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Each year millions of tonnes of rock containing high concentrations
of various metals (called ore) are mined from several underground
and open pit mining operations in Manitoba. Once the ore has been
mined and brought to surface, it is crushed and processed to form a
mineral concentrate. The metal is then extracted through a variety
of smelting or leaching processes to form the metal products we
depend on in our daily lives. Manitoba currently has 9 producing
mines, 2 operating smelters and 2 refineries. The main metals
produced are Cu, Ni, Zn, Au and tantalum. Metal production in
Manitoba between 1995 and 2000 is summarized in Table 1.
Table 1: Metal Production in
Manitoba 1995-2000*
* Production figures quoted in thousands of kilograms except
gold, which is quoted in thousands of grams. Source: Natural
Resources Canada
Where are Metals Mined?
Manitoba has a rich history of metal mining, dating back hundreds
of years when aboriginal people mined hematite and yellow ocre (both
forms of iron) for use as pigments in dyes and paints. At the turn
of the century, gold was being hand-cobbed from small veins
throughout southeastern Manitoba. The first underground mining
operation in Manitoba, the Penniac Reef Mine was located near Falcon
Lake and produced several gold bars in 1913 and 1914. This was
followed shortly thereafter with the development of small gold mines
near Snow Lake (1917-1918), and the Mandy Cu-Zn Mine at Flin Flon
(1916). The advent of large-scale industrial mining activity in
Manitoba dates back to the early 1920s with the development of the
Flin Flon mining complex and the San Antonio gold mine in the Rice
Lake area of southeastern Manitoba. The development of several small
underground gold mining operations in northeastern Manitoba on Gods
Lake and Island Lake in the 1930s, as well as the development of new
Cu-Zn mines in Sherridon followed soon after. In the late 1940s and
late 1950s nickel was discovered at Lynn Lake and Thompson
respectively. New mine development in these regions resulted in the
development of the communities and accompanying road, rail, and
hydro infrastructure that we continue to enjoy.
Today, metal mining activity is primarily centered on the
world-class base metal (Cu, Zn, Ni) mining camps in the Flin Flon–Snow
Lake and Thompson regions. Significant gold mining activity also
occurs at Snow Lake and tantalum-lithium-cesium is produced at Bernic Lake. Gold mining operations at Lynn Lake and Bissett
have been suspended due to depleted reserves and poor market conditions
and the Ruttan Mine at Leaf Rapids, a Cu-Zn producer, is scheduled
for closure in May 2002 for the same reasons.
Figure 1 (pdf, 1.7M) shows the major
mineral producing areas in the province.
Many of the mineral deposits mined in Manitoba are located in
ancient volcanic belts known as greenstone belts. Large deposits of
Cu and Zn were formed billions of years ago as volcanoes erupted
over ancient seafloors. The Thompson Nickel Belt, on the other hand
is not located in a greenstone belt, but rather along an ancient
collision zone between two continents. Regardless of their origin
however, the mineral wealth within these belts can be enormous.
Mining operations at Flin Flon have been sustained for over 80 years
and new discoveries are still being made. The new 777 mine at Flin
Flon will come into production in 2003 and will help sustain mining
activity in the region to 2013.
Outside the main mineral producing areas, the geological potential
for the discovery of new mineral resources in Manitoba is also
excellent. There are many under-explored greenstone belts in
east-central Manitoba (Oxford Lake, Knee Lake, Island Lake) and the
terrain north and west of Churchill is virtually untested. In
addition, the development of new theories about how minerals are
formed and where they are most likely to be found have opened new
exploration and development opportunities in the search for gold and
base metal mineralization throughout the province. The
Manitoba
Geological Survey provides the geological base mapping and regional
mineral deposit assessments required to help identify the mineral
potential of these areas. A practical demonstration of the
effectiveness of the Survey’s work is the recent surge in diamond
exploration in east-central Manitoba. Approximately 21 000 square kilometres in the Oxford Lake–Gods Lake–Knee Lake area has been
acquired in exploration permits and represents the most significant
land acquisition since nickel was discovered in Thompson in the
1950s. This new exploration activity is a direct result of
geochemical surveys conducted by the Manitoba Geological Survey in
the region.
