Melanie Paradis is the president of Texture Communications and has worked at the intersection of mining and politics for 20 years.
There is a tendency in Ottawa to think that if you permit a mine, the capital will flow. But those working in the mining industry and on Bay Street know it isn’t that simple.
This week, Energy and Natural Resources Minister Tim Hodgson said the world is entering the “largest investment supercycle in the history of the metals and mining industry.” A supercycle refers to a long period of investment in new mines driven by significant shifts in the global economy.
According to Hodgson, this supercycle is tied to increased demand for critical minerals generated by changes to the industrial strategies and economic policies of many countries.
To leverage this, the federal government introduced Bill C-39, the Building Canada Strong Act, to compress into one year a federal approvals process that routinely takes several. But while government policy decides which projects are permitted, prices decide which ones get built. When the two line up, Canada builds mines. When they don’t, no amount of legislative reform fills the gap.
To actually build Canada strong, C-39 must be the first step in a countercyclical industrial strategy for mining that would accelerate viable projects today, build the infrastructure tomorrow’s mines will need, and work with allies to make strategically important minerals financeable even when markets are manipulated.
Let’s start with the last time a government bet on regulatory reform.
In 2012, Stephen Harper’s government overhauled federal environmental assessments to speed up resource development, just as the last commodity supercycle was ending. Mineral exploration spending in Canada fell from about $4.2 billion in 2011 to $1.6 billion in 2016. The new rules were designed to be faster, but the regulatory reform alone could not reverse the collapse in investment.
The capital hurdle
Today’s federal government must learn from that experience that while C-39 can make a mine permittable, it can’t attract investors to the mine with a permit alone. The reverse is also true. Government would also be wise not to spurn financeable mines with an overly narrow definition of “national interest.” Gold is a good example. According to the Scotia Growth Institute, gold now accounts for 46 per cent of the value of Canada’s 10 largest mining commodities, up from just 24 per cent three years ago.
Gold projects have and will continue to advance in response to market demand, and for that reason they tend to fly under the notice of governments. But treating gold as an afterthought because it doesn’t fit the critical minerals narrative would be a mistake.
A gold mine that opens in 2028 trains a workforce and builds the roads and power lines that the next critical-minerals project will be able to leverage. It also proves to investors that Canada can take a deposit from discovery to production.
When prices for other commodities recover, that track record will let Canadian critical minerals projects raise capital quickly. It’s therefore in the national interest for viable mines that don’t meet the definition of “critical minerals,” like gold, to be opened.
Beijing’s market chokehold
Some critical minerals are not as easily financed in the current market, and many of Canada’s biggest deposits sit in feasibility purgatory despite the government’s desire to see them advance. And this is not by accident. Beijing floods the market to drive down prices, which starves Western projects of capital so they don’t get built, securing China’s grip on vital supply chains.
A U.S. congressional select committee has documented this predatory pricing, and Washington is now pursuing agreements to establish a trade zone for critical minerals with tariffs and price floors to help build supply chains within allied countries. Because of ongoing trade negotiations with the U.S., Canada has not yet committed to that plan.
The job of government is to invest in readiness during the lean years so that when prices align, projects are permitted, financed and ready to build. C-39 offers a tool for that. Its proposed Regions of National Interest could streamline federal approvals inside a designated mining district, for example. The time to designate those regions with provinces and Indigenous partners is now; we should build the roads and power lines that will make future mines less expensive to develop.
Laying that foundation also means treating the national-interest list as a floor, not a ceiling. The projects on the list deserve the attention they’re getting, but the same speed should be available to every viable mine. And where the government invests its own money, it should strategically serve as a counterweight to market manipulation.
Taken together, these steps would form the foundation of a countercyclical industrial strategy for mining to ensure we are ready for the mining supercycle, Hodgson says, is just beginning.
