After more than a decade of war and nation building, members of the International Security Assistance Force (ISAF) in Afghanistan are heading for the exits. Although what ISAF will leave behind is better than what was there in 2001, Afghanistan remains a battered land. However, the resources Afghanistans land holds copper, cobalt, iron, barite, sulfur, lead, silver, zinc, niobium, and 1.4 million metric tons of rare-earth elements (REEs) may be a silver lining.
Michael Binnion, CEO of Questerre Energy and head of the Quebec Oil and Gas Association, has a great blog post up in which he discusses the impact that equalization payments have on Quebec's energy and natural resource policy.
Looking at Quebec's budget, Binnion observes:
Canadas mining industry is globally competitive, and has long succeeded without much in the way of government subsidies. It even thrived in the last recession by responding to market demand. Yet instead of letting markets drive mining investment in Quebec, the provincial government is bailing out the asbestos industry using taxpayer money - and this for a product that is harmful to human health.
It seems everyone has advice on how Western Canada should manage its resources. NDP leader Thomas Mulcair blames the oilsands for Dutch disease, the notion that high resource prices cause a hollowing out of manufacturing. Its a largely mistaken claim, given that manufacturing in Western economies has been under pressure from more competition from emerging economies for some time. Nevertheless, Mulcair would slow down the energy sector by adding a carbon tax (though hell skip the same as applied to the automotive industry).
Much of Canadas mining industry faces a short-term donnybrook but bright prospects in the long-term. However, the industrys short-term difficulties may have consequences for the economy as a whole when economic recovery begins.
The world may shift from a credit crunch to a commodity crunch.
The most endangered mining companies are in exploration. These are the often small companies that find the resources and then typically hand them off to larger production companies for development. Canadian exploration companies dominate the sector worldwide.