EDITORIAL PAGE — The restrictions grow

Some rules are required to make life bearable for all but it almost goes without saying that if you make the regulations too restrictive, the activity — business, sporting or whatever — is bound to suffer.

Raise the taxation level and at the same time make it more difficult to obtain the necessary permitting and your mineral exploration companies may start looking elsewhere in the world for prospecting opportunities. Preliminary figures released recently by Energy, Mines and Resources Canada indicate a further decline of this country’s mineral production value (excluding mineral fuels) — to $14.6 billion in 1992 from $15.3 billion the previous year, a drop of 4.4% — and while the situation for the mining industry may or may not be quite the “crisis” that some persons describe it to be, it is downright disconcerting.

According to the president of the Mining Association of Canada, the picture remains bleak for 1993. Demand for minerals will, at best, be moderate, George Miller says, with prices remaining low because of oversupply. He points out that because mining is usually the last sector to pull itself out of a recession, the effects of an economic recovery are at least several months away.

Domestically, Miller says the mineral industry’s competitiveness is seriously challenged by a deteriorating investment climate. What is needed, he suggests, is a concerted effort to create the right framework — legislative, regulatory and otherwise — that will allow the industry to grow. South of the border, the new Clinton Administration seems prepared to give miners in the U.S. a reason to try their luck elsewhere. In a report presented to Congress, the president is proposing a 12.5% royalty on the gross value of the hardrock minerals (gold, silver, copper, zinc, lead and others) extracted from mining claims on public lands. (Last year, Congress was presented with an 8% royalty proposal.)

Aside from swelling government coffers in Washington, it is difficult to see what would be gained. Such a royalty would obviously add to the cost of producing precious and base metals and possibly result in the loss of jobs. What keeps a mining company going is its reserves, and to find those new reserves it must spend its hard-earned money. No reserves means no more mine and, eventually, no more mining industry. The capital will have fled and one nation’s loss will be another nation’s gain.