The Manitoba mining industry received some good news recently, but the province still needs to reform its mining policies for the sector to thrive.
Despite some progress over the years, the province continues to have a hostile climate for investment: this needs to change.
Vale Ltd. recently announced a $150-million investment to extend nickel mining activities in Thompson by a decade. The company will also engage in some aggressive exploration drilling of known ore bodies to extend the life of the mine even further.
Just a few years ago, the mining operation in northern Manitoba was set to shut down. But this announcement provides a welcome injection of new capital into the region.
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Nickel is all the rage because of its critical role in electric vehicles and renewable energy endeavours. Manitoba is well-positioned since the quality of nickel produced in the province is top-notch – the ingredients for success are all there.
It’s the perfect time for Manitoba to reform its mining policies. That’s particularly the case as Canada moves ahead on emissions reduction targets, including promoting the increased use of electric cars running on batteries made from minerals that can be mined in the province.
If only that were the end of the story. But simply possessing the mineral and metal deposits isn’t enough. Governments need good policies that attract private exploration and investment.
The province’s mining policies are a mixed package.
And just three years ago, the federal government was announcing plans to place a United Nations heritage site designation on top of lucrative nickel deposits.
Manitoba doesn’t always have its priorities in sync when it comes to expanding its mining opportunities.
Surveys examining the attractiveness of provincial mining policies have seen Manitoba slip over the last few years, to the point where it’s now at the bottom of the national heap. Last year, Saskatchewan was rated the most amenable to mining ventures among Canadian provinces and territories.
Uncertainty over disputed land claims and protected areas continues to deter exploration and investment in Manitoba. Mining producers also complain about delays in the permitting process. Manitoba was also dead last in perception of transparency in the permitting process.
Some things have changed, but more can be done.
In 2013, Manitoba had the highest mining taxes in the country. A study by the School of Public Policy at the University of Calgary documented how distorted the province’s mining taxation policies had become. That study should be revisited since it contained many bits of wisdom for policy reform.
Combined with a high corporate income tax rate, Manitoba was very inhospitable to mining activity. Over the next few years, the province reduced those tax rates and introduced some mining incentive programs. This has certainly helped but it has yet to make the province an attractive mining investment destination.
So Vale’s new investment in Thompson is good news for all Manitobans. But let’s take it with a grain of salt. The future of mining is still precarious.
The provincial government needs to work with producers to adopt winning policies that make Manitoba attractive for mining, to the benefit of Indigenous and non-Indigenous communities.
Joseph Quesnel is a senior research associate with the Frontier Centre for Public Policy.
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