Risks and Regulations
The fine line between growth and governance
2024 has been a transitional year for Ontario’s mining sector, marked by further regulatory developments and record commodity prices. However, the industry continues to grapple with the complexities of securing financing, particularly for juniors, amid a volatile global economic landscape and the US elections. Additionally, Ontario’s miners and explorers face the ongoing challenges of navigating stringent environmental regulations, addressing labor shortages, and enhancing their ESG performance to meet the increasing demands for sustainable and responsible mining practices.
The regulations of the 2023 Building More Mines Act came into effect on April 1st, 2024, amending the existing Mining Act and consolidating the Ministry’s powers over exploration and mine closures. The Ministry is not done yet, however, with further improvements in the pipeline to streamline and simplify the permitting process in Ontario. In his interview with GBR, Ontario’s former Minister of Mines George Pirie shared details: “We continue to make improvements and enhancements to the regulatory framework, with further amendments set to be released in November 2024. These new changes will be incorporated into the Red Tape Reduction Bill, aiming to streamline the mine approval and permitting process. Our largest policy initiative currently is the ‘One Project, One Process’ initiative, which aims to break down the confusion and delays Indigenous communities and mining companies encounter.”
Further efforts to streamline the permitting process in Ontario will come as a relief to many, given that building a mine in the province can take up to 20 years in some cases. “A common theme we hear from mining clients is that regulations are complex and duplicative. Acquiring permits, even for the simplest of projects, takes years, and removing some layers of regulations whilst maintaining commitments to environmental concerns will help many young mines flourish. The Building More Mines Act was a great first step in streamlining the process, but more must be done,” said Bliss Baker, vice chair, Sussex Strategy Group.
In a globalized world, where giant mining multinationals can pick and choose their mining destinations, the regulatory framework in place is playing a more important role than ever. “I believe that Canada’s regulatory frameworks are well intended but need to be streamlined to remain competitive. There are currently some real disruptors in the mining game, such as Argentina and Saudi Arabia, that are aggressively attracting new capital into their space,” said Rob McEwen, chairman and chief owner, McEwen Mining.
Canadian mine developers have always had to contend with the interests of many different groups – from the Ministry of the Environment, Conservation and Parks (MECP) to Indigenous communities. With so many parties to consider, passing new legislation to streamline regulations always comes at the risk of silencing important voices. “From what we see, Canada at the federal and provincial level has invested significant thinking into a thoughtful and committed plan. The issue remains in finding ways to execute on that plan, given the number of stakeholders, as well as the competing federal and provincial jurisdiction,” said Michael Pickersgill, head of mining and metals, Torys LLP.
As part of the 2024 federal budget, the government announced the Indigenous Loan Guarantee Program to facilitate Indigenous communities’ equity ownership in major natural resource and energy projects with up to C$5 billion in loan guarantees. The news was welcomed by many, as giving Indigenous communities a stake in mining will likely strengthen the social license to operate and provide communities with a sense of ownership for projects occurring on their lands. Raymond Goldie, president of the Prospectors & Developers Association of Canada (PDAC), shared his thoughts: “PDAC is urging the government to accelerate the development of a one-window access point for the Indigenous Loan Guarantee Program. This, along with other government initiatives, would enhance Indigenous participation in the mineral industry, fostering economic growth and building capacity within Indigenous communities."
“Canada at the federal and provincial level has invested significant thinking into a thoughtful and committed plan. The issue remains in finding ways to execute on that plan, given the number of stakeholders.”
Michael Pickersgill, Head of Mining and Metals, Torys LLP
The effects of a sluggish permitting process reverberate throughout the mining sector, impacting not just the explorers and developers. “The shift from exploration towards permitting and development can make raising capital more challenging due to extended timelines and costs. Further, the increased risk associated with permitting has mitigated M&A activity, as larger companies are reluctant to acquire juniors without secured permits,” said Gavin McOuat, senior MD, head of mining & metals at investment bank Raymond James.
