Mining exploration spending sharply declining in Ontario
Mining exploration spending is tightening in Ontario.
In 2011, exploration spending peaked, amounting to $1.07 billion of investment in the province. In 2015, the story is much different. Natural Resources Canada is predicting that exploration expenditures will be about $357 million—a decline of 67 per cent since 2011.
Ontario’s peak in spending also coincided with its recent peak in policy performance according to the Fraser Institute’s Annual Survey of Mining Companies. Unfortunately, this correlation has persisted during the sharp decline in investment spending, and as Ontario’s policies have become less attractive, spending has been on the decline.
In 2011, Ontario was ranked as the ninth most attractive jurisdiction in the world for mining investment, based on the survey’s Investment Attractiveness Index, which combines company executives’ perceptions of both policy and mineral potential. Fast forward to 2014 and Ontario has dropped down to 23rd in the world.
So where is Ontario’s policy environment faltering?
The answer is land-use and regulations. The survey has two questions relating to land-use, one assessing uncertainty from disputed land claims and another focused on uncertainty over which areas will be protected as wilderness, parks, archeological sites, etc. The perception miners have of these areas of policy are quite telling.
For example, about 66 per cent of miners perceived uncertainty from disputed land claims to be acting as a deterrent to investment, with 37 per cent stating that it was a) a strong deterrent or b) a reason to not invest at all. Fifty-six per cent of respondents indicated that uncertainty over protect areas was acting as a deterrent to investment.
Likewise for regulations, 51 per cent of miners viewed uncertainty concerning environmental regulations as a deterrent, and 52 per cent of respondents found regulatory duplications and inconsistencies to be deterrents to investment.
With both perceptions of Ontario’s policy environment and exploration spending declining in the province, it appears that there’s growing room for policy improvement.
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