Editorial Exploration could use more support

The mining industry in Ontario is a multi-billion-dollar contributor to the province’s economy and a significant contributor to Canada. To find the mines of tomorrow necessary to continue that role, exploration must be encouraged today. But, according to Ontario government statistics, the number of claims being recorded and worked in the province declined by nearly 40% last year compared with 1988.

Prospectors and junior mining companies are becoming increasingly concerned that regulations being drafted to accompany Ontario’s new Mining Act will make it even more difficult for them to compete with major mining companies in the area of exploration.

The regulations that will govern the mining industry in Ontario are expected to be completed by May, with another six months required to get the final approvals from the government.

Of major concern to small companies is the possibility that assessment work rates on mining claims could be set at such a high level that junior mining firms and individual prospectors will be discouraged from doing exploration work.

The cost of leasing is also a concern to juniors, which in the past could hold claims containing uneconomic deposits through negative market cycles until market conditions improved. Now, if lease rental rates are increased dramatically, junior companies might not even be able to raise funds for initial exploration. Their only reward would be the liability of escalating lease expenses, and a threat of confiscation by taxation.

Annual lease rental rate increases could mean that only big mining companies will be able to afford holding on to ground. Prospectors and juniors, however, have long played an important role in the exploration sector, and they should be rewarded, not discouraged.

There are indications that even large mining companies are leaving mineral deposits undeveloped because government- mandated costs make them uneconomic. Last year, the potential $100-million Musselwhite gold project in northwestern Ontario was shelved by its owners, partly because of high fuel costs and a lack of a power line in the remote area.

Apart from the potential of new mining regulations to discourage exploration there are other factors that enter the equation, all working against the development of mineral resources. More costs are being added to the mineral sector in Ontario from increasingly onerous environmental regulations. The Municipal/Industrial Strategy for Abatement, for instance, has been estimated to cost the mining industry up to $25 million per year in Ontario.

Last year also saw the province’s first private sector gold project at Shoal Lake, Ont., designated for review under the Environmental Assessment Act.

Exploration has now become a high-technology activity, requiring sophisticated research and development to support the search for new deep-seated orebodies. But the federal government is expected to cut back its support for a number of Mineral Development Agreements, which have aided geological survey programs in several provinces and bolstered geoscientific information services.

The Toronto-based portion of the exploration and mining community is also concerned that the relocation of the Ontario Ministry of Northern Development and Mines to Sudbury this year, and the Geological Survey next year, will make access to geological information and assessment files inconvenient and more difficult for some exploration groups in the province.

All these factors are coming into play as the prices of base metals have weakened but the need to locate new base metal deposits in Ontario has increased. More zinc and copper reserves are urgently needed to replace depleting deposits.

If we are going to have new mines for the future, it is clear that exploration must be encouraged today. The province’s new Mining Act has instituted some much-needed change, but the regulations now being written to accompany the Act must take into account the new government-mandated burdens the industry is already carrying.