Ontario has been balancing the urgent need to speed up mine development, while also maintaining its relatively robust environmental regulations. The Ontario government has updated the Mine Rehabilitation Code, requiring that post-mining land conditions be comparable to or better than their pre-mining state, with a particular emphasis on water management. As a result, Ontario’s environmental and engineering firms have reported an uptick in demand for water management-related services. “The mining industry is evolving, and we are observing changing trends where mining companies are making a conscious effort to be better environmental stewards. There is an increasing focus on sustainability, water collection and treatment practices, as well as general environmental responsibility,” said Derek Koziol, senior associate, mining market chief, senior civil engineer at J.L. Richards & Associates.
“Ontario is a leading mining jurisdiction due to a regulatory framework that ensures environmental and community responsibility. However, the same regulations also create challenges, such as delays in project timelines and added complexity around permitting, financing and labor shortages.”
Natasha Faucher, Mining Market Sector Lead, Arcadis Canada
Following an MoU in 2023 signed by Premier Doug Ford and Nevada Governor Joe Lombardo to strengthen the economic relationship between their respective jurisdictions, MineConnect, now the largest Canadian mining supply and services association in Canada, has also continued its efforts to connect its members to Nevada’s vast mining market. Marla Tremblay, MineConnect’s executive director, outlined how the partnerships between her organization and the Nevada Governor’s Office of Economic Development (GOED) and the Northeastern Nevada Regional Development Authority (NNRDA) have evolved: “This partnership has been mutually beneficial, allowing our members to expand their services into a thriving US mining market, filling various gaps within the Nevada mining industry supply chain. In December 2023, NNRDA launched its ‘Silver Link’ program designed to identify and recruit specific mining supply and service providers to enhance northeastern Nevada’s supply chain. As part of this initiative, the ‘Master Links’ element facilitates partnerships with trade organizations to streamline recruitment efforts, and once designated as a Master Link, companies can enjoy various benefits, including insider access to request for proposals (RFPs). MineConnect was the first organization to join the program as a Master Link, and our members will have the first right of refusal to bid on RFPs for 30 days.”
NORCAT, a leading non-profit mining training, technology and innovation center headquartered in Sudbury, has also made inroads in the US state, thanks in part to the foundations laid by MineConnect and the government of Ontario. “Our partnership with Great Basin College originated from introductions made by MineConnect a few years ago and has grown strong since. Expanding into the US market, particularly in Nevada, aligns with our mission, given the geographical and cultural similarities. There is a significant demand for training in the US mining sector, and we are working closely with Great Basin College to establish our leadership in that region,” said Don Duval, CEO, NORCAT.
“In Ontario, the 'Duty to Consult' with First Nations is a particularly pressing issue, mostly due to its relative infancy, which leaves definitions, regulations and requirements vague.”
Bliss Baker, Vice Chair, Sussex Strategy Group
However, with a new Trump administration in power, Canada is having to contend with the threat of tariffs and a potential reduction in funding coming from the US. On the other hand, President Trump has signaled strong support for domestic mining and potential reductions in red tape, which could push Canadian leaders to follow suit. “The announcement from the US is a positive step, although it is possibly more aggressive than what Canada can consider. Speeding up permits is not about cutting corners but rather contributing responsibly to helping mines get going,” said Kris Homer, senior VP for minerals and metals, west, Wood.
With Canada also expecting a change in leadership soon, Ontario’s mining ecosystem is holding its breath to see what legislative changes are yet to come. The Trudeau administration has made several impactful decisions over the years. Some have been well received by the sector, such as agreements with South Korea to enhance collaboration on critical minerals, while others like changes to the Alternative Minimum Tax rules, have been more controversial. One thing is for sure – the inherent stability of having the same government in power for 10 years is soon coming to an end. “Ontario, and Canada in general, has stable government policies, which is important for the mining sector. The process from exploration to mine operation can take 10 to 15 years, so stability in policy is crucial for explorers and advanced-stage companies,” said Michael Hoffman, CFO, Actlabs.
Article header image courtesy of Sasan Hezarkhani at Unsplash