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Our Bedrock Industry

Our Bedrock Industry

At $40.8B Annually, Mining Underpins Indigenous & Overall Canadian Economies

There is no industry more vital to the Aboriginal economy – and some would argue to the overall Canadian economy on the whole – than mining.

Recently released research from a number of sources is driving this point home and suggests the future could soon be even brighter for Indigenous Canadians embracing the mineral sector as the vehicle to deliver good paying jobs and a better future for their families. 

In its latest report, Facts and Figures of the Canadian Mining Industry, the Mining Association of Canada (MAC) states proportionally, the mining industry is the largest private sector employer of Indigenous peoples in Canada. “This can be partly attributed to the proximity of Canada’s 1,200 Indigenous communities to mining operations,” writes author Brendan Marshall, Vice President, Economic and Northern Affairs. “Most of these communities are located within 200 km of approximately 180 producing mines and more than 2,500 active exploration properties.”

Agreements and Partnerships

Although this geographical relationship ensures there is a foundation for collaboration and partnership, it is only in more recent years that agreements and partnerships between industry and Aboriginal groups have become the norm rather than the exception. 

Nowadays leading Canadian mining and exploration companies pursue innovative, progressive and mutually beneficial partnerships with Indigenous communities, writes Marshall.

“Since the groundbreaking 1974 Strathcona Agreement, Natural Resources Canada (NRCan) estimates that 500 bilateral agreements – impact benefit agreements (IBAs) or other agreements at the exploration stage – have been signed,” he writes.

According to documents contained on NRCan’s website, almost 200 of these agreements remain active. “These agreements include commitments to support or provide education, training, jobs, business development and financial payments, as well as other initiatives, to help ensure mining projects bring long-lasting benefits to local communities,” reports Marshall.

In the early days, these agreements typically only contained provisions for employment and training, more recent IBAs have expanded to include the promotion of opportunities for Indigenous businesses through set-aside contracts and joint-ventures.

“They also consider social and cultural matters, provide for environmental monitoring involving Indigenous Traditional Knowledge, set up funding arrangements and dispute resolution mechanisms, and include direct payment and resource-sharing arrangements, among other provisions,” the report states. “Given the proximity of many Indigenous communities to mineral deposits, a booming Indigenous population, and an increasing demand for the significant economic opportunities that accompany mining projects, there is significant potential for additional partnerships and agreements between Indigenous communities and the mining industry.”

MAC highlights several progressive agreements, such as the Ekati mine project agreement in the NWT and the Raglan agreement in Quebec, which have provided Indigenous communities with high paying jobs, skills training, profit sharing, business opportunities and environmental benefits.

“In addition to these agreements, the industry has taken proactive policy positions on issues such as government resource revenue sharing, which supports greater participation of Indigenous peoples, communities, businesses and governments in the mining industry,” says Marshall. “Agreements between Vale and Labrador’s Innu and Inuit people include sections on training, employment, contracting, financial benefits, environmental matters and dispute settlement.

“In the partnership between the Government of British Columbia and the Stk’emlupsemc of the Secwepemc Nation (SSN), the provincial government shares revenues from New Gold’s New Afton mine directly with the SSN, in addition to New Afton’s separate agreement with the same bands. “This government-to-government agreement broke new ground in Indigenous and natural resources public policy, providing the confidence and mutual benefit needed for mining projects to move forward.” It laid the foundation for other revenue-sharing agreements which have since been struck between the Government of B.C. and Indigenous communities across the province. In 2016, the Ktunaxa Nation Council and Teck Resources concluded one of the most comprehensive agreements of its kind in Canada.

“Spanning approximately 40 years and all five operations in the Elk Valley region, the agreement sets out commitments for both parties in the areas of consultation and engagement, environment and land stewardship, employment and business opportunities for Ktunaxa citizens, and cultural resources management,” reports MAC.

Overall Employment Numbers

Statistics Canada data shows that the mining industry directly employed 403,000 people in 2016 – that’s roughly one in every 45 Canadian jobs. When indirect jobs are included, the industry’s overall employment reach jumps by an additional 193,000 individuals to approximately 596,000 jobs.

“In 2016, 93,000 (23 per cent) of those directly employed in mining worked in Stage 1, mineral extraction,” says Marshall. “This includes approximately 40,500 workers in metal mining, 25,600 workers in non-metal mining and 5,200 workers in coal mining, with services accounting for the balance.”

Overall, total direct employment has remained stable in recent years.

Not included in these numbers are to mining activities related to the oil sands extraction sector. 

“Recent data show that Suncor and Syncrude directly employ approximately 14,000 and 5,000 people, respectively, in mining and oil and gas activities. These figures do not include indirect employees, which number in the thousands,” states the Association. “Other oil sands mining companies, such as Canadian Natural Resources Limited and Imperial, increase these numbers further.” The statistics related to employment for mining and the oil sands are hard to track as they change rapidly due to the cyclical reality of commodity markets and fluctuating prices, globalization and other trends.