What is the Value of the Metals Industry to Manitoba?
Over the last hundred years, Manitoba's mining industry has spawned
over 70 mines, generating railways, roads and airports into the
northern reaches of the province, and giving rise to today's mining
communities: Flin Flon, Snow Lake, Lynn Lake, Leaf Rapids and
Thompson in the north and Bissett in the south. From these hubs a
strong infrastructure has developed, creating increased exploration
and mining activity. Additional spin-offs in tourism, forestry and
hydroelectricity have further strengthened the provincial economy.
The metals mining industry in Manitoba annually contributes
approximately $1 billion to the Manitoba economy representing 3.5%
of the provincial Gross Domestic Product. Mining is the second
largest primary resource sector of the Manitoba economy with metals
responsible for 12.5% of the province’s total exports. Table 2
illustrates the value of this production to the province.
Table 2 - Value of Metal Production in Manitoba* ($000s)
| Metals |
1995 |
1996 |
1997 |
1998 |
1999 |
2000 |
| Cadmium |
752 |
613 |
50 |
NA |
NA |
NA |
| Cobalt |
36,405 |
28,561 |
31,682 |
33,380 |
16,868 |
21,764 |
| Copper |
170,494 |
169,500 |
165,317 |
121,763 |
122,404 |
127,928 |
| Gold |
58,974 |
102,262 |
120,598 |
118,126 |
111,397 |
94,572 |
| Silver |
NA |
NA |
8,003 |
10,155 |
8,912 |
7,336 |
| Nickel |
451,459 |
374,371 |
442,023 |
341,732 |
277,137 |
570,127 |
| Selenium |
326 |
372 |
320 |
294 |
254 |
289 |
| Tantalum |
3,965 |
7,625 |
7,230 |
9,863 |
9,304 |
9,952 |
| Tellurium |
39 |
124 |
65 |
57 |
41 |
24 |
| Zinc |
111,047 |
118,629 |
148,526 |
142,084 |
138,970 |
135,557 |
Source: Natural Resources Canada
The metals mining industry in Manitoba directly employs
approximately 4000 people annually, primarily in the Thompson and
Flin Flon regions. This industry also generates 13,000 jobs
indirectly as spin-off employment opportunities. It is the primary
employer in Manitoba's mining communities: Thompson, Flin Flon, Snow
Lake, Lynn Lake, Leaf Rapids, Bissett and Lac Du Bonnet. It is no
surprise therefore, that when mines close, mining communities are
severely impacted by loss of employment, relocation of a skilled
workforce, erosion of the tax base, and reduction in service
supports and infrastructure.
In Manitoba, as in most jurisdictions, the mining industry is
subject to a variety of profit and non-profit based taxes.
Non-profit based taxes provide a stable source of revenue to
governments. For example, payments to municipal governments average
approximately $15 million per year in Manitoba. These payments are
based on a variety of municipal assessment formulae and usually
include a portion that is grant-in-lieu of tax. This provides a
stable source of funding to mining communities that support the
industry. In addition, up to 3% of the provincial mining tax revenue
is transferred each year to the Mining Community Reserve Fund. This
fund was established in the early 1970s to provide assistance to
communities impacted by mine closure.
Non-profit taxes, such as sales tax, corporate capital tax and
payroll tax are also paid to the Provincial Government. At a minimum
these average approximately $20 million annually, and can increase
dramatically when new capital investment in mining projects is
undertaken. Provincial mining taxes, on the other hand, are profit
based and vary with commodity prices and operating costs. Over the
past 10 years, provincial mining taxes have averaged approximately
$19 million annually.
