OPINION: Ford government ignores vital exploration sector

Junior mining sector needs support, province needs to get more competitive to spawn next generation of mines, says industry leader

Without a doubt, one of the most important challenges facing the next generation is global warming and the need to decarbonize the transportation sector.

This can only happen with the sustainable development of new mines that produce the copper, nickel, cobalt, lithium and other critical minerals that can be found throughout Northern Ontario’s rich geology.

However, it is the junior exploration sector that has traditionally found economic mineral deposits that are sold to majors who have the financial capacity to build these new mines. This important and vital part of the mining ecosystem is largely being ignored by the Ontario government.

I have been in exploration sector for over 40 years, the last 10 as head of Kirkland Lake’s Northern Prospectors Association. After attending the annual PDAC mining convention in Toronto a few weeks ago, it was clearly evident that the junior exploration sector was not in good health due to a variety of challenges that has slowed down and could potentially derail Ontario’s much vaulted Critical Minerals Strategy.

While both provincial and federal governments have spent tens of billions of dollars to attract the next generation of electric vehicle (EV) manufacturing plants, Ontario has done almost nothing to support the companies and prospectors that will find the critical minerals needed to build the batteries essential for these operations.

To significantly help the struggling exploration sector, the following strategic exploration investments — needing a fraction of what has been spent in subsidizing EV operations — and other educational initiatives should be implemented by the Ford government in their next provincial budget.

Point 1: A more competitive financial incentive program is needed to complete with other Canadian jurisdictions.

The federal Mineral Exploration Tax Credit (METC) and the Critical Mineral Exploration Tax Credits (CMETC) associated flow-through financing have played a major role in establishing Canada as a destination of choice for global exploration expenditures. Many provinces like Quebec, British Columbia, Manitoba and Saskatchewan have more robust provincial incentives programs in the range of 20-30 per cent for both METC and CMETC. Ontario currently offers a 5 per cent credit. To complicate matters, the federal government is considering letting the METC expire at the end of March, which makes it even more imperative for the Ontario government to increase the provincial METC to a minimum of 20 per cent. This would effectively replace the federal credit and bring it into competitive alignment with other provinces.

Point 2:  A well-funded Ontario Junior Exploration Program (OJEAP) is badly needed.

The current $3.5-million funding formula is far too small to make any serious impact on exploration and will likely not lead to finding many new deposits. To meet the challenge of finding new critical mineral deposits and advancing those discovered to date, in order to go to the next level of development, OJEAP needs to increase funding to about $50 million. While that figure may seem like a considerable amount, in the early 1990s, the highly successful OMIP (junior exploration program) received roughly $10 million from the provincial government. Factoring in inflation, the comparable 2024 number should be about $50 million.

Point 3: “Grassroots” exploration is almost entirely being ignored and is not being funded. A return to prospector grants incentives, like the highly successful Ontario Prospectors Assistance Program (OPAP) of the 1990s, is required. To put things into perspective, in 1990, the Ontario government spent $4 million on this vital initiative. Today, that number should be closer $8 million to $10 million per year. 

Point 4: With First Nations cooperation, the Ontario government needs to publicly publish clear and distinct maps on Indigenous traditional territories. There is a huge problem in the junior sector on which First Nations communities should be contacted when exploration activities are conducted due to overlapping claims. And this information must be communicated to the southern Ontario media, which has problems discerning which First Nations spokespeople represent which communities. Too often, the media quotes individuals who don’t come from the community impacted by an exploration issue giving southern viewers the false impression that all First Nations are not for responsible resource development.

There needs to be a sustained political commitment to the first three initiatives for a minimum of five years, in order to see real solid results.

In addition, there is a large disconnect of understanding between the exploration sector and many First Nation communities on the minuscule environmental impacts and financial limitations and challenges that junior miners face. It is only when a discovery is FOUND and bought out by a major miner that a significant number of direct and indirect jobs, business opportunities, royalties, and other benefits can accrue to Indigenous communities.

This requires access to the land — aside from reserve boundaries and clearly defined sacred areas and burial sites — without onerous First Nation and bureaucratic demands that would limit juniors from doing what they do best: finding the future mineral deposits that will bring long-term, high-paying jobs and enormous economic benefits to impoverished First Nations communities.

The mining sector is the largest private sector employer of Indigenous people in the country. If First Nations want to stay in their home communities and enjoy a high standard of living that they see in the south, the only way this will be accomplished is through the mining sector.

The Ontario government also needs to implement a sizable education initiative for First Nations communities — especially in the isolated communities — to understand the huge differences between junior explorers and major miners as well as the junior sector’s needs to raise scarce capital through the financial markets. Similarly, the Ontario government should consider a large educational program for the general public, municipalities, and educational institutions in working with various provincial mining organizations.

In the next provincial budget, some focused and strategic investments in junior exploration will ensure the sector remains the healthy and vibrant starting point for a successful Ontario Critical Minerals initiative.

Gino Chitaroni is president of Kirkland Lake’s Northern Prospectors Association and is an Ontario Prospectors Association board member.

You may also like...