“Recent mergers and acquisitions have changed the landscape of Canadian mining,” writes Marshall. “Some companies have been acquired or no longer report separate employment figures. Other companies report global figures without disaggregating for the Canadian component of their operations.”

Aboriginal Employment

Proportionally, the mining industry is the largest private sector employer of Aboriginal Canadians. According to the Mining Industry Human Resources Council (MiHR) and its research, the proportion of Aboriginal workers in the mining industry (5 per cent) is well above that of Aboriginal workers in the Canadian workforce (3 per cent), and exceeds the proportion of Aboriginal people in the Canadian population.

According to Statistics Canada, Indigenous employment in the mineral industry increased 12 per cent from 2007 to 2015. MiHR research indicates that approximately 12,700 Aboriginal people were working in the mining industry in 2015, and that mining surpasses all other industries in the engagement of Aboriginal workers in occupations that tend to be specific to mine sites. “Potential for increased Aboriginal employment remains strong,” stresses MAC, again pointing to the relative proximity of mines to Aboriginal communities. “Aboriginal people across the country are, therefore, ideally situated to access employment opportunities (and other benefits) in the mining industry.”

Additionally, approximately half of all Indigenous Canadians are under the age of 25. This means a large segment of the Aboriginal population is fast approaching workforce entry. 

“A critical challenge is to ensure that this new cohort of Aboriginal Canadians has the opportunity to participate meaningfully in the Canadian workforce, and is provided with training and educational opportunities,” reports Marshall. “Approximately one in four Aboriginal people of working age are not participating in the labour force. Since attaining an appropriate level of education is an important factor in labour force participation, training to develop the requisite skills for meaningful participation in the labour force is critical for accessing well-paying mining jobs. ”Looking beyond employment, progress is being made toward increasing Aboriginal participation in the mining industry.

For example, he points to September 2017 when Suncor and Fort McKay First Nation announced their equity partnership in the East Tank Farm Development. In October 2017, Suncor and the Mikisew Cree First Nation (MCFN) announced their equity partnership in the same project. “The combined equity interest of Fort McKay First Nation and MCFN in Suncor’s East Tank Farm Development is 49 per cent,” and valued at approximately $500 million.

Women in Mining

Another key demographic emerging as critically important for the mining sector of tomorrow is women. A 2016 report by the MiHR found that while female participation in mining grew by 70 per cent from 1996 to 2011, women still accounted for just 17 per cent of the mining workforce, or roughly 38,600 positions based on MiHR’s definitions.

“These numbers are well below women’s current labour force participation rate, which is 48 per cent,” states MAC. “When mining is compared with other industries for the representation of women in broad occupational categories, gender disparity is prevalent.”

According to MiHR research, in the mining industry, women are under-represented in occupational categories that are more traditionally associated with a higher proportion of women, such as human resources and financial professionals. Furthermore, even in occupations in which women traditionally have been under-represented, MiHR found that the mining industry is still not attracting a representative proportion of women compared to other industries.

“Part of the reason may be that the perception of gender-based challenges deters interest at the educational level from moving into certain trades,” he says. “For example, in 2011, women accounted for only 14 per cent of registered apprentices and were concentrated in certain trades.”

Drilling down further, women accounted for only 2 per cent of carpentry apprentices, 1.9 per cent of plumbing apprentices, and 1.5 per cent of heavy equipment apprentices.

Overall, according to Status of Women Canada, women represent roughly 5 per cent of all skilled trades workers in Canada – a percentage well below women’s participation rate in the mining industry, and significantly below women’s labour force participation rate overall.

“Concerted efforts by both industry and government are underway to attract and retain talented women in the mining industry,” assures Marshall. “MiHR, with support from Status of Women Canada, is currently working on a program called Addressing Systemic Barriers for Gender Equity in Mining. The program aims to identify and work to mitigate the systemic barriers to women’s participation and advancement in the mining industry in Canada.”

It is hoped that the project’s outcomes identify how to better engage, attract and improve gender balance across the industry’s labour force, he adds.

Constant Need for Skills

The Canadian mining industry faces massive human resources challenges moving forward.

MiHR’s 2017 report, Canadian Mining Labour Market Outlook, estimates that the Canadian mining industry will need to hire 87,830 new workers over the next decade to 2027.

“These new hires are required to replace retirees and fill new positions to meet baseline production targets,” writes Marshall. “In its report, MiHR also forecasts contractionary and expansionary hiring scenarios. Notably, even in a contractionary scenario, the hiring forecast predicts that new hires will be necessary to meet labour demand.” This workforce shortage is compounded by the wave of the industry’s skilled core of workers who are retiring. By 2027, MiHR forecasts more than 52,000 employees will retire from the sector, which represents over one-quarter of the industry’s current workforce.

“This will result in a significant loss of industry knowledge and experience,” says Marshall. “Updated data from Statistics Canada’s 2011 National Household Survey indicate that the mining industry’s workforce is attracting an increased share of young professionals. For example, the 25 to 34 age group makes up approximately 25 per cent of the mining workforce compared to only 20 per cent in the Canadian workforce.

