Pierre Gratton is president and CEO of the Mining Association of Canada.
Any government initiative with a $35-billion price tag is bound to drum up political debate, and the Canada Infrastructure Bank (CIB) has been seeing its fair share. But I stand with the International Monetary Fund, Canadian and global business groups, and aboriginal organizations who say that the CIB, if well structured, is exactly what Canada needs to grow the economy over the long term. Bold action is needed to address an area that we've been failing at: constructing strategic, nation-building infrastructure.
Many of you are probably reading this on a digital device connected to wireless high-speed Internet. And I'll assume that many of you are reading this at work, a place that you travelled to on roads, and that is powered by the electrical grid. Pretty mundane stuff, right? But it's not if you're living or working in remote and northern areas of Canada.
I should know. I represent a major Canadian industry whose opportunities for growth are increasingly in areas where infrastructure simply does not exist, or is severely lacking. As a direct result of this lack of infrastructure – power, ports, roads, telecommunications, you name it – it costs up to six times more to explore for minerals and metals in remote and northern Canada, and more than double to build and operate a mine in these regions compared with more southern areas of the country.
The mining industry, therefore, is a good case study on why the CIB needs to be established.
Let's look at the example of Agnico Eagle Mine Ltd.'s Meadowbank gold mine, which has transformed Nunavut's economy. The mine represents 15 per cent of the territory's GDP, directly employs 300 Inuit employees at an average wage of $107,000 a year, and generates $280-million annually in local business procurement. The company also invests strongly in aboriginal skills training initiatives at more than $5-million a year.
All of these benefits have been generated, despite the fact that the mine – after seven years of operation – has not been profitable. How could this be? Having to absorb the complete cost of basic infrastructure such as roads – in this case a 110-kilometre road – on top of the capital cost to build the mine and related infrastructure, is becoming a deterrent to more investment in Canada's North from the mining sector. You can find similar examples throughout the country.
What's problematic is the lack of infrastructure is increasingly halting promising projects from ever becoming producing mines. This means lost jobs, revenues and other socio-economic benefits to local communities and Canadian governments alike. It also threatens the mining industry's ability to continue being the largest private sector driver in Canada's North. This is a cause for concern, not only for our industry, but also for communities that depend on us. By funding northern infrastructure projects, the CIB can unlock billions of dollars of economic development, can create shared benefits for companies and communities that will use that infrastructure, and could incent future sustainable mineral development in the region.
There's really no need for trepidation with the CIB. Canada is just catching up to what other countries are already doing. Look no further than the United States to find the Alaska Industrial and Development Export Authority (AIDEA), a similar institution that for decades has been operating profitably. AIDEA received initial government funding, but is now self-funded and holds $1.3-billion (U.S.) in assets.
AIDEA funded an 85-kilometre road and port facility that enabled one of the world's largest zinc mines to be built. The Red Dog mine, jointly owned by Canada's Teck Resources Ltd. and the NANA Regional Corporation, owned by the Inupiat people of northwest Alaska, serves as an indicator of what the CIB could do in Canada. Through private-public infrastructure investments, MMG Ltd.'s Izok Lake zinc/copper project in Nunavut can be the next Red Dog if a road and port get built. It could help finance run-of-river hydro in Nunavut and take mines and communities off diesel. And we already know how helpful a road would be to Ontario's Ring of Fire region.
Infrastructure is the key to many things Canadians care about. Economic growth, addressing climate change, and building healthy and prosperous communities cannot happen without it. The CIB could be exactly what we need to get this done.