Good afternoon, Chair and committee members. Thank you for the opportunity to be here today to provide input on behalf of the mineral exploration and development industry.
I would like to begin by acknowledging that we are on the unceded territory of the Algonquin people.
I'm Lisa McDonald, interim executive director at the Prospectors and Developers Association of Canada. I'm joined by my colleague Lesley Williams, our director of policy and programs.
PDAC is the national voice of Canada's mineral exploration and development industry, representing over 8,000 members from Canada and around the world. We support a competitive, responsible mineral industry and encourage leading practices in technical, operational, safety and social performance.
Canada's mineral exploration and mining industry has long been a key economic engine for our country, while also supplying the minerals and metals needed for everyday aspects of life. From northern and remote communities—indigenous communities—to large cities across Canada, the mineral industry generates significant economic and social benefits for Canadians from coast to coast to coast. It employs 634,000 workers across Canada and contributes $96.5 billion to Canada's GDP both directly and indirectly. It is also the largest private sector employer of indigenous peoples on a proportional basis and a key partner of indigenous businesses.
The value of the mineral sector is even more pronounced in northern and remote regions of Canada. In fact, it is the largest private sector economic driver. It accounts for one out of every six jobs just in the three territories and contributes between 13% to 21% of their GDP, with billions of dollars invested in the region, not including north of 60 across the provinces.
The benefits of this type of economic activity expand beyond project sites and direct employment. Capacity-building, business development, revenue for governments and socio-economic contributions that support educational and health outcomes all extend beyond the life of a project.
The mining projects that are typically synonymous with the mineral industry all begin with mineral exploration. Mineral exploration is the first stage of the mineral development sequence. It's a staged process of information gathering over many, many years to assess the mineral potential of a given area with the ultimate hope of discovering an economically viable mineral deposit. It truly is like looking for a needle in a haystack.
Junior exploration companies do the bulk of this work in Canada and have been responsible for more than 70% of all discoveries over the last decade. It is important to note that these companies are small. They have limited budgets and timelines, and the majority do not generate revenue but rather rely on issuing shares to finance their activities. In most cases following a successful discovery, projects are sold by explorers to major companies to mine. Quite simply, without sustained exploration and discovery success, there will be no new mines.
Despite our nation's rich geological endowment, Canada's mineral industry faces strong global competition for investment. Companies and investors have many options when making decisions about what country to explore in, mine or invest in projects. Countries all across the globe compete to attract this investment to their mineral sector. While once dominant, Canada is starting to lose ground to its competitors in a number of areas, indicating its decline in attractiveness as a destination for mineral investment.
Canada's share of mineral exploration investment has declined by nearly one-third over the last decade relative to the rest of the world. It remains challenging to raise critical funding for projects, particularly for early grassroots exploration. Expenditures by companies on this early grassroots exploration have dropped by nearly half. Other indicators of Canada's waning mineral industry competitiveness include declining base metals reserves and protracted timelines to move discoveries into production.
This decline in mineral investment in Canada cannot be primarily attributed to the most recent industry market down cycle. Various factors and policy decisions impact choices made by companies and investors about which jurisdictions to invest in, such as project permitting, taxation and land access, to name a few.
One of the most significant factors with respect to investment decisions is the cost. Remote and northern mineral deposits cost significantly more to explore for, develop and mine. This is increasingly prohibitive.
The cost premium faced by companies exploring and mining in remote and northern Canada is largely due to the lack of transportation and energy infrastructure. Industry research found that mineral exploration can cost up to six times more than in southern Canada, and it can cost up to 2.5 times more to build new mines. PDAC's follow-up study determined that as a result of the cost premium, a high percentage of known deposits remain undeveloped and are effectively stranded. Opportunities remain unrealized.
Quite frankly, it is increasingly too costly for junior exploration companies to continue to explore in these areas. The cost of such activities as intensive aircraft, transportation of large equipment and supplies, and running drills and camps are significantly more expensive in the north. Exploration companies that rely on capital markets for financing are facing more difficulties finding investors for their northern projects. Further, prospective exploration projects are difficult for explorers to sell to larger mining companies for mine development, as the costs to construct and operate a mine in these regions make deposits economically unviable.