“This shift in demographics will lead to an entirely new set of challenges, with relatively inexperienced workers replacing seasoned workers, particularly in the high turnover trades and production occupations. This places an additional onus on industry to work collaboratively with government and educational institutions to ensure that new entrants to the industry have the skills required for high-demand jobs within mining.

“In addition, companies need to ensure that new employees have opportunities to learn from experienced employees during training programs and on the job to gain valuable workplace experience.”

The mining industry includes 70 core occupations according to MiHR, and needs new workers for all of them. Among those required are geoscientists, metallurgists, mining engineers and geologists, as well as workers skilled in computer technology, information management, mechanical repair, heavy equipment operation and other areas.

“Because today’s mining industry relies on advanced technologies, much of the demand is for highly skilled workers,” reports MAC. “It is also important to note that competition for skilled workers is fierce both within Canada and globally. In fact, companies in other countries are actively recruiting Canadian graduates and workers, making retention challenging and recruitment highly competitive.”

Various actions have been proposed to address the mining skills shortage in Canada:

The federal government has taken some steps to help address this problem, such as the expansion of the Youth Employment Strategy, the proposed Post-Secondary Industry Partnership and Co-operative Placement Initiative, and continued funding for the Aboriginal Skills and Employment Training Strategy (ASETS), which the government has reviewed with the aim of improving outcomes.“MAC supports an expansion of this program, which has proved to be a valuable source of funding for Aboriginal skills training initiatives,” states Marshall. “In addition to the funding from Status of Women Canada mentioned above, Employment and Social Development Canada (ESDC) provided $3.5 million to MiHR to enhance its Labour Market Information program, which tracks the industry’s hiring needs.” More recently, MiHR secured government funding for other important programs, including:

Ensuring that MiHR can continue to produce crucial research and deliver strategic programs is essential for supporting the industry’s workforce needs and meeting its commitments to diversity.

The Value of Mining

Overall mining is a $40.8 billion industry in Canada, which has held relatively steady over the last two years. Year-over-year, mineral production values were projected to increase in the MAC report in five of Canada’s 13 provinces and territories. The production values for five jurisdictions were projected to decrease and three remained roughly consistent.

Quebec and B.C. posted the largest gains in absolute value, exceeding $400 million each, with Nunavut increasing by approximately $200 million year-over-year.

Saskatchewan experienced the single largest absolute drop in production value year-over-year, falling from $8.5 billion to $5.5 billion, largely driven by low uranium and potash prices. Overall, total production value is down 4.7 per cent, or approximately $2 billion, to similar levels seen in 2007. “However, it is anticipated that 2017 mineral production values will see an increase across Canada thanks to the upward pressure many commodities experienced throughout the year,” states Marshall.

All told there are 1,201 total mining establishments in Canada. Just 65 of these are metals mines and the vast remained are quarries (Sand and gravel quarries, 735; Stone quarries, 285; and, Peat mines, 68) with just 48 non-metal mines remaining to be accounted for nation-wide.

Territorial Activity

“The three territories together received 20 per cent ($359 million) of total 2016 Canadian spending on exploration and deposit appraisal,” adds Marshall. “This amount, more than three times the territories’ share of production value (6 per cent), reflects global interest in Canada’s Northern mineral potential.” On certain measures, this interest materialized into wealth development as the territories also accounted for 11 per cent ($970 million) of total mine complex development expenditure. The majority of this investment (75 per cent) went to the NWT, where De Beers recently opened its newest mine, Gahcho Kué, and Dominion Diamond expanded the Ekati mine.

“Despite such interest, however, overall territorial exploration and deposit appraisal investment has decreased significantly in recent years,” he says.

Recent 2017 spending intentions indicate a continuation of this trend:

This fifth consecutive annual decrease in spending in Nunavut and the Northwest Territories reflects market realities and ongoing regulatory challenges, and has implications for both junior mining firms in those regions as well as for territorial economies.

The Future

According to the recently released report State of Mineral Finance 2018: Gaining Momentum, which was written by The Prospectors & Developers Association of Canada (PDAC) and Oreninc.com (one of North America’s leading providers of relevant financing information in the junior commodities space) there is reason for optimism moving forward.

“Global mineral sector investment deteriorated from a peak in 2012 through to 2016 as funds raised globally for the mineral sector declined by 56 per cent compared to 2012 levels,” the report reads. “This trend reversed in 2017 as total global financing increased 61 per cent year-over-year.”

Data provided by Oreninc on junior mineral industry financing in Canada shows a mixed picture for 2017.

“Equity raises by junior companies listed on the TSXV increased by 18 per cent compared to 2016, whilst the CSE recorded a 123 per cent increase in funds raised,” the report states. “Conversely, the value of financing for junior companies on the TSX declined 32 per cent from 2016 levels.”

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