Introducing Newfoundland and Labrador
Lifting the Fog on Mining Potential
When Newfoundland and Labrador Finance Minister Siobhan Coady took the podium to deliver the government's 2021 budget speech at the House of Assembly in St. John's in May, she began by emphatically saying: "In this moment we can learn from the past and change the future,” highlighting that the "status quo is no longer acceptable."
The numbers on Newfoundland and Labrador's ledger explain why the current state of affairs is untenable. The budget deficit for 2020-21 came in at north of C$1.6 billion — a dire figure, albeit better than expected. This year's projected deficit is about half that total, at C$826 million, but nonetheless still well short of the government’s ambitions for a balanced budget.
Since confederation, annual deficits have become the norm, being reported in all but 10 years, and Newfoundland and Labrador has the highest per capita expenditures and net debt in the country. The cumulative effect of years of spending outpacing revenue has led interest costs on the debt to be one of the largest public expenditures. The precarious state of the treasury might convince some that austerity measures are likely. However, based off the latest budget it is clear that belt tightening will not come at the expense of the province’s burgeoning mining industry.
"We are educating society about what mining means to us as a province. We have strong relationships and benefit agreements with our indigenous communities and this is a big advantage for companies. By being very small, we are a very neighborly province and relationships are much easier to cultivate.”
Andrew Parsons, Ministry of Industry, Energy and Technology, Government of Newfoundland and Labrador
The reason the provincial government is prioritizing the mining industry is straightforward: it has displayed a clear return on investment. Last year mineral exploration reached its highest point in five years with close to 400 mineral exploration applications processed. This year the province is projecting over C$4 billion in mineral shipments, more than C$80 million in exploration expenditures, and approximately 7,700 person years of employment. In an interview with Minister Andrew Parsons, who heads the Government of Newfoundland and Labrador’s Ministry of Industry, Energy and Technology, he noted: “Mining in Newfoundland and Labrador has been one of the region’s main growth drivers for many decades. Like any industry, it has its ebbs and flows, but currently we are at a high point in terms of interest, exploration and capital.”
Further validating the government’s decision to continue its support for mining are studies such as that from The Prospectors and Developers Association of Canada (PDAC), which states that every dollar of government spending on public geoscience results in C$5 in private sector exploration. Recognizing this importance, and its role in helping attract new exploration investment to the province this year, government is investing an additional C$2.5 million for focused geoscience data collection interpretation, while also investing C$1.7 million for the mineral exploration industry through the Prospectors Assistance Program (PAP) and the Junior Exploration Assistance Program (JEA). Minister Parsons added: “Even while we work through a tough fiscal situation in Newfoundland and Labrador, we are still finding ways to invest in the development of our mining sector.”
This collective effort is capturing attention of organizations like the Fraser Institute, which ranked the province number one in Canada and globally for policy attractiveness and third in Canada and eighth globally in terms of investment attractiveness.
"The most amazing thing that Newfoundland has done is while all the governments across Canada were cutting their budgets for their geological survey, the government of Newfoundland and Labrador increased theirs. They invested time into putting everything online so companies can now go in and know what to stake.”
Janet Lee-Sheriff, CEO, Newfoundland Gold
Newfoundland and Labrador is a province of just over 500,000 people sparsely populated over a huge land mass. It accounts for 43% of Canada’s iron ore shipments and just under a quarter of the country’s nickel shipments. During 2020, the province saw the highest amount of claim staking since 2008, with 47,200 claims staked. There have already been nearly 80,000 claims staked so far in 2021 (as of July 14th) and the government has received nearly 500 exploration plans.
The government is now in year three of its Mining the Future 2030 action plan, which has four key pillars – competitiveness and efficient regulatory process; public geoscience marketing and education; indigenous and community engagement; and innovation and emerging technologies.
“Newfoundland and Labrador is one of those jurisdictions where the people working for the regulators and people working in government know the mining industry. That is not true everywhere, and it immediately makes it easier for us, because we have to speak with the regulators, whether it is formal conversation in the context of environmental assessment work where data has been presented and needs to be interpreted or whether it is just the day to day relationships.”
Matt Manson, President & CEO, Marathon Gold Corp.
Given the staking rush that has been occurring over the past two years, Newfoundland Gold was created because of the need to bring industry leaders together to create awareness of the dynamism of Newfoundland, and in particular, its enormous potential for gold mining. “There is a phenomenal gold rush happening, and this is going to take the world by storm. We set out to educate people on the jurisdiction, highlighting why it is an amazing place to work,” said Janet Lee-Sheriff, Newfoundland Gold’s CEO.
One of those reasons making Newfoundland and Labrador an appealing place to operate is that the permitting time is short. There are a number of permits to get, but you can permit in eight to 12 weeks, which makes it very cost effective to implement a business plan.
Lee-Sheriff also points to the availability of well qualified workers as being a big tailwind for mine developers and explorers. “The nice thing about Newfoundland is that the people have a history of mining and industrial development,” she said.
These are workers who have in large part weathered difficult times, whereby they lost their primary industries, be it cod fishing, mine closures or industrial slowdown. Consequently, many Newfoundlanders have had to leave the province in order to find work. “If you go to many mining towns, these communities would be made up of 50 to 75% Newfoundlanders. They were willing to go 3,000 miles to get a job, but they now can take the skills that they would use elsewhere and go home,” Lee-Sheriff concluded.
Image courtesy of Matador Mining