Introduction to Ontario Mining
Mining becomes pillar of economic transformation
It is unclear precisely when Ontario decided to establish a dedicated mining ministry. Some speculate that its initiation came alongside the discovery of silver in the town of Cobalt in 1904, or gold in Kirkland Lake in 1906, possibly even when gold was found in Porcupine and Timmins in 1909. Regardless of the precise origin, Ontario’s government set the legal parameters for entrepreneurs from all different backgrounds to prospect, engineer, develop, operate and service mines that have delivered enormously positive benefits to Ontario’s local economies, not to mention the province overall. Over a century later, a standalone ministry is back, and the economic stakes are higher than ever. The need to meet growing demand for metals used in cutting edge technology and electric vehicles (EVs) is more pressing than ever before, while simultaneously, geopolitical tensions are forcing manufacturers and governments to consider pathways to more resilient supply chains.
In response, Ontario published its first Critical Minerals Strategy in April of 2022. The report concluded that it was essential that the province marry the mineral potential of Northern Ontario with the industrial might of Southern Ontario. Minister George Pirie, formerly mayor of Timmins after many years as a mining industry executive, was brought in to expedite the development of this critical mineral supply chain with Ontario at the epicenter. “Our mandate is to once again become the number one jurisdiction for mining. We want to do that because it is imperative that we modernize into a green, carbon neutral economy. The reality is the world needs Ontario’s minerals,” Pirie proclaimed.
Fortunately, the province already possesses many of the pieces required to achieve these ambitious energy transition goals. There is a wide array of juniors with promising exploration projects, majors have long been producing successfully in Ontario, and the province has proven itself to be one of the most advanced when it comes to engineering and technological integration. Critical minerals are already a C$3.5 billion-a-year industry in Ontario, according to government figures. However, the C$3.8 billion in support over eight years that government has pledged to implement Canada's first Critical Minerals Strategy should incentivize a far larger industry. The early signs are promising. In the past year alone, Vale has spent C$945 million to bring the old Copper Cliff South mine back to life, generating 270 Sudbury area jobs in an instant. South Korea-based LG Energy Solution (LGES) also deepened its commitment to the province by signing agreements to source lithium and cobalt from two Ontario-based mining companies —Electra Battery Materials and Avalon Advanced Materials. These offtake agreements will feed the C$5 billion EV battery plant LGES is in the process of building in Windsor, Ontario.
“One component of our mandate is to once again become the number one jurisdiction for mining. We want to do that because it is imperative that we modernize into a green, carbon neutral economy. The reality is the world needs Ontario’s minerals. If we are going to be green, we must mine.”
George Pirie, Minister of Mines, Government of Ontario
Ring of Fire Heats Up
Perhaps the most promising mineral development opportunities for critical minerals in the province lie in the Ring of Fire, 500 km northeast of Thunder Bay. Government has earmarked C$1.5 billion for infrastructure investments to unlock new mineral projects in critical regions such as the Ring of Fire. But this is not without its challenges. The region is cut off from the rest of Ontario, and projects require substantial taxpayer investment in roads and infrastructure, in addition to buy-in from surrounding First Nations. Despite this, Perth-based Wyloo Metals offered C$617 million in cash to buy Noront Resources, outbidding fellow Australian mining giant BHP Group. “What attracted us most was that we liked what the (Noront) team was doing from a First Nations perspective. We knew the project had a long history, and that it had been stranded for a long time. However, seeing the shift change that Noront’s management team had achieved over the last five years was incredibly compelling,” Wyloo CEO, Luca Giacovazzi explained.
Toronto Remains the Lifeblood of Mine Finance
No major industrial transformation is possible without access to capital. This is especially true of industries as capital intensive as mining. Thankfully, the TSX and TSX Venture Exchange (TSXV) exist to keep liquidity flowing to the sector regardless of cycle. The exchange raises more equity capital for mining companies than any other globally, and over the past five years, 35% of equity financing for mining went through the TSX and TSXV. The two-tier system the exchange offers is one that is deeply focused on upward mobility for juniors. Close to 50% of companies on the TSX started out on the TSXV, and approximately 20% of those companies that graduate have gone on to be included in the S&P/TSX Composite Index. Dean McPherson, head of business development - global mining for the Toronto Stock Exchange and TSX Venture Exchange, offered: “We are a unique market in the sense that we have a place for mining companies at every stage of the growth cycle; from early-stage exploration through to production."
“If the government can spend more money on infrastructure, it opens things up and drives down the cost of exploration and mine development. Furthermore, infrastructure spending has an add-on permanent benefit for nearby communities."
Denis Frawley, Partner, Ormston List Frawley LLP
“We are looking for additional incentives that target the territories to help bridge gaps in infrastructure and offset high operating costs."
Alex Christopher, 38th President, Prospectors & Developers Association of Canada (PDAC)
Article header image courtesy of Barrick Gold