- The Empire Club of Canada Addresses (Toronto, Canada), 10 Nov 1999, p. 146-157
- Carrington, John K., Speaker
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- Mining and its meaning to Canada and Canadians. Domestic struggles. An inefficient approval process governing new mine developments in Canada. Internationally, facing the growing use of non-tariff trade barriers against metals. The significance of the industry. Some Canadian mining history, and some figures reflecting the importance of the industry to Canada's economy. Personal importance--a look around the room. Challenges facing the mining industry, as mentioned previously, now illustrated with examples. Solutions. The need for bold solutions. Some suggestions. Steps to take to champion an industry that has provided so much for Canada. Slicing through the red tape. Recent examples of successful dialogue with stakeholders. The forthcoming review of the Canadian Environmental Assessment Act. Seeking improvements to the environmental-assessment process that will guarantee adequate environmental protection while providing a better investment climate for mining and other industries. Industry and government working together to address threats to market access. The new Minerals and Metals Policy adopted by the federal govenrment in 1996. The importance of this policy guiding Canada's negotiations in Seattle. Concluding remarks.
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- 10 Nov 1999
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John K. Carrington
Vice-Chairman and Chief Operating Officer, Barrick Gold Corporation
THE CANADIAN MINING INDUSTRY
Chairman: Robert J. Dechert
President, The Empire Club of Canada
Head Table Guests
Lisa Czach, Senior Consultant, Hill & Knowlton Canada and a Director, The Empire Club of Canada; The Reverend Dr. Brian Freeland, Associate Priest, St. Thomas's Anglican Church; Phillip Muller, Student, Etobicoke Collegiate Institute; Gordon Peeling, President, Mining Association of Canada; Deborah McCombie, President, Watts, Griffis & McQuat; Dr. Michael Sopko, Chairman and CEO, Inco Limited; The Hon. Thomas Hockin, PC, President and CEO, Investment Funds Institute of Canada, Former Canadian Minister of Small Business and a Director, The Empire Club of Canada; Maureen Jensen, Director, Mining Services, Toronto Stock Exchange; Patrick Reid, President, Ontario Mining Association; Dave Goldman, Executive Vice-Chairman and Chief Operating Officer, Noranda Inc.; and Carole Kerbel, Executive Vice-President, General Manager, Toronto Office, Hill & Knowlton Canada.
Introduction by Robert J. Dechert
"There are strange things done in the midnight sun By the men who moil for gold;
The Arctic trails have their secret tales
That would make your blood run cold.
The Northern Lights have seen queer sights, But the queerest they ever did see
Was that night on the marge Of Lake Laberge
I cremated Sam McGee."
Every student of Canadian literature knows those famous words by Robert Service which illustrate the relationship between the mining industry and Canadian history and culture.
The search for gold and other minerals opened up Canada and formed the foundation for our modern industrial economy. Shortly after the dawn of the twentieth century, John Dafoe remarked that "The towering skyline of Toronto... depends on the mines in the northern ranges of Ontario. The height of the one in balance with the depth of the other."
In 1998, the mining and mineral processing sector of the Canadian economy generated an estimated $26.5 billion, or 3.8 per cent of the nation's gross domestic product. As a world leader, the Canadian mining industry exports roughly 80 per cent of its production, representing 14 per cent of total domestic exports. The Canadian mining industry directly employs approximately 338,000 Canadians. It ranks number one in productivity growth amongst Canadian industrial sectors and invests approximately $350 million annually in research and development.
The Canadian mining industry has transformed itself from a domestically based industry to a global leader over the last 15 years. Large Canadian companies now control approximately onethird of planned exploration expenditures around the world.
The shares of more than 1,400 mining companies are traded on the major stock exchanges across Canada. Today, mining shares represent approximately 23 per cent of the TSE 300 trading volume.
For the past few years, however, the Canadian mining industry has been savaged by historically low mineral prices and turmoil in Asian markets. While a few large mining corporations are reporting profits, most companies are operating at break-even levels or worse. The mining industry is being forced to make tough decisions, resulting in suspension of exploration, mine closures, layoffs, asset write-downs and consolidation.
At the threshold of the new millennium what is the prognosis for this historic and vital Canadian industry?
As Vice-Chairman of Barrick Gold Corporation, John Carrington knows what is required to survive and succeed in this challenged industry.
Barrick Gold Corporation is the world's lowest-cost producer of gold and one of the most profitable. Barrick's aggressive operating approach and relentless focus on productivity has resulted in a significant and consistent reduction in operating costs resulting in record earnings and cash flow in 1998 representing a 15-per-cent increase in net income from the previous year. And all of this was achieved in the face of a 20-year low in gold prices.
