New Brunswick’s golden touch

Industry insiders have long understood New Brunswick’s fabulous untapped mining potential. Now, a prestigious Vancouver think tank has named the province the best place on earth for mineral exploration and development. Who knew?

When the Fraser Institute announced, in February, that its annual survey of mining executives had selected New Brunswick as the top place in the world for mineral exploration and development, no one seemed more surprised than the government’s own minister of natural resources.

Asked how many miners worked in the province, a visibly flustered Bruce Northrup replied, “I’m not quite sure, to be honest. I know it’s up and down.”

Still, it didn’t take long for the import of the honour to sink in, and he was on surer ground explaining the province’s many and manifest advantages.

“We have a lot of natural resources in New Brunswick, and the CEOs are very positive towards us and how we run things here,” he told a reporter. “We haven’t changed anything. We have a very open-door policy. We talk to anybody, and I think that’s why we’re number one.”

He added: “I attribute a lot of this to our staff. When mining companies reach out, they get right back to the mining companies. And that’s one of things we’ve been hearing from the mining companies. Our staff is very fair and will get back to people. That means a lot.”

The news could not have come at a better time. For months, the Alward government has been caught in the middle of a public relations battle between two intractable foes: Exploration companies that hope to drill for shale gas, using the controversial hydraulic-fracturing method; and environmental and community leaders who want nothing to do with operations that, they say, will poison the province’s water supply and wreck property values.

None of this, however, appeared to sully the Fraser Institute’s findings. Quite the opposite, reported Fred McMahon, the Vancouver-based organization’s vice-president of international policy research who coordinated the survey of executives from 802 mineral companies, representing a combined $6.3 billion worth of exploration operations in 2011. “New Brunswick shot to the top of the rankings as miners lauded the province for its fair, transparent and efficient legal system and the consistency in its enforcement and interpretation of existing environmental regulations,” he said.

Indeed, said Mike Taylor, CEO of Miramichi, N.B.-based SLAM Exploration Ltd. (which hunts for gold, nickel, copper and cobalt in the province’s north), “New Brunswick has always been a favorite place for exploration but they have made strides in recent years to make it an even better environment. Favourable policies combine with a wealth of mineral potential to make it our primary target for mineral exploration and development.”

Considering the number, and complex nature, of exploration and development opportunities the province now faces, the achievement is not only what spin doctors call “good optics”. It’s a strategic asset.

As David Plante, manager of the New Brunswick Mining Association, recently reported, “This province has long been blessed with a diverse and rich mineral endowment. Of the 22 major mineral commodities produced in Canada, we actually produce 18. In 2010, the value of mineral production in this province was $1.15 billion. That was off our record peak of $1.54 billion in 2007. But it still represents the greatest value per square kilometer of mineral production of any jurisdiction in Canada.”

The Potash Corporation of Saskatchewan is roughly a year away from completing a $1.7-billion expansion at its Sussex, N.B. mine (Piccadilly deposit), which will double its production capacity at the site to 14.9 million tonnes a year and potentially employ hundreds of workers. Another company, Atlantic Potash Corp., has signed a two-year agreement with the provincial government to explore a separate mineral play in central New Brunswick.

Trevali Mining Corp. of Vancouver announced in January that “initial mineral production commenced from the uppermost portions of its wholly-owned Halfmile polymetallic (zinc-lead-silver-copper-gold) sulphide deposit in the Bathurst Mining Camp . . . Ramp-up to full nameplate (2,000-tonne-per-day) commercial production will occur over the current quarter (to March 31, 2012).”

Meanwhile, Saskatchewan’s Great Western Minerals Group continues to search for rare earth elements – such as Scandium, Erbium and Samarium, which are used in the manufacture of computer memories, DVDs,
rechargeable batteries, cell phones, car catalytic converters, magnets, and fluorescent lighting – in the Benjamin River area of northeastern New Brunswick.

Under the economic circumstances of the province – which include a generally moribund economy, high public debt, structural unemployment in rural areas, and an aging population – maintaining a mining-friendly environment may be the best hope for long-term growth and prosperity in more than a generation. Fortunately for policy makers, they need only pursue an “if-it-ain’t broke” agenda to pursue their objective.

According to the survey, New Brunswick stands head and shoulders above 92 other jurisdictions around the world precisely because it doesn’t throw up unnecessary barriers to investment. Fraser’s key metric is the Policy Potential Index (PPI), a composite index that measures the overall policy attractiveness of individual countries or regions. A perfect score is 100. New Brunswick’s is 95, followed by Finland, Alberta, Wyoming, Quebec, Saskatchewan, Sweden, Nevada, Ireland and the Yukon.

The bottom 10 (all scoring below 15) are, in descending order: Vietnam, Indonesia, Ecuador, Kyrgyzstan, Philippines, India, Venezuela, Bolivia, Guatemala, and Honduras, all of which place dismally, in the opinion of mining executives because, unlike New Brunswick, their regulations are opaque, incomprehensible and unreliable.

There are also problems with their tax and legal systems and uncertainty regarding land claims, protected areas, infrastructure, socioeconomic conventions and traditions, political stability, security framework and labour market. And for the first time in the 15 years since Fraser has conducted the annual poll, corruption enters the mix.

Says the report: “This year we added a new question on corruption, and there are a few surprises. The strongest-growing economies in Latin America (Chile) and Africa (Botswana) are perceived to have the lowest level of corruption among developing nations. Even more interestingly, they are perceived to have less corruption than four Canadian provinces (Quebec, Manitoba, British Columbia, and Alberta), and two U.S. states (Montana and Washington).”

The report continues: “Spain and Poland had the highest levels of corruption among high income nations, immediately followed by Nunavut and the North West Territories, although as noted elsewhere, these territories have improved in this survey. Of more concern is the fact that a large number of miners would not invest in these jurisdictions due to worries about corruption: around 16 per cent for Spain, Poland, and the Northwest Territories, and eight per cent in the case of Nunavut.

“The 10 jurisdictions considered by respondents to be the most corrupt are India, the Philippines, Indonesia, the Democratic Republic of Congo (DRC), Venezuela, Papua New Guinea, Guatemala, Honduras, Madagascar, and Zimbabwe. The least corrupt in their estimation are Sweden, Norway, Finland, Missouri, Minnesota, Michigan, Idaho, Arizona, Saskatchewan, and South Australia.”

As for New Brunswick, it ranks 18th, above Nevada and below Western Australia, for corruption, a finding which may also surprise Natural Resources Minister Northrup. But as the institute does not actually define the term, he may be better off focusing on the unblinkered good news of his province’s overall standing.

After all, no one knows better than the Alward government just how badly New Brunswick needs a boost these days.

v14n2_NBmining-chart

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