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Sudbury Mining Solutions


Lessons in resilience from a cyclical industry

February 23, 2016
by Chris Hodgson
In: Commentary

When reflecting on the current state of the mining industry, there is plenty of scope for negative sentiment. The outlook of many analysts is cautious at best, given slowing growth in China and Brazil, muted conditions in Europe and a weak recovery in the U.S. — all of which contribute to an ongoing slump in demand, pushing prices downward. Given that mining is a price-taker in global commodity markets, it is easy to think that the situation is hopeless, but we have been through this before.

Although the sector is vulnerable to cyclical risk, the products of mining are essential, irreplaceable components of daily life and modern technology. Long experienced in dealing with this boom-bust pattern, Ontario mining companies are doing what they can to prepare for the next upswing by controlling costs and ensuring that their business models are lean and nimble enough to meet the requirements of fiercely competitive and changeable global conditions.

Ontario Mining Association (OMA) companies understand that a downturn is precisely the time to focus on future growth opportunities. To maintain our jurisdictional advantage and ensure that we can compete for highly mobile global mining investment, Ontario must likewise take immediate steps to maximize our gains when markets rebound.

Leadership in mining no longer hinges on good geology. Certainty of the rule of law and regulatory clarity is what gives us an edge when competing against other jurisdictions with significant mineral potential and lower costs.

As a high-wage/high-cost jurisdiction, it is critical that Ontario offers a low level of regulatory risk for investors to increase capital inflows into the mining sector.

Competitive long-term energy prices are the key to attracting capital investment and maximizing the value of Ontario’s mineral resources.

As a northern industry, and due to the realities of our energy-intensive processing, the mining sector is disproportionately exposed to fuel and electricity costs. While the majority of Ontario’s electricity is carbon free and almost all of the electricity consumed in Northern Ontario is carbon free, the cap-and-trade system proposed for Ontario is set to add a carbon price to electricity costs. OMA members, regardless of emissions profile, are expecting to face increased costs on all forms of energy use and from the supply chain at a time when Ontario industrial hydro rates are among the highest in North America. This puts the viability of our operations and the future of our industry at a significant risk.

Just as the companies are doing on a corporate level, the province must respond strategically to market pressures. It is important to recognize that the mining sector is a leader among Ontario industries for being a minor emitter of greenhouse gases. Moreover, the industry is supplying the materials needed to build a low carbon future. As society shifts away from fossil fuel dependence toward alternative energy sources, global use of mining products will only grow. What better place to mine them than in Ontario, with its responsible environmental protection, low carbon footprint for critical metals, world class safety record and desire to participate in new and emerging technologies?

To turn our natural resource potential into sustainable wealth and to contribute to the resolution of the global climate change challenge, Ontario needs to make smart policy choices aimed at promoting new mines and supporting smelters that have the potential to tap into the growing recycling market. Ultimately, building a mining industry that is the cleanest, most productive, technologically-advanced and socially responsible in the world is the way to achieve resilience from economic shocks and ensure lasting prosperity for Ontarians.


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Sudbury Mining Solutions Journal is printed quarterly -- March, June, September and December. Circulation includes distribution to mining executives, consultants, suppliers, distributors, government officials and opinion leaders across Canada and around the world.

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