Indirect revenue to governments accrues from a variety of
sources, not the least of which is tax on income generated from
mining employment. With an average income of $65,000.00 per year,
joint Federal/Provincial personal income tax generated by direct
mining employment in Manitoba is estimated to be approximately $78
million. Of this, Manitoba receives approximately $30 million.
How does the Exploration and
Mining Industry Work?
The Mining Cycle
The development of a new mining operation is usually the result
of many years of exploration, technical feasibility studies and
environmental impact assessments. Figure 2
(80kb) outlines the five major stages in the exploration and mining
sequence: exploration, evaluation,
development, production and
closure. The timelines and costs associated with each stage are
based on those associated with development of major diamond mining
and processing facilities, but are roughly equivalent to any major
mining development project. The timelines and costs for developing
smaller mines would be less, however, so too is the length of time
the mine stays in production. As a result development of smaller
mines typically takes place when the ore body is rich and/or can
easily be extracted, such as by open pit rather than underground
operations.
Exploration
Exploration usually begins with prospecting and staking. Once
prospective ground has been identified, the prospect is more
thoroughly explored using a variety of techniques that include:
bedrock mapping, mineral deposit modelling, and geochemical and
geophysical surveys to identify exploration targets, which are then
drilled to test the rock and identify the minerals present. It
typically takes several years and several million dollars worth of
exploration before a discovery is made and many projects are
abandoned very early in the exploration stage.
Evaluation
Once an initial discovery is made, it is necessary to complete
more advanced exploration to fully assess the size and grade
(richness) of the deposit. Advanced exploration usually involves
detailed drilling and rock analysis to determine the tonnage of ore
present. If initial results are promising, technical feasibility
studies are undertaken to determine if the ore can be safely mined
and the metal can be extracted from the rock in a cost-effective
manner. Environmental studies are also undertaken to determine the
potential impacts of mine development at the site and the measures
that need to be put into place to mitigate them. A decision to put a
mine into production requires a positive outcome of all of these
activities plus favourable market conditions. Poor market conditions
can delay a production decision indefinitely whereas high metal
prices may accelerate the process. The evaluation stage may take
several years and cost tens of millions to hundreds of millions of
dollars.
Development
Following a production decision, the process for developing a mine
requires that all necessary environmental, mining and workplace
health and safety permits be in place. Construction typically begins
immediately following the permitting process. Depending upon the
size, complexity and potential environmental impact of a mine
development, permitting may take anywhere from 6 months to 2 years.
In Manitoba, permitting for new mines has typically taken
approximately 6 months.
Production
A major mining complex, once in production, may provide employment
for several hundred to over a thousand people. In Thompson, Inco
currently employs over 1400 people and Hudson Bay Mining and
Smelting employs over 1500 in Flin Flon. The length of time that a
mining complex stays in production is dependent upon ore reserves,
the price of metal (which affects the profitability of the
operation) and the cost of operation. Investment in a major new
mining operation requires a large ore body allowing production to be
projected over a period of 20 to 30 years. During that timeframe
additional exploration both on the mine site and in the surrounding
area is usually undertaken to extend ore reserves and hopefully the
period of operation. Both Thompson and Flin Flon are good examples
of this, where ongoing exploration has enabled both operations to
continue production well beyond initial projections. Recent
discoveries in the Flin Flon area have resulted in new capital
investment of approximately $430 million by Hudson Bay Mining and
Smelting to open two new mines and upgrade their processing
facilities. This ensures operations will continue in Flin Flon until
the year 2016, approximately 90 years from the time the first mines
were opened. Likewise, Inco has recently invested $70 million in
their Birchtree project in Thompson, extending mining operations
there until 2016, approximately 60 years after they began
production.
Not all mining operations are as long lived. The communities of Lynn
Lake, Leaf Rapids and Bissett are currently experiencing the impacts
of mine closure. Mining operations in these communities have been or
are in the process of being shut down due to a combination of
depleted reserves, high operating costs and/or poor market
conditions.
