The Mining Association of Canada
Presentation to the
Society for Mining, Metallurgy and Exploration
February 27, 2001
• Good morning, I am Gordon Peeling, President and CEO of
The Mining Association of Canada (better known as MAC).
• MAC is the national organization of the Canadian mining
industry. Our members are engaged in mineral exploration,
mining, smelting, refining and semifabrication.
• Member companies such as Inco, Noranda, Barrick, Placer
Dome, Cominco, BHP Diamonds, and Syncrude account for
the vast majority of Canada’s of Canada’s minerals, metals
and oil sands production.
The State of the Canadian
• The industry is recovering,
slowly, from a protracted
• But the industry in Canada
remains a global leader
and a major force,
committed to sustainable
• The industry’s future
depends on governments’
willingness to provide a
globally competitive policy
environment for both
existing mining and new
• I have been asked to speak today about the state of the
Canadian mining industry. Let me begin with an overview of
our current economic situation.
• Our industry is recovering, slowly, from what has been a very
difficult, protracted economic downturn. While much of
Canada was making money over the past few years, our
industry was in the red suffering from the Asian economic
• The full impact of the economic downturn is still being felt,
and like you, we are uncertain of another economic downturn.
Exploration has been hit particularly hard. The federal
government has recognized this and introduced in its October
2000 Budget a 15% exploration tax credit, which we hope will
help to stimulate exploration across Canada.
• Despite these tough times across the global mining industry,
Canadian mining remains a global leader and a major
economic force in Canada. It is one of the few industrial
sectors where Canadian knowledge, technology, expertise and
corporate leadership dominate internationally.
Minerals and Metals Industry and
the Canadian Economy
• 3.7 % of Canada’s GDP
• About 400,000 employed Canadians - one
in 40 jobs
• Important to Canada’s rural and urban
• 13.3 % of total Canadian exports
• 69.4 % of total port volume
• 57.5 % of total rail freight revenue
• Five of the top 50 R&D companies
• Financed by Canadian financial
institutions to the tune of $1.8 billion
• Here are a few facts about Canada’s mining industry. These
bullets are just a few indicators, but they clearly reflect the
importance of our industry to the Canadian economy.
• This slide also helps to capture how our industry’s growth is
inseparable from the growth and vitality of other industrial
sectors including financial, transportation and R&D.
• The industry is also important to regions and communities
across our country, including in Canada’s three major urban
centres: Toronto, Montreal and Vancouver.
* NB: In 1999, Canadian financial institutions raised $1.8
billion for the global mineral industry, representing
54% of total global equity raised for exploration
and mine development.
Some New Facts
Canadian mining is ...
• A leader in productivity, exceeding • Surpassing motor vehicles,
the Canadian average parts and accessories sector,
• Achieving better productivity than electrical utilities sector and
the US industry the sum of agriculture,
fisheries and logging in R&D
• Three of the ten leading industries
in average annual total factor
productivity 1984-1998 • A world leader in using state-
• 4% of total Canadian R&D in 1999 of-the-art technology
• Based on recent studies by Federal Government Departments such as
Industry Canada and Natural Resources Canada and an independent
think tank, the Centre for Canadian Living Standards, we have learned
some new facts about our industry’s dynamism and leadership.
• These studies have concluded that Canada’s mining sector has been able
to remain competitive by continuously investing in new technologies, in
innovative mining practices and in R&D.
• Another finding from these studies is that our industry is a Canadian
leader in productivity, beating most other Canadian industries and
beating our international competitors, including the U.S.
• Industry objectives continue to focus on:
• lowering production costs
• enhancing productivity of workers and equipment
• opening up new reserves and extending the life of existing
• continuing to meet regulatory and multistakeholder
requirements in the areas of environment, health and safety etc.
Top Fifty Fastest Growing
Companies by Revenue in Canada
Wood Minerals and
Finance 2 % Metals
Based on the Report of Business (July 2000)
• Despite the apparent global obsession with
information technology and dot-com companies, Canadian
exploration and mining companies have still shown
tremendous growth potential.
A Sample of Canada’s
• Ekati (diamonds) -- BHP (NWT)
• Syncrude (oil sands) – (Alta)
McArthur River (uranium) – Cameco,
• Bullmoose (coal) – Teck (BC)
• Voiseys Bay (nickel, copper, cobalt) – Inco
• Mount Wright (iron ore) – QCM (Quebec)
• Carol Lake (iron ore) – IOC (Labrador)
• Lac de la Madelaine - Platinum (ON)
• This slide is a sample of Canada’s geological diversity.
• Canada produces over 60 mineral and metal products
• Across Canada our geological potential continues to show
promise--oil sands, diamonds, platinum group metals.
World Production Share and Canadian
Ranking of Selected Commodities 1999
Platinum group metals
0 10 20 30 40
% of world total Sources: Natural Resources Canada; U.S. Bureau of Mines
• Canada is the world leader in the production of uranium and
potash. We also rank among the world’s top 5 producers of
16 (14 are shown here) major minerals and metals.
