Mining investors dramatically downgrade Manitoba in annual survey

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Appeared in the Winnipeg Sun, March 4, 2018

Manitoba is no longer a top-ranked jurisdiction for mining investment, and government policy uncertainty is largely to blame, according to the Fraser Institute’s annual survey of mining companies.

Every year the Fraser Institute surveys miners around the world to determine which jurisdictions are attractive—or unattractive—for investment, based on policies and geology. The survey spotlights policies (taxes, duplicative regulations, availability of labour and skills, etc.) that govern the mining industry and impact the investment attractiveness of jurisdictions worldwide.

Over the years, Manitoba has had its ups and downs in the survey. Last year it ranked 2nd worldwide, but fell to 18th place this year. Why? Because survey respondents expressed increased concern over political instability and taxation.

Crucially, Manitoba’s dramatic drop appears to be a made-in-Manitoba problem, as three Canadian provinces—Saskatchewan (2nd), Quebec (6th) and Ontario (7th)—now rank in the top 10 globally. In fact, Ontario, Manitoba’s eastern neighbour, saw its rank improve from 18th last year to 7th this year. In Ontario, miners are now less concerned about uncertainty around disputed land claims and protected areas.

Meanwhile, in Manitoba, 45 per cent of survey respondents cite uncertainty around disputed land claims and protected areas as deterrents to mining investment, compared to much less uncertainty in Saskatchewan (17 per cent cite disputed land claims, 23 per cent cite protected areas).

Given the recent actions—or perhaps inaction—by the Pallister government, it’s no surprise miners are skeptical about investing in Manitoba.

For example, in 2017 the government unveiled its Climate and Green Plan, which includes a $25 per tonne carbon tax. According to the plan, the carbon tax will “start and stay” at $25 per tonne and not rise to the federally-mandated price of $50 per tonne by 2022. However, this move raises questions about the ability of Manitoba’s carbon tax to resist the federally-mandated hike. Surely investors will be watching to see how the Trudeau government plans to implement its “backstop measures” in Manitoba to reach the $50 per tonne price.

Manitoba’s climate plan also states that the province is reviewing its “network of protected areas.” However, it’s unclear what this means for the mining industry and the ancillary benefits of jobs and tax revenue.

Clearly, the mining industry has a rich history of wealth-generation in the province, but Manitoba seems to now be paying the price for its unclear policies. For example, Alto Ventures Ltd., an exploration and development company, recently pulled the plug on an exploration program at Oxford Lake in Manitoba. To explain its exit from the project, the company cited challenges in obtaining “clear and timely information” about the government’s position on consultation and permitting matters. Alto also said it will refocus on projects in northwestern Ontario and Quebec.

And this raises the key question: why would mining investors want to invest in Manitoba where policies are uncertain and taxes are increasing?

The reality is that policies and investor perceptions matter. Mining investors have a gloomy outlook for Manitoba’s mining industry compared to other provinces, as policy uncertainty is deterring investment. The Pallister government should focus on adopting clear and competitive policies to show investors that Manitoba’s mining industry is open for business once again.

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