Title: Interview with Chris Hodgson, president of the Ontario Mining Association.
Blurb: The Canadian mining industry was hit by a series of curveballs during the past year. Wildly fluctuating raw material demand and prices, labor troubles and the advent of new legislation are all changing the way the industry operates. To get a sense on how companies are handling the challenges, CIM Magazine recently spoke to the Ontario Mining Association’s president Chris Hodgson. Following is an edited transcript of his comments.
The world economy has gone through a fairly turbulent time during the past year. How has this affected your members?
The biggest challenge was the huge drop that we saw in global commodity prices. This caused credit markets to freeze up and exploration activity tanked, which in turn led to some downsizing and mine closures. Lately things are starting to look up and some of those closures have come back on-stream. Prices have bounced back too, though I don’t think we will see a return to $24 nickel anytime soon. Over the longer term, continued urbanization around the world, as millions of poor people move up into the middle classes, means that raw materials demand, particularly from emerging economies will increase significantly.
How does the Ontario mining industry fit into all of this?
Ontario has an extremely favorable geology, which makes it a great place to do mining. Resources are quite abundant here, ranging from base metals, such as nickel, copper and zinc, to precious metals such as gold, silver, diamonds, platinum and salt. We even have industrial minerals.
But geology alone does not automatically ensure success. Companies need to feel comfortable in the jurisdictions in which they operate. Fortunately unlike some economies, Canada and Ontario have a strong tradition of respecting the “rule of law.” Certainty of ownership, which is extremely important to investors, is well protected here and tenure rules (the right to bring a mine into production) are applied fairly.
October marks the fifth anniversary of your becoming president of the Ontario Mining Association. What are some of the organization’s main accomplishments since you took office?
I was a bit lucky because I took the helm of a strong association, which my predecessor Patrick Reid had led for more than 20 years. Much of my efforts have been devoted towards pursuing our association’s primary goal, which is to improve the competitiveness of Ontario’s mining industry. For example we have continued to represent the industry at Queen’s Park. On federal issues, we make our positions heard though the Mining Association of Canada. We have also worked to build on the industry’s social license to operate. We have improved our outreach to First Nations and help foster education about the industry. We also worked to improve our communications, by for example developing new a new logo for the organization and upgrading our Web-site with a “members only” section.
Before joining the Ontario Mining Association, your career included stints as Ontario’s Minister of Northern Development and Minister of Natural Resources. What are some the key government relations initiatives that the industry is now working on and how has your background helped you to lead in these areas?
Don’t forget, that before entering politics I had also worked as a real estate developer too. That meant by the time I joined the Ontario Mining Association, I had already worked both sides of the table. So I know how important effective cooperation is. The other thing I learned is that to influence the decision making process, you first need to be at the table and to understand what your counterpart is thinking. That said, this may surprise you, but there are lots of similarities between government officials and business people. Both groups have a real desire to do what is right.
Right now on the Ontario legislative front there are two key pieces that affect our industry. The first is Bill 173, The Mining Amendment Act, which deals with mining explorers more than it does with operators, though we are pleased with its scope. Bill 191, The Far North Act, which is before the house right now is more problematic. We agree with the goal. We want to protect the environment. However the act is vague and we would like clarification in some areas. If not, the act will not be helpful in making mining here competitive in a global sense. Not all we do involves contributing to the legislative process though. We also provide input into a lot of less visible initiatives. For example right now we are contributing to a federal task force on human relations.
Ontario’s mine workers benefit from enviable labor conditions compared to those in other jurisdictions. Yet the recent labor dispute at Vale Inco’s Sudbury facilities was quite serious. What can other Ontario producers (such as Xstrata, where the contract with workers expires next year) learn from the Vale Inco experience?
First and foremost, I don’t comment on individual issues. However we need to back up a bit and remember that the reason Ontario and Canadian miners are well paid, is that they are among the most productive in the world. Each miner here generates more than $600,000 worth of output. Furthermore, about industry cooperation has yielded significant benefits. For example Ontario is the safest jurisdiction to do mining work in the world.
Environmental concerns are on the rise around the world. However the mining industry is a significant energy consumer and many companies are major polluters. How do you see the industry’s role in all of this?
Ontario has a toxic reduction strategy and we have told legislators that we want to be part of the solution, not part of the problem. That said we also want balance so that the industry can stay competitive. We need to make sure that compliance is practical and cost effective. For example Regulation 419 is expected to set emissions standards based on health criteria, while other jurisdictions use a “best available technology” approach. Speaking more broadly though, maintaining our social license to operate is a major challenge. Remember that any new ecological initiative, such as the widespread manufacture of solar panels, is going to require the use of minerals to produce. For example one of the key ingredients in catalytic converters is platinum, and nickel is used in the production of turbines.
One of the industry’s key challenges has been its ability to partner with first nations. How is that going?
Our members have always worked well with the province’s First Nations and we want to continue to build on those successes. For example there have been already been well over 40 impact-benefit agreements (IBAs) negotiated with First Nations including ones with DeBeers regarding the Victor Diamond Mines and one at Goldcorp regarding the Musselwhite Mine. But we want to do more. Everybody has an interest in it. Ontario needs more mines, and mining is already the number one employer of First Nations peoples.
Are there any other key challenges facing the industry going forward and if so, what is your association doing to help deal with them?
Keeping the public informed about what we are doing and how society profits from this is crucial. For example we conduct regular macro-economic analyses about the benefits that the industry provides and we provide many of the key findings online. We continue to fine tune those efforts. For example we recently also did a micro analysis and were quite surprised by the extent of the downstream economic activity the industry generates. Education is another big issue. The association has produced videos to inform the public about the industry. Another initiative was to start a competition among students to see who could produce the best video about the benefits that mining provides.
We have also undertaken initiatives to increase the interest among students in mining as a career. This is important because the supply of skilled labor to the industry could come under pressure in coming years. Nineteen-ninety was a peak birth year and after that the numbers tail off. We have to make sure that we have enough people coming into the industry to replace those that are leaving.
Our work with Ontario’s Worker Safety Insurance Board (WSIB) is also very important. As I mentioned before, the safety record of Ontario’s mining industry is the envy of the world. However we need to make sure that the insurance rates that our members are charged reflect that fact.
Peter Diekmeyer (email@example.com) is CIM Magazine’s Quebec correspondent.
|© 2009 Peter Diekmeyer Communications Inc.|