Despite the vast mineral potential, companies are turning to other jurisdictions to explore, such as Australia. Instead of investing in Canada's north—injecting money into local businesses and communities and hiring local and indigenous people—companies are choosing to explore elsewhere. Currently, we are not capitalizing on our enviable mineral potential. Given the sector's immense value, what are ultimately at stake are further economic development opportunities for northern and indigenous communities and all of the associated benefits for a prosperous north. Strategic infrastructure is needed to sustain exploration and unlock this potential.
Against this backdrop, PDAC has consistently encouraged government to develop a strong economic policy for the north, particularly by enhancing mineral development through infrastructure investment, a sector that is a proven economic driver and that has even more potential. Some recent initiatives to support infrastructure development include the trade and transportation corridors initiative, or TTCI, and the Canada Infrastructure Bank. That said, the funding requirements for some of the much-needed infrastructure proposals through TTCI exceed the amount allotted. Further uncertainties remain with respect to the Canada Infrastructure Bank and its role with respect to the north.
As such, we continue to advocate for increased strategic investments in critical transportation and energy infrastructure to enable the discovery and development of mineral resources, reduce costs, and provide alternatives to carbon-based fuels; for funding for the infrastructure proposals that have been submitted by the three territories; and for clarity on the Canada Infrastructure Bank and ensuring that there is a distinct northern focus. Otherwise, we strongly encourage the establishment of a distinct northern investment fund.
As our research shows, reducing the costs of operating in the territories by just 10% through strategic infrastructure investments could spur exploration activity in the region and help with advancing five or six new mines. Enhanced northern infrastructure would enable increased mineral development that supports northern and indigenous employment and business development as well as revenue generation for governments and improved socio-economic conditions for people in the north.
Thank you for the opportunity to appear here today. We would be pleased to answer your questions.
Thank you, Madam Chair, and ladies and gentlemen of the committee.
I'm Dean Proctor, the chief development officer at SSi. We give our sincere thanks to the committee for the opportunity to appear today and contribute to your study on northern infrastructure projects and strategies.
SSi was formed and is headquartered in Canada's north. We're a family company founded over 50 years ago as the Snowshoe Inn in Fort Providence in the Northwest Territories. We specialize in remote area connectivity and infrastructure. We remove barriers to access and provide broadband, mobile and other communications services in remote and rural areas in Canada and abroad.
Telecommunications, though, is not our only passion. Our new energy division, SSiE, is developing new and innovative clean energy solutions for these same remote and rural areas.
In all we do, we work productively with those in the communities we serve to ensure that local talent has the opportunity to shine. Our mission is to ensure that all communities, wherever they may be, have access to high-quality broadband at affordable rates.
To achieve this, we have invested heavily in facilities and infrastructure. In Nunavut alone, we have co-invested with the Government of Canada over $150 million into vital infrastructure used to deliver Internet and mobile cellular service throughout the territory. During that time, we have also invested $10 million in our community service providers. These local agents are key to our success in all 25 Nunavut communities.
In 2005 we launched the Qiniq network. For the first time, every Nunavut community had access to affordable broadband on the same terms and conditions. This year, we delivered another first: mobile voice and data into every community, where the vast majority have never had access to cell service.
So, SSi is unique: we are successful in a highly capital-intensive, highly regulated field, working in remote areas with a small population base. This is almost the opposite of what you'd expect. We can do it because we have innovative people and we leverage ideas and technology, tied together with customized software, to build solutions where there previously were none.
Our message to this committee is simple: There is a need for much more investment, private and public, in remote-area infrastructure and in the north, but that investment must be properly directed. The committee here can support this critical process by working to ensure that good policy translates into real-world results.
The focus should be on policies that will sustainably improve connectivity for all of Canada's northern and remote areas and that will provide the digital tools to support local talent and local development, creating truly Canadian-made and northern-made models that can be exported around the world.
This is important. Young people in Canada's north can be tomorrow's innovators if they have access to the same tools and support systems that exist in the south. But if we don't address the critical infrastructure shortfall in the north and in other remote areas, then Canada, as a leading innovation nation, will leave people behind, particularly those in our most at-risk communities.
