During October, many Canadians voted for change and they got it. Justin Trudeau unseated incumbent Prime Minister Stephen Harper and the Liberal Party secured a majority in the House of Commons of the Canadian parliament, winning 184 of 338 seats. Canada’s federal political system will experience a major upheaval as a different group takes control. What does this mean for the mining business?
The recent downturn in commodities played a key role in the Conservative downfall. The Conservatives cut the Canadian federal corporate tax rate to 15% and rode the wave during the global commodities boom. More recently, Canada’s economy has experienced negative growth for the past two quarters and this recession quickly erased many of the successes of the Harper administration.
Mining is an economic engine that drives Canada. It employs nearly 400,000 directly and is the largest private sector employer of aboriginal peoples. More than 3,400 companies supply equipment and services to not only the mines in Canada, but to the mining industry worldwide. Toronto is a financial hub that underpins much of the mining investments globally. Mining contributed more than $54 billion to Canada’s GDP in 2013. It accounted for nearly 20% of Canadian exports. The mining business pays on average $7 billion per year to the country’s federal and provincial governments in the form of taxes and royalties.
While he hasn’t fully disclosed his feelings toward mining per se, Trudeau on several occasions has voiced opinions on aboriginal issues and the environment with an emphasis toward climate initiatives, two areas that have a strong influence on mining. In a June campaign speech, “A New Plan for Canada’s Environment and Economy,” Trudeau acknowledged that Canada derives much of its wealth from its land and water. As he sees it, Canada was moving backward as many other countries moved forward with green technology. He said the Harper administration deprived Canadians of the chance to participate in new “green” opportunities by denying climate change. Even though he endorsed the Keystone XL pipeline on the campaign trail, Trudeau believes Canada should put a price on carbon emissions and reduce the country’s collective carbon footprint. He plans to introduce tax measures to create more clean energy jobs.
Unlike many mining countries, Canada’s mining sector is diversified. Mines in the eastern and western provinces produce precious and base metals. Coal is mined in British Columbia and Alberta. In addition to coal, Alberta is a major energy district with oil, oil sands and uranium. Saskatchewan is a leading producer of potash, and the mines in territories to the north produce diamonds. Making generalizations about Canada’s mining sector would be difficult. As an example, reducing one’s carbon footprint has different implications for coal, oil sands and uranium, just as aboriginal issues are more important to the exploration and development side of the business. While it seems the Liberal Party plans to defer to the provinces at the moment, it will be interesting to see how the relationship between the mining business and the new federal government evolves.
Steve Fiscor, E&MJ Editor-in-Chief,