Mining makes its debut in Canadian election
It's not often that mining makes headlines as an election issue in Canada, but there it was last week, when Prime Minister Stephen Harper made a scheduled campaign stop in the battleground riding of Nipissing–Timiskaming in Northern Ontario.
Harper, whose incumbent Conservative Party finds itself in a tight three-way race with the Liberal Party and the NDP, told a group of supporters in North Bay that the 15 percent mineral exploration tax credit, in place since 2006, would be extended at least another three years if the government is re-elected. Projects that face steep overhead costs due to remote locations, such as the Ring of Fire in Northern Ontario and the Plan Nord in Quebec, would qualify for a 25 percent tax credit.
The cost of extending the credit and the new enhanced credit would be about $60 million a year starting in 2016-17. Both Liberal Party leader Justin Trudeau and the leader of the NDP, Tom Mulcair, have said they oppose the tax credit.
Harper lashed out at his opponents, saying that Trudeau has gone against “a number of critical projects that would develop our resources responsibly and create jobs" and that Mulcair opposes resource development for ideological reasons:
“When it comes to resource development, Mulcair stands with anti-development activists who want to halt all development no matter the consequences. The NDP’s economic policies would kill jobs and hurt Canada’s rural and Northern communities,” he told the North Bay supporters.
However two Northern Ontario NDP candidates say that it's Harper who is out of touch, noting the Conservative government's mishandling of the Ring of Fire, home to an estimated $60 billion worth of mineral deposits. Lacking highways, rail lines or reliable power, the Ring was dealt a major set back when Cliffs Natural Resources withdrew from Ontario operations in 2014.
“It’s pretty rich for Mr. Harper to come to Northern Ontario and pretend he supports mining jobs after he has so badly mishandled the Ring of Fire,” Howard Hampton, running for the NDP in Kenora, said in a news release. The release stated the Ring of Fire stalled because of the federal Conservatives' failure to work with other governments. The Ontario government said in 2014 it was willing to invest CAD$1 billion to develop an all-season transportation corridor to the Ring of Fire and asked the federal government to match the funds.
“The Conservatives claim of helping ‘hard to reach’ mines is laughable – many of these mines are hard-to-reach because their government has failed to invest in infrastructure in Northern Ontario,” Claude Ravelle, the NDP candidate in Nickel Belt, said in the release.
As for the mining tax credit's impact on the industry, there is some debate about its effectiveness. According to a University of Victoria economist quoted in a recent CBC article, the tax credit only applies to flow-through shares, which makes the tax credit more of a vehicle to avoid taxes than to increase investment in junior mining projects.
"That's a very, very niche area that they [the Conservatives] are targeting," Lindsay Tedds told CBC. "These investors in flow-through shares are predominantly doing this for tax planning reasons, not for investment purposes."
The mining industry is, not surprisingly, a fan of the policy, with the CBC quoting the Yukon chamber of mines' executive director as saying that the credit extension was recommended in a May industry report as a way to offset costly northern projects.
"We're pleased that there's a recognition by one of the parties so far in this election, and certainly a welcome announcement," said Samson Hartland. "Every little bit helps given the increased cost and the propensity for projects to cost more in Canada's North."
The Canadian election campaign is being fought amid a backdrop of billowing economic clouds. Last week Statistics Canada said the country fell into a recession during the first half, due partly to falling oil prices. According to Stats Canada, exports of metal ores and non-metallic minerals were down by 7.9 percent in the second quarter.