• McArthur River, the world’s highest grade uranium project, is
just one example of the diversity of mineral endowments
held in Canada, reflecting our industry’s belief that Canada still
provides an attractive base to do business.
• This is just a cursory view of Canada’s production share.
Without doubt, diamonds will very soon be added to this list
as production from Diavik, Snap Lake and other prospective
discoveries come on line over the next 5-10 years.
Leading Ten Industries
in Total Factor Productivity
Growth in Canada, 1984-98
Banks and trusts
Petroleum and gas
0 2 4 6 8
. Average annual growth (%)
Source: Centre for the Study of Living Standards.
• As noted earlier, Canadian mining companies are among the
most productive industrial sectors in Canada and the most
productive companies in the global mining industry.
• Recent studies have concluded that over the period 1984 to
1998, mining and primary metals were amongst the top ten
leading industries in total factor productivity growth in
• Our progress was acknowledged most recently by Canada’s
Deputy Minister of Industry, in a speech lamenting the lack of
innovation in Canadian business in which he noted, and let me
quote, “Canada’s natural resources industries, for example,
have in many cases incorporated high tech into their
production techniques and became top in their fields
internationally, ...” and “have successfully translated
innovative efforts into productivity advantage over the U.S.”
• A sample of this “advantage” is noted on the next slide.
Labour Productivity in Selected
Mineral Industries in the United
States and Canada
Commodity United States Canada
Gold (troy oz/hr) 0.29 0.33
Iron Ore (t/hr) 3.70 4.20
Uranium (kg/hr) 2.30 7.20
Coal (t/hr) 5.9 5.00
Sources: NRCan, Statistics Canada, and US Census Bureau
• High levels of productivity have reinforced the mining
industry’s position as a knowledge-based industry.
• Similarly, mining’s skill intensity has placed our industry third
after Government and Financial institutions in terms of
knowledge and management occupations as a share of
• The Canadian industry’s productivity record ranks well both
domestically and internationally and allows us to rank
amongst the worlds largest mineral and metals exporters.
• Our productivity record is inextricably linked to skills,
training, knowledge and as you will see in the next few slides,
research and innovation.
Canadian Research and Development
in the Minerals and Metals Industry
Source: Statistics Canada
• In 1999 (the latest data available) Canadian mining companies
invested roughly $351 million on research and development,
with an additional $13 million invested in services
incidental to mining.
• Research and Development expenditures is approximately one
percent of total company revenues (roughly the same as the US
mining sector) representing 4 percent of total Canadian
industrial sector R&D in 1999.
• In 1999, the mining sector spent more on R&D than the motor
vehicles parts and accessories sector, the electrical utilities
sector, and the total of the agriculture, fishing and logging
sectors combined, to name just a few.
• Canadian integrated mining companies (Inco, Noranda,
Falconbridge, Cominco and Alcan) represented “5 of the top
50" R&D spenders in Canada in 1999.
Innovation in the Canadian
• Why is the mining industry
innovative and driving technology
– Commodity prices
– Regulatory legislative and statutory
• What is driving this innovation? As a price taker, low
commodity prices, globalization of the mining industry, as
well as regulatory and political constraints on development
has pushed the industry to innovate ever more.
• Canada’s mining industry has taken this challenge seriously,
and based upon Canada’s Department of Industry, mining was
among the top ten most innovative industries in Canada
over the period 1993-1997.
NB: [(machinery and equipment + R&D)/value added).100]
4 Information and communications
technologies for process
4 Remote control and automation
4 Operations and Maintenance
4 Unit-operations capabilities
• IT has been one of the most important advances, enabling the
ability to monitor, evaluate and adjust to maximize
productivity and minimize cost. For example, equipment
sensors, mine design technologies, GPS equipment
monitoring, and GPS surveying allows for quick process
of information in real time.
• Remote control and automation has been part of the research
agenda for many years. Remote guidance of load-haul-
dump (LHD) vehicles, operator- assisted drill positioning
and vehicle tramming. This area is moving quickly, and
future technologies are approaching commercial availability.
• In a capital intensive industry like ours, equipment availability
and performance is critical. Equipment sensors and system
monitoring has helped predict equipment failures and
schedule maintenance actions. Optimization of equipment
operations will continue to be vital with further implementation
of remote control and autonomous operations.
• While the industry will look for new equipment technology
(i.e., fuel cell technology), we have made significant strides in
adapting to larger trucks, shovels, loaders and excavators
to increase economies of scale and lower production costs.
How much larger can we get?
Human Resource Impacts
• Human element is an • Less staff--more high
essential part of the tech equipment
based mining • Today’s mine
industry employee requires
• Mine employees
today are essential
to the success of
• Technology is not unique to mining, but it does provide
individual operators with greater control, than ever before, in
determining mine output.
• Part of today’s workforce requires training in a wide range of
skills to take full advantage of new technologies, with a greater
role in solving problems.
