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Mining Association gives Ontario budget an A+

June 1, 2010
by Adelle Larmour
In: News with 0 Comments
Ontario Mining Association president Chris Hodgson gave the Ontario Liberal government an A+ for its latest budget.
“We found it really encouraging that mining has been viewed as part of the solution for Ontario’s future,” Hodgson said. “We’re very pleased not just with the specifics, but also with the general tone that the government has taken toward mining.”The province’s March 25 budget recognized that Northern Ontario’s mining sector plays an integral role in the economic development of the province. Mining in Ontario is a $10 billion business, provides the province with a $3.3 billion trade surplus and more than $600 million in corporate taxes annually.

“I think they realize we are a major benefit to the province, both in terms of the economy and society in general,” Hodgson said. “The spin-offs from developing mines are huge.”

Northern Ontario and its mining industry were referenced in the budget under an initiative called the Open Ontario Plan, designed to encourage job growth. More specifically, the budget touted the Ring of Fire in Ontario’s Far North where junior mining companies have discovered base and precious metals as well as chromite.

“The discovery of chromite in the Ring of Fire could be as big as the discovery of nickel was in Sudbury in the 19th Century,” Finance Minister Dwight Duncan said in his budget address.

One initiative announced in the budget was a three-year $450 million Northern Industrial Electricity Rate Program (NIERP). This initiative provides electricity price rebates of two cents per kilowatt-hour, which would reduce, on average, industrial electricity prices by about 25 per cent for companies that commit to an electricity efficiency and sustainability plan.

Since the mining industry spends more than $500 million annually on energy, according to the OMA, reduced rates will help ease operational costs.

Hodgson said the initiative was a good first step, but added he would like to see the highly-complex Ontario government pricing formula, called the “global adjustment,” changed to better reflect conservation principles. The global adjustment is the difference between the market price for electricity and the rates paid to electricity generating companies under guaranteed revenue contracts like the feed-in-tariff programs.

“The way they calculated how that bill (global adjustment) was arrived at is wrong,” he said, explaining that, presently, it is based on demand. “If the global adjustment rate was calculated based on peak power usage, it would get it closer to being more competitive with Quebec and Manitoba.”

This approach is based on the premise that an electricity system’s long-term costs are largely attributable to investing in the necessary infrastructure to meet maximum demand. Therefore, the recovery of long-term costs should be a function of consumption during peak demand periods, according to the OMA.

A $45-million skills training program for Aboriginals and Northern Ontario residents was another perk mentioned in the budget. Although the Aboriginal component is province-wide, Hodgson sees a large portion of it centred on Northern Ontario, particularly the Ring of Fire, as a means of capacity building within First Nation communities.

He was also pleased to see that a Ring-of-Fire co-ordinator will be appointed to liaise with Aboriginals and mining companies in the region.

He added that the $1.2 billion for infrastructure development for roads, hospitals and water systems in the North is a positive step for economic development. As well, the elimination of a capital tax and reduction of corporate income tax will also help.

As a spokesperson for the mining sector, Hodgson has been advocating measurable economic targets such as developing 10 new mines in 10 years.

“I think it is an easy target if you put the focus on the fact that we want new mines,” he said. “Historically, that is what we’ve done, but you need to remind everyone that this is important to the province, especially the decision makers around permitting, regulations and environmental assessments. Mining is part of society. We take the social license to operate very seriously. You are starting to see that modern mining has a lot to offer, not just in terms of the economy, but also to the environment.”

www.oma.on.ca

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