Why is Manitoba not booming?

By Stephen Masson, M.Sc., P.Geo. President, Manitoba-Saskatchewan Prospectors and Developers Association

Contained within our magazine are write-ups by both the Manitoba and Saskatchewan provinces on last year’s and current activities in the exploration and mining industry.

Saskatchewan is long on detail, which is a pleasure to read even though uranium and potash prices continue to hurt corporate revenues and, therefore, provincial revenue as well. Still, gold exploration is up, base metal exploration has seen a four-fold increase and an interesting cobalt-nickel prospect and a new potential diamond mine may be developed. Overall, junior exploration in the province is expected to come in around $70 million. In Manitoba’s write-up, which lacks significant detail, the new Manitoba Aboriginal Mining Protocol, in which our association had input in and fully endorsed, is spoken about but little else. Manitoba’s junior exploration is under $6 million, will not be even a 10th of Saskatchewan’s junior exploration. The contrast between provinces is disturbing but is rooted in some fundamental differences involving mineral abundances, permitting and politics. True, Saskatchewan has huge world-class potash and uranium deposits, of which Manitoba either has a lot less or, in the case of uranium, little to speak about so far; however, Manitoba does have world-class nickel and copper-zinc deposits and comparatively more abundant gold deposits and more potential for gold. Lithium deposits, the new darling of metals, are more common in Manitoba. Diamond exploration in Manitoba has recently seen some success but not on the scale of Saskatchewan. When we look across mid-Canada, we see exploration is way down, financings are down and, with the lack of exploration, new discovery rates have plummeted. Resources in general seem to be taking a beating; although, it is encouraging to see the further exploration of Foran’s large zinc-copper deposit at Hanson Lake and Star Diamond Corporation’s (formerly Shore Gold) diamond project at Fort de la Corne. Both, being backed at different levels by large mining companies, moving forward.
Still the conditions are hard to ignore: the hundreds of geology students (approximately 50 per cent of which are young women) that can’t get a job in the industry, unemployed or underemployed drillers and the overall decline in exploration activity and junior financings. Much of the money has walked away from exploration, but this has not been more evident as in Manitoba, where companies have packed up and gone elsewhere. The main problem has been the lack of or of timely permitting approvals for exploration. This uncertainty has sent a message that exploration can expect delays or even refusal for permits giving explorationists the distinct impression that they are generally not welcome in Manitoba, and the government will not help them. The past provincial government did little to address this issue.


The present Conservative government took a wider view and tried to address Ab-original concerns of not benefiting from exploration and mining as much as they should. The Manitoba Aboriginal Mining Protocol was an excellent start to create certainty by providing a win-win scenario for First Nation communities and the mining industry. However, this great step of a mechanism that could bring wealth and unparalleled control over the process for northern communities was sabotaged by the same government by telling First Nations communities they had a veto over mineral exploration and mining in their traditional land use areas. All the certainty and first benefits brought by the protocol evaporated. Our association wrote the Minister to clarify this position, and we received no answer.
After numerous attempts to get clari-fication, we published in the Brandon Sun the MSPDA’s position on the harm this would do to exploration investment in Manitoba titled “Uncertainty is Bad for Business”, which I include below. We still have not received any response.

UNCERTAINTY IS BAD FOR BUSINESS


Our Minister is proposing to change the “ground rules” Resource projects to be subject to ongoing veto August 29, 2018 The comments of Manitoba’s Honourable Minister of Growth, Enterprise and Trade during the public announcement of the Manitoba First Nations Mineral Development Protocol implied that the First Nation Communities’ consent would be required before exploration permits would be issued. He went on to say that communities could decide not to have exploration and mining in their Traditional Land Use Areas. This is essentially a VETO, which would have huge implications for the survival of Manitoba’s mining industry.
Manitoba is blessed with abundant mineral resources and a long rich mining history, having produced many world-class deposits, which continue to churn out every 15 to 20 years, once boasted of two smelters and has a world-class zinc refinery.


There is great potential for new miner-al discoveries in Manitoba and even new mining camps, where much of the province is still under-explored compared to eastern Canada. Despite this, Manitoba’s share of junior exploration is now almost non-existent. Spending is under $6 mil-lion compared to $61 million next door in Saskatchewan. Adding to Northern Manitoba’s current woes were the shutdown of the Port at Churchill and the rail line servicing it, the closure of the Birchtree Mine in Thompson last year and the closure of the Smelter this year. In Flin Flon, Hudbay just shipped their last ore from the Reed Lake Mine while the Triple Seven Mine may have just three years left. To support our communities and the province, more mines need to be discovered. There is no shortage of targets; we simply need more explorers and investment dollars. Steps to reverse this trend must start now or we will not have a mining industry in seven years.


So what happened in our province? Manitoba exploration companies struggled to get exploration work permits, especially outside the established camps. Companies just gave up and left and the sector dwindled.

