There is some good news for mining in Manitoba, but the province needs to reform its mining policies for the sector to thrive. Despite some progress over the years, this province still has a hostile climate for investment and this needs to change.
Vale recently announced it is making a $150 million investment to extend current nickel mining activities in Thompson, Manitoba by a decade. At the same time, the company will be engaging in some aggressive exploration drilling of known ore bodies to extend the life of the mine even further.
This is good news because a few years ago, the mining operation in Northern Manitoba was set to shut down. This announcement provides a welcome injection of new capital into northern Manitoba.
The promising thing is that nickel is all the rage today because of its critical role in electric vehicles and renewable energies. Manitoba is well-positioned since the quality of nickel produced in this province is top-notch so, the ingredients for success are all there. In fact, it is the perfect time for Manitoba to reform its mining policies as Canada moves ahead on carbon dioxide reduction targets that will include promoting increased use of electric cars which run on batteries made from minerals that can be mined right here.
If only that was the end of the story. Simply possessing the mineral and metal deposits is not enough. Governments need good policies that attract private exploration and investment.
The province’s mining policies are mixed. It was only in 2018 that the federal government was announcing plans to place a United Nations heritage site designation on top of lucrative nickel deposits.
Manitoba does not always have its priorities in check when it comes to expanding mining opportunities in the province.
In recent surveys examining the attractiveness of provincial mining policies, Manitoba has been dropping over the last few years, to the point where it is now at the bottom of the heap. This past year, Saskatchewan led 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 mining permitting process. Manitoba was also dead last in perception of transparency in permitting.
Some things have changed, but they are still producing the results the province needs. Back 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 distorting our province’s mining taxation policies had become. That study should be dusted off and revisited since it contained many precious nuggets of policy wisdom for reform.
Combined with a high corporate income tax rate, Manitoba, back then, was very inhospitable to mining activity. Over the last few years, the province has reduced those tax rates and has introduced some mining incentive programs. This has certainly helped, but it has not yet made the province into an attractive mining investment destination.
So, the news about Vale’s new investment in Thompson is indeed good news for all Manitobans. However, let’s take that 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. That would certainly advance both Indigenous and non-Indigenous communities for quite a while.
Joseph Quesnel is a senior research associate with the Frontier Centre for Public Policy.
Photo by Curioso Photography on Unsplash.