The challenge is not technology, logistics or money. What is needed is a holistic approach to a problem that is multi-faceted. We need to harness ideas, technology and local capacity to do things better. This will lead to a digital emancipation, where all Canadians in all regions of the country can fully participate in our digital democracy.
To be certain, strong investment policy is not enough. Investments must be properly directed. Public investment in broadband must also support developing local talent, the people who Mary Simon called “local champions” in her Arctic leadership report. To do this, investments have to respect three fundamental objectives.
Number one is competitive and technology neutrality. The second is a focus on funding gateway and backbone infrastructure. The third is open access for all service providers to those same facilities.
We're happy to see these objectives reflected in recent policy statements of your House of Commons colleagues, provincial and territorial counterparts, as well as the CRTC and Innovation, Science and Economic Development Canada.
For instance, in April of 2018, the House Standing Committee on Industry, Science and Technology picked up on these objectives in its excellent report entitled “Broadband Connectivity in Rural Canada: Overcoming the Digital Divide”. The report pointed to the important role that smaller and non-incumbent providers have to play in extending connectivity to Canada's more remote areas, particularly given the propensity of incumbent telephone companies “to only invest in high density areas that are more economically profitable”.
Given this reality, the report continues:
||To facilitate broadband deployment in rural and remote communities, the Committee recommends...that the Government of Canada consider ways to increase the accessibility of funding programs for small providers, non-profit providers and non-incumbent providers...
More recently, just last week on October 26, the federal, provincial and territorial ministers for innovation and economic development agreed to principles for a long-term strategy to improve broadband access for all Canadians.
Though the ministers' principles are generally positive, we are concerned that their statement on open access is far too tepid vis-à-vis the role and importance of emerging and non-incumbent players, a group that includes, for example, first nation initiatives like the Eeyou Communications Network in the James Bay region of Quebec.
The ministerial statement says, in part, “Open access requirements can promote competition, affordability, and greater choice and should therefore be considered.” On the contrary, open access to vital communications infrastructure is not something that should “be considered”. It is absolutely essential for innovation, investment and growth. When public investment focuses on gateways and backbone infrastructure and requires that these be made available on a wholesale basis, it encourages further private investment and innovation in the last mile. This leads to a choice of technologies, a choice of service providers, and opportunities for those who most need broadband access to participate fully in global society.
As SSi has proven in the north and elsewhere, quality local access networks can be built in remote areas, largely due to advances in technology and, in particular, wireless and IP technologies. Our company is on the front lines. We know, and live daily, the positive impact of information technology, and we see the positive impact of our investments.
It's important to be vigilant, even when policy principles are generally sound. We have to ensure that policies are enacted and investments are made as intended, and that inertia, neglect and incumbency do not bring us back to a world of an end-to-end monopoly, in which incumbent phone companies receive funding and then restrict access to their publicly funded networks, squeezing out further investment, innovation and consumer choice. We believe that this is a real risk that exists today, and that risk must be removed.
The challenge and the solution is to build shared-use facilities and open access backbone infrastructure, and we hope this committee will lend support to and endorse policies that advance local initiatives—that is, investments in open gateways, open backbone infrastructure and local capacity. In particular, we urge you not to endorse proposals that would permit parties, like the incumbent phone companies, that happily apply for and take funding for public networks, and then turn around and undermine the basic wholesale requirements that are core to that funding.
In sum, what's needed? Much still needs to be done to improve connectivity in Canada's indigenous and northern communities. The continuing barrier to better broadband is the backbone transport connecting those same communities to the rest of the world. This reality effectively disenfranchises northerners and many indigenous people from the digital democracy.
If we successfully deliver on investing in and enabling open backbone and gateway infrastructure, local training, innovation and competition, Canada will be a global showcase, where broadband overcomes the barriers of distance, and where all regions of the country, no matter how remote, benefit from and participate fully in the digital economy.
Remember, nobody has a monopoly on ideas, and past monopolies have not been successful in delivering the needed results. Otherwise this committee would not have a mandate to study northern infrastructure projects and strategies.
