Financial Post
January 31, 2000

Lawrence Solomon responds to a letter to the editor
from Gordon Peeling, president and CEO, The Mining Association of Canada regarding his article on mining subsidies Financial Post, Jan. 31, 2000

Contrary to being a vibrant industry, as the Mining Association’s Gordon Peeling tries to convey, the mining industry is small and getting smaller. The number of mining companies on the TSE 300 is decreasing, as is the number of mines in Canada, as is employment in mining, which was one-third higher at the beginning of the 1990s than at its close. The Prospectors and Developers Association of Canada, which formally decided in November to use the word “crisis” to describe its state, last week told the North West Territories’ Chamber of Mines that “a lot of drilling companies are facing chapter 11 [bankruptcy],” and is asking the federal government for another round of tax breaks in the next budget, this one worth $1.1-billion over three years.

Mining’s contribution to Canada’s GDP drops year after year, and now – despite Mr. Peeling’s claim – it rests below 1% of GDP. His tally inflates mining’s contribution by a factor of four, by counting industries – such as the steel mills run by companies like Stelco – that use minerals. Statistics Canada’s GDP tables classify steel as a manufactured product, and not as part of the mining sector. Mr. Peeling’s export and employment statistics are similarly inflated.

Mr. Peeling states that tax holidays for the mining industry were repealed long ago. In fact, several provinces provide tax holidays, all provinces except P.E.I. provide a host of tax breaks, and no country apart from Canada has flow-through-share tax loopholes. Provincial bodies such as Ontario’s Ministry of Northern Development and Mines build roads for the mining sector. While provinces increasingly require mine reclamation plans and even payments toward mine cleanups, these are often token.

Despite layer upon layer of handouts, the entire mining industry produces minuscule returns for shareholders, and huge economic and environmental liabilities for the public. Without the subsidies – which primarily come from urban residents – and with strict environmental liabilities, our mining industry would be smaller but healthier, and a credit to the country.

Miners doubt the wisdom of Solomon Financial Post, Jan. 31, 2000

Letter to the editor Gordon Peeling, president and CEO, T

he Mining Association of Canada

I am writing to respond to the Jan. 11 column, They Get the Gold, We Get the Shaft. Alas, the mining industry is the latest victim of Lawrence Solomon’s ongoing ill-informed diatribe against Canada’s natural resource sectors.

As executive director of the Urban Renaissance Institute, Mr. Solomon would be well served by examining the significant contribution the mining industry makes to sustaining Canada’s urban centres. Housing more than 650 mining and exploration company offices, suppliers, consulting firms and service providers, Toronto is Canada’s largest mining community. It is also the world’s centre for mine financing and headquarters to some of the world’s largest and most successful multinational mining companies. Montreal and Toronto together are home to some of the world’s leading centres in mining research and development, whose innovations support developments in other major industrial sectors, such as aerospace.

Let me correct just some of Mr. Solomon’s erroneous statements:

– According to Statistics Canada, mining contributes 4% ($26.5-billion) to Canada’s GDP (not 1% as Mr. Solomon alleges); employs one in 40 Canadians; represents 14% of all Canadian exports and as much as 25% of Canada’s trade surplus.

– Specific tax holidays referred to by Mr. Solomon that targeted the mining industry were repealed almost 30 years ago as part of the 1972 tax reform. The mining industry is not advocating their return. – Public support for Canada’s geological surveys is not a subsidy. Governments and the public must know what the natural wealth of the country is if appropriate fiscal and public policies are to be put in place. Every major mineral-producing nation has a research-oriented geological survey.

– Unlike urban transportation, the mining industry builds and pays for development of its own access roads, often using local construction firms, and always after lengthy and extensive environmental permitting processes.

– With more than 300 mining firms listed on the Toronto Stock Exchange and a good proportion of mining-related stocks contributing to the retirement funds of millions of Canadians, blanket statements about bankruptcy in Canada’s mining industry is absurd. Investing in major companies such as Inco, Noranda and Falconbridge is one of the safest and most reliable investments one can make.

– All new mines are required to prepare mine closure plans, including posting bonds to guarantee mine site rehabilitation. The science, research, technology, investment, and related benefits of mining are and will continue to be very exciting for future generations. The mining sector, like the urban community, faces numerous challenges. If we are to find the best solutions, Mr. Solomon’s Urban Renaissance Institute should focus its efforts on what it knows best, rather than “giving the shaft” to thousands of rural and urban residents.