Ontario’s energy costs and the mining industry: investment interest slipping says Parker Gallant
Ontario’s ministries of selective facts
On December 11, 2015 Michael Gravelle’s ministry Northern Development and Mines, issued a press release announcing a renewed Mineral Development Strategy (MDS) and, as is generally done with those provincial press releases, it contained a “Quick Facts” section. Also as usual, you only see the positive ones.
As an example, one of the “Quick Facts” listed in the release states: “The value of mineral production in 2003 was $5.7 billion. In 2014, the value of mineral production was a record $11 billion.”
On examination of that fact via data from the Mining Association of Canada’s (MAC) 2014 report you learn that in 2003, Ontario produced 28.3% of the value of all Canadian mining production, but by 2013 the “value” had dropped to 22.5%. If you then look at the value of the three highest valued minerals mined in Ontario, you see they are gold, copper and nickel. The value of those three minerals increased by 142% in the 2003/2013 period, from $5.7 billion to $13.9 billion. So, in other words, the claim made in the Quick Facts shows an increase of 92%, which is considerably less than the commodity price increase.
One could easily surmise the drop in Ontario’s percentage values of all Canadian production was caused by a reduction of investments (Ontario ranked 4th) in mining and processing/refining activities — but that wouldn’t make for a snappy positive “quick fact”.
For example, the “Ring of Fire” got the Ontario government plenty of media attention because of their lack of commitment to infrastructure spending. That resulted in the exodus of several large and small mining companies seeking to develop mines in the region. Nothing in the Mineral Development Strategy suggests anything will change!
As a coincidence to the Ministry’s press release and the MDS, the Ontario Mining Association (OMA) a week prior had posted on their website a “welcome” release to a report from the Ontario Chamber of Commerce (OCC) titled Digging Deeper: Strengthening Ontario’s Mining Advantage, which carried the following message deemed worth repeating on the OMA post:
“In recent years, however, the sector has struggled due to both global factors, including economic uncertainty and lower demand for mineral products, and Ontario-specific challenges. These challenges include rising costs, particularly electricity rates as well as regulatory uncertainty and a lack of essential infrastructure.”
The message in the MAC 2014 report was similar but wasn’t specific to Ontario:
“Canada’s processing facilities operate in a global arena, where China and other countries are expanding their capacity and competing fiercely for raw materials. The cost of electricity is also a factor in some Canadian jurisdictions. Given the energy-intensive nature of these value-added processes, high-cost power jurisdictions dampen the competitiveness of existing operations and can deter future investment.”
The Ministry’s response on the issue of high-cost electricity was contained in one of their “10 point action plans” in the MDS, released days after the OCC report: “Improve our cost competitiveness by reviewing current energy programs and providing ongoing assistance to mining and processing operations to ensure competitiveness.” Which means, another review!
While the mining sector endorses the use of renewable energy they note the high capital costs associated with both wind and solar power generation and the need to continue to generate their electricity with diesel fuel, due to the lack of grid connection availability in many mining and processing locations.
That latter issue is obvious to Southern Ontario’s rural communities saddled with the industrial wind turbines connected to the grid to supply intermittent power to large urban communities such as Toronto and grids to export surplus power to our neighbours in New York, Michigan, and others who purchase it for cents on the dollar. Selling surplus power at a huge discount penalizes not only residential ratepayers, but also our mining sector which estimates the cost of electricity/fuel is their second highest expense at over 60% of labour costs on a Canada-wide basis.
It’s about time for some real facts from Ontario’s Ministries!
December 13, 2015
The opinions expressed are those of the author and do not represent Wind Concerns Ontario policy.