Mr. Carrington received his Masters degree in Mining Engineering from McGill University in 1968. He has had an extensive career of more than 30 years in the mining industry. Prior to joining Barrick, Mr. Carrington was President and Chief Executive Officer of Noranda Mining and Exploration Inc. He joined Barrick in 1995 as Executive Vice-President of Operations. In 1996, he assumed responsibility for all of Barrick's mining operations as Chief Operating Officer. And earlier this year, he was elected ViceChairman of Barrick.
In recognition of his knowledge and expertise in the industry, Mr. Carrington was recently elected Chairman of the Mining Association of Canada.
Ladies and gentlemen, please welcome Mr. John Carrington to the podium of The Empire Club of Canada.
Thank you for that kind introduction.
I am delighted to have the opportunity to address this prestigious Club, one of Canada's oldest speakers' forums. The Empire Club has provided a distinguished platform for many of Canada's prime ministers and for some of the greatest personalities of this century-individuals like Winston Churchill, Indira Gandhi, Golda Meir and, I note with some curiosity about my own family tree, Lord Carrington. Now Lord Carrington was a distinguished British career diplomat and statesman, finishing his career as the Secretary General of NATO in 1988. A long way from my line of Carringtons.
I am honoured to be included among such notables. I cannot claim to have shaped a nation's destiny. I do stake my claim though as a leader of the Canadian mining industry-an industry that truly has shaped, and will continue to shape, Canada's future.
This afternoon I would like to talk to you about this great industry and its meaning to Canada and Canadians. It's a story of romance, wealth creation, high finance and technology. It is not without its current challenges, both domestic and international.
Domestically, we struggle with an inefficient approval process governing new mine developments in Canada. Internationally, we are facing the growing use of non-tariff trade barriers against metals. My message is that mining is much too important to Canada to be undermined by issues like these. We must overcome these obstacles if mining is going to continue playing its dynamic role in this country's economy and future.
Personally, I want to engage your interest in this industry. I want to make you feel proud; proud of an industry that adds to your quality of life, tries to learn from its mistakes and seeks continually to improve itself.
First, I will outline the significance of mining to Canadians. Then I will lay out issues for your consideration. Following that, I will present some suggestions for going forward.
Significance of the Industry
Let me begin by telling you why the mining industry is so important to Canada. Mining helped build this country. It opened Canadian frontiers. Glace Bay, Rouyn-Noranda, Val d'Or, Chibougamau, Sept-Iles and Labrador City, Sudbury, Timmins, Kirkland Lake, Cobalt, Flin-Flon, Thompson, Fort McMurray, Trail, Kimberley, Dawson City all started as mining towns. Today they're strong municipalities in their own right.
Grizzled prospectors, canoes, and caged canaries for testing the quality of underground air are a part of our history. But that history, rich and romantic as it is, reflects nothing of the modem world of Canadian mining. Today, mining is a major contributor to Canada's economy. It is high-tech. It is very conscious of its social obligations.
In 1998, mining, smelting and refining generated $26.5 billion of value. We export 80 per cent of our production, which has more than doubled in the last five years. Today, one in seven of all Canadian export dollars comes from mining. Mining has helped make Canada a major world trader.
As a major exporter, we account for more than half of the rail revenues of this country and two-thirds of the volume of all goods leaving Canadian ports. We are the largest user of the transportation sector, our business helping it to thrive. A nice spin-off is that other important users of the sector, like agriculture and forestry, benefit from transport's robustness.
Today, Canada ranks among the top-five producers of 17 major minerals and metals. It headquarters some of the world's largest and most successful multinational mining companies: Noranda, Inco, Alcan, Cominco, Falconbridge, Placer Dome and my own employer, Barrick Gold.
Toronto is the world's centre for mine financing. Major investment banking houses have headquartered their mining groups in Toronto. Mining shares represent about one-fifth of the TSE 300 trading volume. There are over 650 mining and exploration companies, suppliers, consulting firms and service providers in the Toronto area alone.
By any measure, these are impressive statistics. But mining means even more to Canada's economy and people. We directly employ more than 368,000 Canadians. That is one out of every 40 working Canadians. We pay higher wages than any other industry. We are a powerful engine of growth-not just in rural and remote areas, but also in urban centres. For every $1 billion in output from mining, smelting and refining, direct demand for goods and services increases by $615 million.
At a time when productivity seems to be such a national issue, the mining sector can claim three of the top-10 industries leading productivity growth in this country. We have achieved this impressive growth, while continuously improving our health, safety and environmental records, through investments in high technology.
