered. These nine projects under study are as follows:
1. Bending Lake Iron Group Limited – Bending Lake iron property
2. Cliffs Natural Resources Inc. – Black Thor
3. Goldcorp Inc. – Bruce Channel Deposit and Cochenour Project Gold Projects
4. Osisko Mining Corporation – Hammond Reef
5. Noront Resources Ltd. – Eagle’s Nest
6. Rainy River Resources Ltd. – Rainy River Gold Project
7. Rubicon Minerals Corporation – Phoenix Gold Project
8. Stillwater Mining Company – Marathon copper-PGE deposit
9. Treasury Metals Inc. – Goliath gold project
These projects were selected based on the following criteria: they are mature, or near
the development stage; they have the potential to become producing mines within the next five years; and they have sufficient public data available.
In terms of dollar value, employment and tax revenue, the economic analysis revealed that the potential worth of the mineral deposits in NWO is substantial.
1. There is a total real option value (i.e., the total value of the un-mined metals and minerals) of $USD135.40 billion for these nine mines utilizing June 1, 2012 commodity prices.
2. Employment growth is expected to be significant. The direct, indirect and induced
employment created for the Province of Ontario is expected to total 23,588 new positions, (8,107 from construction and 15,481 from mining operations over an average mine life of approximately 17.5 years). A total of 13,149 of these new positions are expected to remain in NWO (5,719 during construction and 7,430 from mining operations).
3. The potential tax revenue for all three levels of government is conservatively
estimated to exceed $CAD 16 billion. The Federal Government, Province of Ontario and municipal governments will benefit significantly in terms of corporate taxes, personal income taxes, property taxes, other payroll taxes, and indirect taxes such as sales and excise taxes. These tax revenues will be received over the average operating life of approximately 17.5 years.
Three major issues facing the development of mining in this region are: (1) Aboriginal
involvement, (2) labour market dynamics, and (3) infrastructure in terms of rail, roads, and electrical power.
To enhance the involvement of Aboriginal peoples, this study demonstrates that flexible, innovative and collaborative long-term solutions are required. Government and industry can play a critical role in terms of fostering community development, education and training, employment, business opportunities, revenue sharing and developing full partnerships in the mines, energy, other natural resources and its related infrastructure.
It is imperative that the Federal Government take a leadership role regarding Aboriginal involvement. Recognition of Aboriginal and Treaty Rights and clearly defined processes for meaningful consultation in relation to the ‘Duty to Consult’ would help move agreement making beyond traditional impact benefits to relationship and partnership building. Utilizing this approach would help provide certainty regarding land management decisions as well as maximizing mutual benefit for economic growth and community improvements.
Challenges pertaining to labour market dynamics include a tight labour market, a highly
mobile labour force and an aging workforce. Over the next decade, NWO would need to attract upwards of 30% to 45% of the entire new entrants to the mining industry.
The occupations expected to be in highest demand are the trades such as underground
miners, millwrights, mineral processors, heavy equipment operators and electricians.
Recommendations and strategies to address these challenges include: utilizing under-represented groups in mining such as Aboriginal people and women, developing strategies for high school, college and university students to consider mining as a career, and creating an industry-wide branding and communication strategy.
Inadequate and limited infrastructure has been a significant factor in hindering the
development of the region’s immense economic mining potential.
The development of an integrated transportation, energy and modern communication network is necessary to realize the potential from mining. An expanded infrastructure network will also provide positive economic and social benefits for local communities and Aboriginal peoples.
For the nine mining projects, it is estimated that capital costs for roads, rail and power line transmission are approximately $1.739 billion. This figure represents approximately 10% of the projected government revenues to be generated by these mines (i.e., $1.739 billion capital costs divided by $16 billion in tax revenues). These capital costs will create hundreds of construction and maintenance jobs that have not
been quantified as part of this study. Infrastructure development will also open up the
NWO region to further development of the minerals and metals potential.
A major constraint in operating the nine mining projects is the requirement for over
550 MW of electrical power. Various industry stakeholders have suggested that surplus
power capacity in excess of 500 MW exists within the current generating stations in Thunder Bay and Atikokan and that both these thermal generating stations would have to run at full capacity to meet the needs of the mining industry.
This study demonstrates that the extent of the projected wealth, the positive economic and social benefits and the expected taxes that could be generated by these nine mines is substantial. Existing operating mines and other advanced exploration projects are not considered within this analysis. If these operations had been included, a much greater economic impact would have resulted.
The extent of the magnitude for mining development in NWO calls for effective participation and leadership by the Provincial and Federal Governments to coordinate the required initiatives and to support economic growth that fosters sustainable development for the future of mining in this region.
It is apparent that collaboration amongst the Provincial and Federal governments,
Aboriginal communities and industry is required to produce long-term strategies for the success of all parties. This study brings to the forefront and to the attention of all stakeholders, especially the Federal and Provincial governments, that enhancing the opportunities and addressing the challenges, economic and social benefits can be realized for the region of NWO and the Province of Ontario.