Ontario is calling for a strategic partnership between the province’s mining industry and the provincial government to address issues facing the industry.
In a recent discussion paper, the Ontario Ministry of Northern Development and Mines (MNDM) says future gains in advanced exploration and mining technology will require a joint strategy encompassing three basic elements: legislative reform, geoscience information management and exploration incentives.
The paper acknowledges the importance of mining to the provincial economy. It enumerates existing programs and initiatives specific to the industry and it makes a tentative listing of options intended to further growth. There is no commitment to new funding. The discussion paper points out that the cost of present programs may not be maintainable.
In Ontario, the mining industry is the source of about $5 billion in annual exports and it directly provides 37,000 well paying jobs and at least as many others indirectly. It is critically important to a number of northern communities in which mining is the principal and sometimes the only employer. Those who are unfamiliar with the industry believe that mining is a sunset industry, the discussion paper says. Orebodies have a finite life and sooner or later they will be mined out. The proposition is only half true. Mining is sustainable as long as regulatory control is competitive with other jurisdictions and as long as there are incentives to find new orebodies. Exploration investment has fallen off significantly in recent years because of changes in federal tax policy. Investor confidence has also been damaged by the fluid regulatory climate and, most obviously, the low levels of present metal prices.
The report says there are new minerals to search for, new exploration techniques to apply, new ore processing methods and new places to sell geological, exploration and mining expertise.
Ontario already has a number of direct mining incentive programs in place. MNDM has a 1991-92 budget of $50 million for stimulating and regulating the province’s mineral resources.
The Ontario Mineral Incentive Program (OMIP) provides 30-50% of the risk capital for eligible exploration expenses to a maximum of $300,000 per year from a current budget of $6.5 million. Assistance totalling $30 million has been approved since the program began in 1989.
The Ontario Prospectors Assistance Program (OPAP) pays 100% of eligible expenses for grassroots exploration up to a maximum of $10,000 per applicant per year. From 1989 to 1992, $13 million was paid to 1,500 applicants. Three percent of these projects had been sold or optioned to new owners for further exploration. According to the paper, this is a favorable success ratio compared with the industry average of one prospect in 10,000 developing into an active mine.
The Northern Ontario Resources Transportation Committee (NORT) supports transportation projects specifically linked to minerals exploitation. Seven percent of this year’s $5.1 million budget has so far been approved. The Northern Ontario Heritage Fund (NOHF) has provided loans or financial support to three northern Ontario mining operations. The purpose of the fund is to encourage business development and assist single-industry communities experiencing economic disruption.
In the mining tax field, Ontario claims a profits tax that is substantially more equitable than that of other provinces. According to the discussion paper, the tax “does not penalize the marginally successful mines and it is more responsive to the cyclical nature of the industry.”
Other current incentives include a tax exemption for profitmines and it is more responsive to the cyclical nature of the sive to the cyclical nature of the of the industry.”
Other current incentives include a tax exemption for promore modified and less attractive form, the result of changes introduced in 1990. The new proposals in the ministry’s discussion paper include expanding OMIP and OPAP by a number of means, a capital gains exemption for prospectors and significant changes affecting mine development.
The latter includes loan guarantees for advanced exploration projects, startup assistance for small-scale operators, modification of the mining tax and meaningful environmental and rehabilitation credits and writeoffs. The Ontario government’s aim is to spark discussion between government and all parties within the industry. It is hoped that new incentives will attract new
investment and reactivate the industry.
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