To address the work permitting issue and other problems, the Honourable Minister Pedersen set up a committee so First Nations peoples could benefit directly from resource exploration and development activities in their Tradition-al Land Use Areas (TLUA). Each community would be able to benefit through training, employment, revenue sharing, business partnerships and other business opportunities from the exploration stage right up to and into mine production. The idea was obviously to address the needs of communities with high unemployment but also to unblock and speed up the permitting process, which had stalled because there were no firm incentives in the consultation process for First Nations communities. The Protocol was strongly endorsed by the Manitoba-Saskatchewan Prospectors and Developers Association (MSPDA), which felt it was long overdue. The training, jobs and business partner-ships would bring a better quality of life to communities and further make the skill sets developed transportable across Canada. It is important that these communities, with growing populations, have opportunities to prosper from the exploration investment of new mining development. But this requires ongoing certainty of permitting and reasonable stability. Projects will only move forward in a pro-development environment exists that gives certainty to investment dollars.


During the announcement of the Manitoba First Nations Mineral Development Protocol, the Honourable Blaine Peder-sen stated that he would respect and not issue permits where those communities don’t want mining. His statement essentially removed the stability and certainty that exploration venture capital requires. It removes control by the province, the duty of which is to ensure that all residents and business of Manitoba can benefit from its resources. If implemented, it is almost certain that the province will turn away millions of dollars in resource investment. So now it has moved from not just being all about permitting but also to all about certainty of tenure and process.

It takes hundreds of targets tested to find a mine. The role of junior exploration and prospectors is to test as many targets as possible. Juniors are essential to form the base of pyramid to feed discoveries to mining companies. However, unlike min-ing companies, juniors have no income from mining and rely on high-risk investors to fund their exploration. Without junior exploration, and we need more not less, discovery rates will plummet. Conditions that welcome investors will see exploration dollars flow into the province and into the hands of northerners, but the opposite is also true. Investors simply will not put hundreds of thousands or in the case of more advanced projects, mil-lions into a project if it can be shut down arbitrarily by a veto. Investors simply in-vest elsewhere where there is certainty and they feel welcomed.

The implied veto gives First Nations jurisdiction over the mineral rights. Such action would overrule the Mines Acts and Regulations of Manitoba and the jurisdiction of the province provided by the Natural Resources Transfer Act of 1930. Such action would also compromise the rights of innocent parties who acquired mineral dispositions legally. Each First Nations community would have the right to change their mind, or could add financially unsupportable demands on a project. This level of uncertainty will direct future project financing away from our province and see Manitoba rapidly gain-ing the dubious distinction of being the least friendly place to explore in Canada.

All residents of Manitoba have a right to the benefits of resource development throughout the province. These resources pay for everyone’s social benefits of health, education, roads and other services. First Nations peoples should have a big say in what goes on in their Tradition-al Land Use Areas. The Supreme Court has ruled that First Nations communities must be consulted and accommodated by governments. Certainly, any community in Canada should have a say in what hap-pens in their own backyard.

First Nations communities may think having the final say is great and what they want, but it is not good if it works against their chance for real prosperity. Because of the uncertainty it creates, a veto would cancel all of the positive aspects that the “Protocol” achieved. Chances for revenue sharing, job training and new First Nations business partnerships would be significantly diminished. Money follows opportunity and relative certainty of process. Northern Manitoba is the big loser if a “veto” comes into effect because mines will not be discovered at a rate that makes the industry sustainable, as discovery rates further plummet because of a lack of exploration dollars. Northern communities will find it extremely difficult to support themselves and related infrastructure, which will burden the rest of the province. All Northerners need to realize the effect and high cost of a veto. The province’s role is to play honest broker between industry rights and First Nations’ rights, taking into consideration all the economic, social and environmental realities.

A better quality of life for First Nations people and mining, the largest industry in the north, and second largest in Manitoba, are tied together and are not unrelated, but the industry must be sustainable. Without a significant change in the incentives for exploration in Manitoba and a climate of stability in permit-ting and development, mining will be destroyed in Manitoba and all its northern communities will be far worse off. The rules must be transparent for investors to feel welcomed and realize security of land tenure, with a reasonable expectation, that exploration is allowed to proceed in a timely manner and investors can expect a reasonable chance of a return on their investment.

The Conservative government planted a fabulous tree with the “Protocol”, then proceeded to cut off the water supply to it. Perhaps it was bad wording by the Minister in an unscripted speech. To not clarify exactly what he meant will be an irresponsible act and likely the greatest setback for mining in the history of Manitoba. This is a disaster in waiting, and the Minister should review the consequences of his viewpoint.

We hereby request that the Minister, or the Premier, make a clarifying policy statement whether or not a veto was implied. This will allow investors, industry and Indigenous communities to have a clear and transparent understanding on the security of their mineral rights and investments. The current situation is confusing and bad for business and the markets are reacting accordingly.

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