• Today, innovations in environmental protection are as much a
function as risk management and maintaining our “social
license to operate” as they are a function of employee
• Like every other sector of the economy, attracting and
maintaining good staff in a competitive hiring environment is
one of the key challenges facing existing and new mine
developments in Canada.
Mining Investment in Canada
Mining Industry Capital
Oil and Gas Extraction $19,146.9
Coal mining 142.2
Metal ore-mining 1,631.7
Non-metallic mineral mining and quarrying 392.9
Support activities for sector (suppliers, engineering ) 1,137.0
Source: Statistics Canada (2000 intentions)
• The Mining and oil and gas extraction industry are by nature
capital intensive. The above investment data includes
construction plus expenditures on machinery and
equipment (excluding repair expenditures) is estimated at
$22.5 billion for the year 2000.
• While oil and gas extraction accounts for the lions share of
investment, the vast majority of this capital was invested in
oil sands mining development in Alberta.
• Capital investment in mining/oil and gas extraction accounted
for 12.2 percent in 2000, and between 10-13% over the past
3 years, of total private and public investment in Canada.
• The level of capital intensity in Canada’s mining industry is
further accentuated by the fact that only the housing and
manufacturing industries have higher levels of annual
* NB: Support activities include, suppliers, engineering,
Major New Mines or Mine
Expansions in Canada
• Inco Limited (mine expansions)
– McCreedy East mine, Ontario (1996-1999) US$194 million
+ nearby development work (2000-01) US$33 million
– Creighton mine, Ontario (1988-2013) US$125 million
– Birchtree mine, Manitoba (2000-03) US$48 million
• Placer Dome Inc. (depth development)
– Campbell gold mine (1997-2000) $51 million
• Agnico-Eagle Mines Ltd . (expansion)
– LaRonde gold mine (1997-2004) US$218 million
• BHP (expansion)
– Ekati diamond mine (1998-2006) US$700 million
• We continue to invest in Canada, creating jobs and new
opportunities across the country. The past year witnessed a
number of major developments; these two slides
highlight just a few.
• The impact of each new investment is significant. It is
estimated that for every $1 billion in output created by the
mining, smelting and refinery sectors, direct demand
for goods and services increase by $615 million. And for
every job created in the mining industry, one full-time job is
indirectly created elsewhere in the Canadian economy.
• New major discoveries such as Voisey’s Bay illustrate that
“world class” deposits still exist in Canada. Major on-site
discoveries and developments by Hudson Bay Mining
and Smelting, Inco, Noranda and Falconbridge are also
generating much interest.
• Diamond mines such as BHP, Diavik, Ekati, Snap Lake and
Jericho, all suggest Canada will be among the world’s
largest diamond producers.
Major New Mines or Mine
Expansions in Canada
• Suncor Energy, Inc
– Project Millennium (1999-2002) $2.8 billion
• Syncrude Canada Ltd .
– Syncrude 21 (Stage I-IV) (1996-2008) $6.8 billion
• De Beers Inc (redevelopment)
– Red Lake gold mine, 2000 US$269.4 million
• North American Palladium Ltd. (expansion)
– Lac des Iles palladium mine, 1998-2001 US$126.5 million
• Rio Tinto plc (expansion)
– Diavik diamond mine, 1999-2002 $1.3 billion
Future Challenges and Opportunities
• Increased competition for investment dollars
• Canadian fiscal and regulatory competitiveness
• Increased pressure on social licence to operate
• Declining industry profile and clout
• The Canadian mining industry is clearly a dynamic and competitive force, with a
strong potential for growth in Canada.
• The industry is not without its challenges, however. In fact, though I have not
focused my remarks on them today, the mining industry, in Canada, here in the
US and around the world, faces a number of major challenges that it must
overcome to secure its future.
• The Canadian fiscal and regulatory environment is increasingly uncompetitive on
a global basis, as new mining jurisdictions compete for investment dollars. In
Canada, the industry is working hard to bring greater clarity and predictability
to our regulatory systems, while pushing, in Canada’s new era of fiscal surpluses,
for an improved tax environment.
• In this global world, heightened scrutiny of our operations applies ever-increasing
pressure on our social licence to operate, to which we must respond. At MAC,
we have a new initiative underway, the Toward Sustainable Mining initiative, to
respond to these pressures.
• Plus, we must deal with the reality that in today’s new economy, the industry’s
relative economic importance is declining. We must look at new ways to
champion our sector, by working with other industries, demonstrating the important
connectedness of mining to the new economy, and by changing the
way we participate in society by increasing our capacity to work with
• Canada’s continuing prosperity needs a robust and
competitive mining industry.
• Canadian exploration and mining companies have tremendous
• Canadian mining industry will continue to be a world leader in
productivity, innovation and R&D.
• Partnership with, and support from, government is therefore
• A robust and competitive mining industry is essential for
Canada’s continuing prosperity.
• Canada’s exploration and mining companies have tremendous
growth potential, and the industry will continue to be a
leader in productivity, innovation and R&D.
• Maintaining our dominant global position requires
partnerships with, and support from, all levels of government.
This is why we will continue to press for a stable,
competitive, public policy framework.