Sector study highlights industry’s impact on economy
$10.7 billion industry powered by gold, nickel and copper
The value of total mineral production from Ontario’s 35 active mining operations grew to $10.7 billion in 2011, $200 million short of the pre-recession high recorded in 2007, according to the Ontario Mining Association’s 2012 mineral sector impact study.
Authored by economists Peter Dungan and Steve Murphy of the University of Toronto’s Rotman School of Management, the report also estimated output per worker in the province’s mining industry at $680,000 in 2011, roughly six times the provincial industrial average, while output per worker in Ontario’s metal mines was $740,000.
The sector study also underlined the importance of mining in Northern Ontario, which accounts for approximately 85 per cent of mining jobs in the province, with the Sudbury region itself accounting for 35.8 per cent of the total. The rest of northeastern Ontario, including Timmins, Kirkland Lake and North Bay, accounts for 30.8 per cent of the jobs in the industry, while 19.2 per cent of jobs in the sector are in northwestern Ontario.
Just over 70 per cent of the $10.7 billion of mineral production is from metal mining, with gold as the leading commodity accounting for 22.9 per cent, or close to $2.5 billion of the total. Other significant commodities include nickel at 20.4 per cent and copper at 17.7 per cent, accounting for $2.2 billion and $1.9 billion, respectively. Platinum group metals accounted for an additional $624 million of production, while diamonds from De Beers’ Victor Mine in the James Bay Lowlands contributed $453 million of value.
Other non-metals and structural materials were worth just over $3 billion.
Ontario continues to lead all other Canadian provinces and territories in mineral production, accounting for just under 30 per cent of the country’s $25.3 billion output and ranking first in gold, nickel, copper, and platinum group metals.
Mining in Ontario also pays well. The average weekly wage paid in the mining industry is almost 60 per cent higher than the province’s average industrial wage, while wages paid in the mining support sector were almost 95 per cent higher. According to the report, the Sudbury region alone accounted for 37 per cent of the industry’s wage bill.
Aside from being a lucrative industry in which to work, mining has made great strides in worker safety, recording a lost time injury rate of 0.4 per 200,000 hours worked for the first nine months of 2012, a dramatic reduction from rates of six per 200,000 hours in 1981 and three per 200,000 hours in 1991.
The report estimates that mining companies in Ontario contribute more than $800 million in taxes annually and that mining sector employees pay an estimated $500,000 in personal income taxes.
Ontario also leads the rest of Canada in exploration and deposit appraisal expenditures, recording just over $1 billion of spending in 2011, up from $139 million in 2002 and $347 million in 2006.
Capital spending in the province’s mining industry soared in 2011 to well over $4 billion and is expected to come in even higher for 2012. Over the last decade, according to the report, the industry has invested more than $23 billion. Of that total, the industry spent $14 billion constructing new mines or expanding existing ones, and $4 billion on machinery and equipment.
Toronto, home to many mining company head offices, the Toronto Stock Exchange and the TSX Venture Exchange, is another major beneficiary of the province’s mining sector. Together, “the two exchanges are home to 58 per cent of the world’s public mining companies and provide the best access to capital in the world for junior exploration companies.”
At the end of 2011, 370 mining companies were listed on the TSX and another 1,274 were listed on the Venture exchange. Together, they accounted for $426.8 billion of capitalization.
In 2011, according to the report, 90 per cent of all global mining equity financings were done on the two exchanges, with $12.5 billion raised. Between 2007 and 2011, the TSX and Venture exchanges accounted for 36 per cent of the $220 billion in global equity financings, far outpacing the performance of the London Stock Exchange and its Alternative Investment Market (AIM).
While the future looks rosy for Ontario’s mining industry, the authors of the report cautioned that the “challenges of making decisions on siting future expansions or new smelters in Ontario…remain, given the availability of cheaper energy supplies right outside the provincial border.”
According to the report, the average price per megawatt hour in Ontario for industrial users was more than 80 per cent higher than in Quebec and more than double the price in Manitoba.
“We know mining makes important contributions to the society and economy in all regions of the province and this study helps us quantify the scale of many of these positive impacts,” commented OMA president Chris Hodgson. “Mining is an expanding component of the Ontario economy. The world wants Ontario’s mineral products and if the province provides necessary infrastructure support and maintains an atmosphere conducive to investment, it will continue to be pulled ahead by a strong mining industry.”
The full report, entitled, “Mining: Dynamic and Dependable for Ontario’s Future,” is available on the OMA website.