One of the reasons mining is so economically strong is its commitment to the new economy through its ready embrace of new technology. Mining is high-tech. No, this is not an oxymoron. Canadian geologists and geophysicists have developed sideways-looking radar for airborne surveys to penetrate foliage cover to see directly the land forms beneath. They have developed airborne sensors to allow us to map the rocks being flown over. Last year at the Canadian Institute of Mining and Metallurgy's centennial meeting in Montreal, INCO engineers operated a drilling rig deep in one of their mines at Sudbury from a console in downtown Montreal. Underground, driverless trucks, scooptrams and drills are becoming the norm. Now, when exactly do you expect to ride to the cottage in your driverless car? Harmless bacteria are now used to extract metals from ores. Electron microscopes probe the atomic structures of ore minerals and metals, providing insights into the most efficient ways of recovery. And Noranda's engineers are building a new magnesium metal plant using exclusive Canadian technology. The feed source for this plant are old asbestos tailings. What a wonderful example of recycling.
Finally, let me really bring the significance of mining closer to home.
Look around this room. Windows and drinking glasses: silica. Plaster and china: gypsum and clay. Knives, forks, spoons: steel and nickel. Wedding bands, rings and jewellery: gold, silver, platinum and precious stones. Ornamental lights and chandeliers: tungsten, brass and silica. Go a little farther to your office: your PC-31 different metals. Heat shields: gold. That gold tinge to the Royal Bank towers is not an optical illusion. There are 2,500 ounces of gold in those glass panes to keep heat in and out. Bic lighter tops: zinc. The oomph to get your car going in the morning: lead batteries. Whether you realise it or not, metals and mining products are as ubiquitous as the air we breathe. Life without them, as one wag put it to me, would be the end of the civilised world as we know it.
Challenges Facing the Mining Industry
Let's turn now to those challenges I mentioned earlier: our policies governing new mine development approvals in Canada and the growing use abroad of non tariff trade barriers to metals. Both are significant. Both are very worrisome.
First, new mine developments in Canada. Mining is important to Canada. You know that. But it is critical for all of us-particularly public policy makers-to realise that there is a disturbing reality that has the potential to seriously hamper mining's growth. Within Canada, overlapping bureaucracies and tangles of red tape are stalling major mining developments. Our public policies about natural resource developments are confused, costly and inefficient. Here are three examples:
Voisey's Bay. The discovery by two prospectors of this significant nickel deposit in Labrador led to one of the grandest takeover struggles in Canadian mining history. The stuff of great mining lore. Today, five years later, we still don't have an approved mining project in Voisey's Bay. News reports suggest that the government and the company are at least now talking about solutions and a development plan, but the delays have meant lost opportunities for Newfoundland and Aboriginal people while one of the richest nickel deposits in the world lies fallow.
Cheviot. The Cheviot mine is a coal development in the foothills of the Rockies in Alberta. The project received its provincial and federal permits after extensive environmental reviews. Subsequently, the permits were challenged in court and have been overturned. After six years of examination, the fate of Cheviot is still unknown.
Cheviot illustrates the tremendous uncertainty and lack of finality of the permitting process.
Sunpine. Again, a lengthy review process outcome has been overturned, this time against a logging development in Alberta. Here we have a court ruling relying on a debatable interpretation of the Canadian Environmental Assessment Act. The reason I say "debatable" is that for two other different cases the court has interpreted the same article in exactly the opposite sense.
These experiences, combined with the painfully slow resolution of Aboriginal land claims, are seriously compromising the attractiveness of Canada for mining and other natural resource investment. Canada, and by this I mean the federal and provincial governments, has not yet put in place a clear and comprehensive project-approval process, one that respects the societal values we all share while at the same time fostering investment.
A second emerging issue reflects the activities of Canada's trading partners. This is the rise of non-tariff, trade barriers. Increasingly, we are seeing product bans, labelling and health, consumer and environmental restrictions that discriminate against our exports. The impact on metal markets is real; it is serious and it is already being felt. Canadians have every reason to be concerned, given the importance of mineral exports to Canada.
Let me be clear. Banning, labelling or imposing restrictions on products that truly pose unacceptable risks, be they health or environmental, is absolutely correct. I, for one, am pleased that my sons and granddaughter live in a country where gasoline and paints are now lead-free. However, there are very beneficial uses for lead that are safe. What we must do is educate others about the safe uses of lead and other metals.
We are strongly committed to improving environmental performance and meeting sound health standards. We should not, however, let inconsistent environmental and health rules become the trade barriers of the future. A careful review of recent actions in Europe reveals their arbitrary nature. For example, the European Union is trying to block imports of electrical and electronic equipment containing lead solder. They want to ban nick elcadmium (Ni-Cad) rechargeable batteries, the one battery in its line that can be fully recycled.
These actions appear to contravene obligations under the General Agreement on Trade and Tariffs, GATT, and the World Trade Organization, as well as the current Technical Barriers to Trade Agreement. Any supposed health-based rationale is spurious. Solder and Ni-Cad batteries account for negligible amounts of the lead and cadmium in the European environment.