Closure
Once a mining operation has ceased, the closure stage of the mining
sequence begins. In most jurisdictions, including Manitoba,
companies are now required to file a closure plan prior to obtaining
an environmental license to operate. These plans detail all aspects
of mine decommissioning and environmental remediation. Upon approval
of the closure plan, the company is required to provide financial
assurance to cover the closure costs. The closure phase of a project
may continue for several years, depending on the need for long-term
treatment and/or environmental monitoring.
Market Forces that Impact the Industry
The market forces that impact the mining industry are a response to
global economies and supply-demand forecasts. Metal prices are set
daily by the
London Metal Exchange and these provide the fixed price
for the metals sold by mining companies around the world. As a
result, mining companies are said to be "price takers" not "price
makers". This means that any additional cost to produce a pound of
metal, must be borne by the company, it can not be passed on to the
purchaser. Mining operations are not only extremely sensitive to
changes in global economies that impact the supply-demand forecast
for various metals, but also to changes in
federal/provincial/municipal policies that impact production costs
and fiscal environment.
Over the past year, metals prices have decreased dramatically.
Prices for copper and zinc are currently at or near historic lows in
real terms. Nickel prices fell dramatically throughout the fall but
have rebounded slightly over the past two months. The current low
metal prices are due, in large part, to a downturn in the U.S.
economy, which has negatively impacted the automobile and steel
industries (nickel) and the construction industry (copper and zinc).
When assessing the viability of new and ongoing mining operations,
projected market conditions play a major role in determining the
value of a mineral deposit. What is considered to be ore one day,
may only be rock the next.
In addition to global market conditions, the framework of federal
and provincial policies and regulatory environments has significant
impacts on mining operations. In recent years, Canada has
experienced a significant decline in investment in exploration and
mining development. This is in part a response to increased
competition from offshore markets, where the fiscal and policy
framework is more attractive for investors. It is critical that we
remain competitive in order to retain and enhance investment in the
minerals sector in Canada and Manitoba.
Remaining Competitive
Ongoing exploration is key to sustaining a viable mining industry.
Without new discoveries, new mines can not be developed and existing
mines can not be sustained. Over the past few years, Canada has seen
a significant decrease in the amount of investment in exploration as
illustrated in Table 3. Exploration funds raised in Canada have been
increasingly used to support offshore projects. As a result, fewer
new discoveries are being made in Canada and Canadian reserves of
most major metals have decreased dramatically over the past 20
years.
Table 3 - Canadian Mineral Exploration and Deposit Appraisal
Expenditures 1998-2001 ($ millions)
* % change relative to 1998 baseline
Source: Natural Resources Canada
In order to ensure a sustainable exploration and mining industry,
it is important that Canada and Manitoba are viewed as an attractive
destination for investment capital. Recognizing the critical role of
exploration in sustaining the mining industry, Manitoba offers
direct assistance to exploration companies and prospectors for
projects undertaken in Manitoba through the
Mineral Exploration
Assistance Program (MEAP) and the
Prospectors Assistance
Program (MPAP). In addition, recent legislative amendments
provide new investment opportunities for advanced exploration and
development projects through Manitoba's labour sponsored funds. And,
Manitoba was the first province to lobby the federal government to
implement the new Federal Exploration Incentive Tax Credit, a 15%
tax credit for flow-through share investors.
Significant efforts have also been made to provide an attractive
investment climate for mining development within the province. The
basic provincial mining tax rate of 18% has been offset by a variety
of tax credits and allowances that provide on average an effective
mining tax rate in Manitoba of 9%. In addition, new mines are
eligible for a tax holiday and the provincial corporate income tax
rate was recently reduced from 17% to 15%. The province has also
lobbied the federal government to extend the reduction of the
federal corporate tax rate from 28% to 21% to the resource sector,
while maintaining the federal tax allowances and credits that are
currently in place.
What are the Social and Environmental Impacts?
