Ottawa must hone mining’s competitive edge: Hendrick

How to gain a competitive edge in a climate of continuing globalization was the theme of the ninth annual Mineral Outlook Conference staged here recently.

Five hundred delegates heard Mining Association of Canada Chairman Keith Hendrick remind them that the Canadian mineral industry has been successfully competing worldwide for many years. However, he added that “its performance will be influenced by government policies.”

Hendrick, also chairman of Noranda Minerals, listed the critical objectives that should have high priority on the federal agenda if the industry is to maintain its position.

Government, he said, should allow the Canadian dollar’s value to fall relative to the U.S. dollar, secure an open-trading environment by participating in GATT and Canada-U.S.-Mexico trilateral trade talks, eliminate interprovincial barriers through constitutional reform, remove overlapping federal-provincial jurisdictions, establish reasonable and predictable environmental policies, eliminate uncertainty over land access and build infrastructure in frontier areas.

Delegates then learned where to find this kind of support aimed at creating a competitive mining industry — Mexico.

Alfredo Elias Ayub, Mexico’s deputy minister for mines and basic industry, said his country has a stable political and economic climate as well as the favorable geology to become a major contributor to the world mineral scene. Inflation is falling, the budget is balanced, the economy should grow 4% this year and competition is actively encouraged, he said.

Mexico wants to attract foreign investment along with its capital, technology and access to distribution systems, he said. Import tariffs have been lowered; mining and other industries have been deregulated and/or privatized. He estimated that under the proposed North American free-trade agreement, the three signatories will represent 20% more wealth than a unified Europe. Elias painted a glowing picture of opportunities for mineral seekers in his country. Only 20% of its area has been explored at all, let alone with modern technology. The federal government, the sole mining regulatory power, is rapidly divesting itself of ownership of land and known deposits. The 7% production tax has been removed, and the income tax has been brought down to 35% from 50%.

Barriers to entering the mining field have been lowered. It now takes only six months (not four or five years) to acquire a mining concession, which may be freely traded. Geological information is published and readily available. Exploration companies may be 100% foreign-owned. So may exploitation ventures for the first 13 years of production; thereafter, 51% must be held by Mexican interests. And there are a good number of experienced Mexican mining companies eager to become partners with foreigners.

The last word of the conference went to Tony Petrina, president of gold producer Placer Dome (TSE): “Competitiveness in mining boils down to this — whether or not a country or community in a favorable geologic setting wants a mining industry.”

He concluded, “The minerals the world needs must come from somewhere. So if we don’t want them to come from here (Canada), it means we want them to come from elsewhere.”