Trudeau ‘wish list’ fell short for miners in green energy transition

Article content

Speaking to a group of mining industry professionals at a conference in early 2020, Prime Minister Justin Trudeau made it clear what role he saw for their sector in the future.

Article content

Article content

“The mining industry cannot only drive the clean (energy) transition, but profit from it,” he said.

Now, as Trudeau plans to exit as the federal Liberals’ leader after 12 years, many inside the mining sector are hopeful that their industry is already in the early stages of a revitalization, driven by exactly what Trudeau described years ago: cutting global carbon emissions will significantly increase demand for metals, which will lead to new investment in mining companies and greater government support.

Article content

But other mining insiders say that while Trudeau talked about the role mining could play in the green energy transition, his cabinet ministers implemented few policies that addressed the challenges they face, from lengthy permitting processes to the difficulty in raising capital.

“We have a lot of policy documents, or wish lists, let’s say, or things we hope happen,” said Sean Boyd, chairman of Toronto-based Agnico Eagle Mines Ltd., the country’s largest mining company by market capitalization. “The question is: how do we actually make it happen? It’s not good enough to say we hope this happens; you have to make it happen.”

Boyd said several major shifts occurred during Trudeau’s tenure.

First, governments in Western countries stopped viewing mining as a “dirty, old industry” — a view he said had been common throughout the political spectrum for decades — and began to view it as strategically important, largely because of the energy transition.

Trudeau said as much during a speech in March 2020 at the Prospectors & Developers Association of Canada, one of the world’s largest mining conferences, in downtown Toronto.

Article content

“You need a partner in government that will help you grow and remain competitive on the global market,” he said. “Our government is that partner.”

To that end, in late 2022, his government released a strategy that identified 31 critical minerals and prioritized six of them — lithium, graphite, nickel, cobalt, copper and rare earth elements. It created tax credits for companies searching for critical mineral deposits and set aside funding for exploration and the deployment of technologies to support the sector.

“Trudeau’s support for the mining sector was mixed,” Pierre Gratton, president of the Mining Association of Canada, the primary industry lobbying group, said in an email. “The critical minerals strategy is a great document, but several of the measures for the upstream mining sector remain incomplete, including key tax credits.”

He said Canada has been losing ground to other countries and needs to do a better job of attracting investment.

By some measures, however, mining companies are seeing greater investment: Through October, mining companies listed on the Toronto Stock Exchange or the TSX Venture Exchange had raised $9.2 billion, which is more than any other sector and over 50 per cent of all equity capital raised.

Article content

That compares to $7.6 billion raised in all of 2023, which represented only about 35 per cent of all equity raised.

But there is little question that the industry’s growth has been sluggish at best over the past decade. In 2012, without accounting for inflation or any other adjustments, mining companies on the TSX raised $10.2 billion.

“We have been losing competitive ground,” Gratton said.

One particular sore spot for the mining industry has been the length of time needed to obtain a permit.

The federal government did reform the Impact Assessment Act in 2019 to help streamline the process, but it hasn’t resulted in significant time savings yet.

Natural Resources Minister Jonathan Wilkinson earlier this year said it takes around 12 to 15 years to permit a mine, and his goal is to bring the process down to five years.

So far, Gratton said, “the promise of a new regulatory system remains elusive.”

Perhaps the biggest shift felt by the mining sector was unrelated to any Canadian policy. As China has gained economic power and invested heavily in supply chains for the energy transition, such as solar panels and electric vehicles, its relationship with many countries deteriorated to the point that it is now viewed as an adversary.

Article content

In 2020, Canada blocked a state-owned Chinese mining company from purchasing a gold mine in Nunavut. That opened the door for Boyd, then chief executive of Agnico, to purchase the company.

Since then, the federal government has placed new restrictions on Chinese investment in Canada’s mining sector. In 2023, it forced Chinese investors to divest from three lithium exploration companies, a move that received industry pushback.

Boyd said that under Trudeau, there has been renewed interest in developing the Arctic — a region where his company has focused — which he sees as a positive sign. But he said that for mining to thrive, the government needs to provide more support, not only for infrastructure such as ports and airstrips to open up remote areas so bulk metals can be mined and shipped to markets, but for communities around the mines to thrive.

“Those communities have needs around food security, basic high-quality internet, and the government doesn’t have to blow the budget to do this,” he said. “But I think the government needs to be more strategic about how it thinks about partnerships.”

• Email: gfriedman@postmedia.com

Bookmark our website and support our journalism: Don’t miss the business news you need to know — add financialpost.com to your bookmarks and sign up for our newsletters here.

Article content