Mineral exploration, development and production activities can
affect the quality of air, land and water. Concerns include impacts
on human health and ecosystems. In addition, the economic and social
impacts of the minerals industry need to be considered when
assessing potential impacts. The objective is to achieve a
sustainable balance between environmental protection and the
economic and social benefits derived from the minerals industry.
Over the past 10 years considerable progress has been made toward
achieving this objective. From a government perspective, many
recommendations and concerns that were identified as part of
Manitoba's Sustainable Development Initiative have been addressed
through changes to the regulatory and policy framework that guide
mineral development in the province. The minerals industry itself
has shown considerable initiative in addressing environmental and
social concerns through a variety of self-regulation and corporate
policy initiatives. The
Global Mining Initiative and the Mines and
Minerals Sustainable Development Initiative reflect the commitment
of the CEOs of major mining companies around the world to corporate
social responsibility.
Manitoba's Protected Areas Initiative
In Manitoba, the mining sector has been an active participant in
consultation regarding the province's
protected areas strategy. The
mining sector consultation in Manitoba is unique in Canada,
involving an innovative industry-government-environmental NGO
(non-government organization) partnership that addresses the need
for environmental protection in Manitoba, while minimizing the
impact of protection on opportunities for resource development.
Encouraging Aboriginal/Industry Partnerships
In November of 2000, a relationship building process among the
minerals industry, aboriginal groups and the provincial government,
culminated with the development of a set of
guiding principles that
will assist all parties in building relationships that balance the
needs of industry, communities and the environment. The primary goal
of this initiative is to build positive, long-term relationships
based on mutual trust, respect and understanding regarding rights,
cultures, values and traditions.
Mine Closure Regulation
In 1999, Manitoba enacted a
mine closure regulation that requires
all new and existing mining operations to file a closure plan. These
plans provide a detailed outline for decommissioning of the mine
site and environmental remediation. Closure plans are submitted to
the Department of Industry, Economic Development and Mines and
approved by a technical review committee, which includes
representation from the Department of Conservation and the
Department of Labour, as well as a variety of federal agencies that
have regulatory authority for the environment. Upon approval of the
closure plan, the company is required to providre costs. Since 1999, new mining operations are
required to file a closure plan prior to acquiring an environmental
permit. All existing mining operations are currently completing
their obligations under the new regulation.
Orphaned/Abandoned Mines Program
In Manitoba there are several un-rehabilitated mine sites where
ownership has reverted to the "Crown", under the authority of the
Crown Lands Act. These sites are referred to as "orphaned" sites,
where the former mining company no longer exists. "Abandoned" sites
are those where the former mining company still exists but no longer
has the financial capacity to carry out rehabilitation. At the time
of operation and closure of these mining operations, there were no
environmental legislation or licensing requirements that addressed
environmental concerns. The responsibility for management and
rehabilitation of these sites now rests, at lease in part, with the
Crown.
In 2000, the Province initiated funding for a formal
"Orphan/Abandoned Mine Site Rehabilitation Program" in the amount of
$1 million over four years. Administered by the Department of
Industry, Economic Development and Mines, this program focuses on
addressing public safety issues such as open stopes (holes) and
shafts, scattered debris, stability of tailings dams and retention
structures, appropriate fencing and signage.
In 2001, the Government of Manitoba, recognizing the potential
environmental and human health impacts associated with these sites,
established a parallel program administrated by Manitoba
Conservation to complete "Human and Environmental Health Risk
Assessment" of orphaned/abandoned mine sites. This program has also
received funding in the amount of $1 million over four years and is
designed to ensure that remedial measures proposed are
scientifically sound and that measures taken to properly "manage"
the sites are based on the risk to the environment and to the health
of residents.
The mining industry has also recognized the significant
environmental and social impacts of orphaned or abandoned mines in
Canada. In September 2000, the Mining Association of Canada
recommended to Federal/Provincial/Territorial Mines Ministers at
their meeting in Toronto, that a multi-stakeholder steering
committee be established to begin to address issues and come forward
with specific recommendations regarding rehabilitation of orphaned
and abandoned mines in Canada.
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