Mining bolsters other sectors

A nation’s productivity is widely considered the domain of economists and financial analysts, and few Canadians know the level of Canada’s productivity, or whether it has risen or fallen in recent years. Productivity affects every one of us and is one of the main determinants of our standard of living. When productivity increases, income grows and our standard of living rises.

Recently, productivity has become a hot topic in government circles, among economists, and in the media. At all three levels, there is growing concern over industrial productivity levels in Canada. It has been pointed out that while overall productivity has experienced steady growth in the U.S., it has slowed in Canada. This would pose a major challenge to Canada were it not for the fact that the Canada-U.S. total economy gap in labour factor productivity has been closed by the tremendous performance of the non-manufacturing sector, particularly the primary resource sectors.

Last month, the Mining Association of Canada was invited to appear before the House of Commons Standing Committee on Industry to present the mining industry’s productivity record. What we had to say surprised a few people.

Since the late 1970s, Canada’s overall productivity growth has slowed. However, this disturbing trend is not evident in our mineral and metals sector, where the level of productivity has risen to exceed average productivity growth for all industries in Canada.

From 1984 to 1998, the average Canadian annual rate of total factor productivity grew by 3% in the mining sector — almost double the 1.7% growth reported by Canada’s manufacturing sector.

The mineral and metals sector has experienced strong productivity growth because of its long history and commitment to investment in research and development, knowledge creation and skills development. Today, the Canadian mining industry is a world leader and has introduced important advances in mine automation, software technology, continuous and remote mining technology, and computer automated process control.

Increased growth and better productivity are fundamental requirements of an increasingly global minerals industry, and the Canadian minerals and metals sector has succeeded in accomplishing both. Without the mining sector’s investment in innovation, education, training and human resources, Canada’s industry-wide record of productivity growth would have been much worse, and all Canadians would have felt the effects.

During the past 25 years, the real price of minerals and metals has declined. Although this has led some Canadians to underestimate the economic importance of the natural resource sectors, these price declines are related to a reduction in production costs and the phenomenal performance of the industry. They reflect mining’s production and innovation successes, not a declining demand for its products.

Mining is a driving force of the Canadian economy. The industry has strong ties to other engines of the economy — including the financial and transportation, high-tech, research-and-development and academic sectors — and will remain a vital part of our future. For this reason, it is worth nurturing and sustaining.

— The author is president of the Mining Association of Canada (web site: http://www.mining.ca). He wrote this column at the request of Mining Works for Canada, a program designed to increase awareness of mining in this country.