These issues are raised under the umbrella that they pose unacceptable risks. We all know that we do not live in a risk-free world. There are acceptable ways of managing these risks without banning products. To highlight the hypocrisy, Europe, while imposing these bans, has been very slow to ban lead in gasoline. It has been reluctant to encourage lead battery recycling or to switch to low-cadmium phosphate fertilisers, by far the largest contributor of cadmium to Europe's environment. It is interesting to note that the European Commission has not proposed bans on the less recyclable and more expensive lithiumion and European-manufactured nickel-metal-hydride batteries.
Is this kind of activity peculiar to metals exports? Not on your life. You know that the forestry business has been facing foreign import bans for years, for a variety of reasons. And like some metal restrictions, some of these bans are nothing short of environmental protectionism. Should arbitrary or unsubstantiated environmental rules prevail in the trade arena, no resource sector in Canada will be safe.
These problems call for bold solutions. Let me suggest the kinds of steps we must take to champion an industry that has provided so much for Canada.
We really must slice through the red tape and bring some common sense back to the mine-development approval process. This will not be easy. Any solution must involve Canadian policymakers, both federal and provincial, our own industry and other stakeholder groups. We seek a process that is attentive to all groups. One that is predictable, i.e. it will end; think of Cheviot. And one that is complete, i.e. the outcome, be it yes or no, is the final outcome. Future actions can then proceed secure in the knowledge that the decision is firm. We are not asking for a process that would ignore environmental or social concerns. Au contraire. The process must integrate them. We must improve our dialogue and our partnerships with environmental groups, Aboriginal peoples and the communities in which we operate.
We do have recent examples of successful dialogue with our stakeholders. Falconbridge's successful development of Raglan in Northern Quebec, Syncrude's oil sands expansion in Northern Alberta and BHP's commissioning of Ekati in the Northwest Territories, Canada's first diamond mine all required extensive interactions with different Aboriginal communities and environmental groups. The industry is attentive to its stakeholder groups and is continually learning how to improve the quality of these relationships.
The forthcoming review of the Canadian Environmental Assessment Act will be a good time to show that we can work together and improve the process. Already, preliminary discussions with members of the environmental community are suggesting ways to create a win-win situation. We are seeking improvements to the environmental-assessment process that will guarantee adequate environmental protection, while providing a better investment climate for mining and other industries. If we don't succeed, Canada will suffer serious consequences that are in no one's interest.
With the same constructive spirit, the industry and government must work together to address threats to market access. This includes helping to provide manufacturers and consumers with the best information available about our products, their relative risks and how they can be used safely. It's often difficult for us to monitor and influence the final use of our products. But we're realising that if we don't do it, no one else will.
We support the product stewardship initiatives of commodity associations. Lead producers, for example, have launched an international programme to help governments and industries reduce significant lead exposure risks. And two months ago, the Board of the Mining Association of Canada formed a Task Force on Sustainable Mining Development. Over the next few years, it will be developing actions to ensure responsible stewardship of the many facets of mining operations.
But industry cannot combat these non-tariff barriers by itself. We also need government support. This month, global trade ministers meet in Seattle to launch the next round of WTO negotiations. Among the issues to be addressed is the growing use of non-tariff barriers to trade. As Canada's delegation heads to Seattle, we will be urging the federal government to pursue more stringent international and national standards for technical barriers to trade. These must be based on scientifically sound risk assessment and management, including consideration of the risks of using alternative products.
In November 1996, the federal government adopted a new Minerals and Metals Policy that reflects the principles of the Rio Declaration on Environment and Development. It states that products should be banned only when they pose unreasonable and unmanageable risks. It is of paramount importance that this policy guide Canada's negotiations in Seattle.
I'd like to conclude by reaffirming my message: the great importance of mining to Canada demands that the industry, government and all stakeholders work together to overcome the obstacles to its growth.
Vigilance and support are the watchwords. Whether it is mining, forestry or agriculture, we all need to be aware of and stand against inefficient public policy or unjustified protectionism. We owe this to Canada.
The strong ties of the mining industry to other key engines of Canada's economy-the financial and transportation sectors, the rapidly growing high-tech industry, our research and development institutions and universities--mean that these issues are of concern to the entire business community, to governments and indeed to all Canadians.
With informed citizens, clear-headed political leadership and a good balance of economic and social goals, we can ensure that we have a vibrant mining industry for the benefit of future generations. I have every confidence this will, happen. Working together, we will get it right. We will continue to mix the wealth of our human resources with those of the earth; a formula that will ensure we all continue to enjoy a strong economy and quality of life that is the envy of the world, well into the next millennium.
Thank you very much.
The appreciation of the meeting was expressed by The Hon. Thomas Hockin, PC, President and CEO, Investment Funds Institute of Canada, Former Canadian Minister of Small Business and a Director, The Empire Club of Canada.