Simon Doyle.Fred Lum/The Globe and Mail
Simon Doyle covers lobbying and the intersection of business and politics in Ottawa. He writes for Politics Insider, which is available only to subscribers of Globe Unlimited.
The mining industry is lobbying for government help for junior mining companies and northern infrastructure as more juniors have delisted from the TSX and the commodities rout has deepened.
Minerals continued to fall early last week before a tumultuous few days on the markets. Fears about China's economy and its metals consumption have refreshed arguments among members of Canada's mining-industry associations for government measures to support the sector.
"The government appreciates the circumstances," said Rod Thomas, head of mineral exploration industry group the Prospectors and Developers Association of Canada, whose group has been calling for an expanded junior mining tax credit, investment in northern infrastructure and relaxed rules for raising capital.
"Right across the board, we've seen a withering, if you will, of commodity prices. A lot of that is due to slower growth in China.
"You have to separate a lot of the near-term noise from the long-term potential," Mr. Thomas said.
What's the issue?
Junior mining companies have felt the combination of a commodities slump and the challenge of raising money on capital markets.
Mr. Thomas referred to data showing that, between December, 2012, and June, 2015, there were 155 fewer mining companies listed on the TSX Venture exchange. He said there's been 93 delistings so far in 2015.
"It's very challenging conditions for IPOs, and in fact what we're seeing is delistings," he said. "They can no longer afford, presumably, to list, to remain public."
The PDAC and the Mining Association of Canada (MAC), a group of large producers, submitted government recommendations at the Energy and Mines Ministers Conference held July 19-21 in Halifax.
The recommendations were supported by the Canadian Mineral Industry Federation, an umbrella lobby group of eight national industry groups and 14 provincial associations.
The groups called for faster environmental and consultative regulatory processes, tax incentives for infrastructure investments in the North such as roads and power projects, as well as the creation of a "northern infrastructure investment bank" to provide financing for infrastructure.
The MAC argues mining exploration and operations in the North add a cost premium of as much as 2.5 times those of central mines.
"We need to get the mining sector in position to seize growth opportunities, which for mining lies increasingly north, including the northern parts of our provinces and the territories," Jessica Draker, a spokeswoman for the Mining Association of Canada, said in an e-mail.
They also called on provincial finance ministers to change securities regulatory frameworks to allow for capital-raising from a broader base of investors, in part by expanding the definition of what constitutes an accredited investor.
They urged additional exemptions such as raising money by crowdfunding.
PDAC has also been calling on the government to double, for three years, the Mineral Exploration Tax Credit to 30 per cent from 15 per cent, a tax incentive that it says would attract risk capital back to the exploration industry.
Who's lobbying whom?
The mining industry has been busy meeting with government, with lots of activity reported in the federal lobbyist registry in advance of the energy ministers conference, where industry officials can meet with ministers and senior government officials.
The MAC reported scores of meetings leading up to the conference and after it. They included discussions with senior officials from the Foreign Affairs and Trade Department, Energy Minister Greg Rickford, Transport Minister Lisa Raitt, Foreign Affairs assistant deputy minister Susan Bincoletto, Privy Council Clerk Janice Charette, as well as staff in the Prime Minister's Office.
The group also reported several discussions with Natural Resources assistant deputy ministers Marian Campbell Jarvis and Neil Bouwer.
Selwyn Chihong Mining Ltd., owned by Chinese company Yunnan Chihong Zinc & Germanium Co., Ltd., has met with the Natural Resources minister's policy team, and KGHM-Ajax Mining Inc. had discussions with senior Environment Canada officials as well as cabinet ministers and MPs about its mine project south of Kamloops, B.C.
Other meetings with senior officials and MPs were reported by Teck Resources Limited, Mandalay Resources Corporation, GoldCorp Inc. and Paladin Energy Ltd.
"[We've] had a lot of meetings with federal representatives as well as provincial representatives," said Mr. Thomson, whose organization has sister associations that lobby provincially. "We're trying to get the message out that times are tough right now."
The biggest challenge?
Given political pledges to balance the 2015 federal budget amid a possible recession in the first half of the year, most of the political parties, certainly the Tories, aren't entertaining new big-ticket spending measures.
John Kaiser, owner of the Kaiser Research Online service that covers high-risk Canadian resource sector securities, said the biggest obstacle for junior mining companies is provincial security regulation.
Although the industry is lobbying all provinces through the federal government's proposed co-operative capital markets regulator, Mr. Kaiser said existing provincial rules are likely to be migrated onto the national rules.
He said Canadian venture companies may start listing in Australia, where the securities regulations are more favourable. "That's going to be the end run around the Canadian system that prevents the extinction of the juniors," Mr. Kaiser said.
What's next?
The mining groups are watching the election campaign closely for discussions affecting their industry. "Like all industry groups, we are monitoring policy developments that impact our sector as the campaign unfolds," Ms. Draker said.