Thank you very much for the opportunity to speak to you today. I would be pleased to answer your questions.
That is a good question. Thank you.
Investments have been made, but more are needed. We need about $2 billion, perhaps a little more, to meet the needs. Of course, the private sector has a role to play in the investments.
We are now in a difficult situation. We applaud the government policy that is funding and supporting a new, “basic” open infrastructure. But we really have to concentrate on more specific needs in determining, for example, how remote communities are digitally connected to the south of the country. This involves satellites, fibre optics, and, in some cases, microwaves. Once the system is in place, everyone must have access to it.
That is the current policy. But, in reality, those receiving the funds—and, without mentioning any names, we are talking about Bell—are using the money that should be for everyone’s benefit, for their own.
Investment aside, the government, which is a partner in the investment, must really ensure that the networks are open. That is critical and it costs nothing.
We're a little bit of an offbeat company. We have three rules: Will you love the job? Can you do the job? Can we stand to spend time with you? We say it a little differently, but that's the idea.
In each one of our served communities, we have community service providers. Some of them have been with us since the beginning, which was 2005. They are local agents who do shipping and receiving. They receive in all the equipment. They have to sign up customers. They handle customer complaints. They shovel the snow from around the shelters in the winter time. They do fixes when fixes are needed. They're absolutely essential to our activity.
We train those people; they're part of the team, even though they are agents. As I say, by investing a lot of our top-end revenue, not bottom-line revenue, into these community service providers, we're able to recruit and retain. We really profoundly believe in investing in ongoing, constant training, not only in our community service providers but in all of our people.
We try to make an enjoyable workplace. At the same time, it is one big team, one big family. It's constant learning and constant investment in ideas, and encouraging that.
I really don't know how else to do it, apart from that.
I'm going to have go a bit off the track of telecom, but infrastructure is housing. It's heat and power, and it's telecoms. Our energy initiatives are based in large part on that. Our second-largest cost, apart from our backbone, our satellite, is electricity.
In a lot of the communities that we're dealing with, housing is a huge problem. In fact, whereas the Canadian average is like 2.2 people per home, in almost all of Nunavut it's in excess of six or seven. There's a huge housing shortage. However, in a lot of the communities, there's not enough power being produced to build new houses. How can you heat the houses, if the power plant can't produce enough electricity to heat them?
As we speak, we are working toward solutions. We can put in place micro-grid energy, which can provide not only electricity very cost effectively, but also distributed heating. That will help facilitate putting in new homes. We're working with Nunavut Construction Corp in some discussions there.
It's a real issue. I mean, when we talk about holistic solutions, living in a crowded place is also part of a mental health issue, a physical health issue. It leads to the spread of tuberculosis. It leads to the need for telehealth. Housing really goes to the core of a lot of this.
Yes. Well, one thing is for sure: There's a big need to expand broadband and cellphone access across all of the northern regions. One thing I have been very encouraged by is the number of communities and individuals coming forward, showing an interest and looking at options. Let's hope we can all get there.
I've certainly registered your comments around open access. I believe that, as the Government of Canada continues to fund those backbone connections, open access is going to be very important.
I want to move to the Prospectors and Developers. I was a little taken aback by the comments regarding the slow growth of exploration in Canada. I come from a mining region—and maybe I see it differently—where we have two expanded projects, an underground mine and potentially a new mine all opening within 12 months.
How slow is that growth in exploration? I'd like you to give me some comparable figures. Where is the exploration in Canada, or is it commodity driven? Is there something the federal government is doing that's impeding this?
Obviously, in the north, we've never had real infrastructure to support resource development. We're moving more in that direction. Of course, we want to be accommodating to resource development industries, because we know that it's those companies that drive jobs and opportunities for people who live across the northern regions.
I'd like to get a better understanding of what your message is around that and what we should be doing. I heard your piece about needing an infrastructure program for the north. No one who has sat at this table who I can remember hasn't told us that, which is good. In addition to that, is there something we should be doing that we're not doing that will encourage more exploration?
Then the chair will take over.