Canada’s Future: Natural Resources, Natural Leadership

Earlier this month I had the honour of giving a guest lecture at the Royal Military College of Canada to an undergraduate class exploring the intersection of science, technology, politics and policy.  As I prepared for this lecture, it was hammered home to me yet again – there is no better Canadian industry than mining, where one can watch science, technology, politics and policy collide and play out on the world stage.

We have it all.  The application of evidence-based policy to undertake major resource development projects, designed by science, geology and engineering. Or STEM, as we like to say these days… Resource development projects that are driven by society’s demand for materials and become drivers of economic growth and community development. Projects that will deliver base metals needed for a low carbon future, precious metals that will provide a safe haven for investors, or critical minerals that will help secure supply chains for strategic industries and defence.  

These same resource development projects can often be faced with fierce opposition because of real or perceived environmental and community impact.  Is mining a solution?  Or is it a problem?  What role does the industry have in Canada’s future?  And why does it even matter to Canada’s next generations?

To answer these questions, one must go back in time.  And don’t worry, I won’t go as far back as the colonization of the Americas as a way to access a steady supply of resources and trading goods.  Rather, I’ll start with the Atlantic Strategic War Plan – or ‘War Plan Red’.  A compelling analysis written by Republic of Mining historian and writer Stan Sudol can be found here.  

But also let me summarize – War Plan Red was a hypothetical plan developed in the late 1920s through mid-1930s that outlined actions that could be taken if the US and Britain declared war on each other. Some say this plan was a product of manifest destiny – a belief held by many 19th Century politicians that the United States was destined to expand across the entire North American continent – others say it was a simple military training exercise.  What we do know for certain is this invasion plan identified the strategic importance of Canada’s natural resources.  A stated goal of War Plan Red was to secure access to the rich nickel deposits found in the Sudbury basin, invading from Northern Michigan through Sault Ste. Marie and moving quickly onward to Sudbury.  The plan stated, “unless nickel can be obtained from the Sudbury mines, a serious shortage in that important war-making material will develop in [the United States] within a few months after the war begins.” Interestingly, Canada had developed a secret plan to counter an invasion, called Defence Scheme #1 based on a ‘good defence is a good offence’ strategy. Of course, operation War Plan Red never happened.  But the strategic importance of Canada’s nickel assets did play out.  When World War II started, Sudbury was essential to the war effort. In fact, Inco supplied 95% of all Allied demand for nickel - feeding their military weapons, convoy vehicles and war ships. Non-essential uses of the metal were banned, nickel prices were controlled and Inco facilities were at the disposal of the allied war effort. In fact, King George VI and Queen Elizabeth (the Queen Mother) visited Sudbury in 1939, during the first visit to Canada by a reigning British Monarch.  This was a clear indication of the key strategic value of Sudbury and nickel to the Empire.  

Canada’s natural assets were of strategic importance to the world then.  And from there, we grew into a global leader in modern mining.  Mining is Canada’s only global industry where we can boast centres of excellence in research and development; access global capital; execute large-scale commercialization and production; export raw and finished product to all corners of the world; and lead in responsible business behaviour.

This global leadership in mining and our natural endowment of resources continues to be of strategic importance today.  And that is why it matters to Canadians.  It’s simple – it’s about maximizing our natural resources and our resourcefulness.  You’ve heard this from me before.  Canada’s natural resource industries are driving our resourcefulness – both in what we do, how we think and how we tackle our piece of the puzzle.  But our relevance doesn’t stop there.  

At the local level, miners often step in where government can’t deliver, partnering with the local communities where we operate.  COVID-19 relief efforts by the Canadian mining industry have been significant, not only in financial contribution, but in supporting rural and Indigenous communities across the country and around the world.  In Canada, Indigenous communities were deemed particularly at risk, so mining companies delivered pandemic preparedness supplies and made testing solutions available to help prevent the spread of the virus in remote and vulnerable areas.  Local community organizations like food banks saw ever-peaking demand, so mining companies raised the dollars to deliver food hampers. PPE ran short in local hospitals and care facilities, so mining companies filled the gap.  The list is endless.  And demonstrates how responsible practices and doing the right thing are embedded into how Canadian miners operate.  

At a macro-level, we are perhaps receiving more attention than ever before.  In his Speech from the Throne in September 2020, Prime Minister Trudeau spoke of the future importance of the mining industry, stating: “A good example of adapting to a carbon-neutral future is building zero-emissions vehicles and batteries. Canada has the resources – from nickel to copper – needed for these clean technologies. This – combined with Canadian expertise – is Canada’s competitive edge.”

Here in BC, politicians of all stripes running in the upcoming provincial election recognize thestrategic importance of mineral exploration and mining in electrification and fueling clean technologies for our future.  

The commitment to champion our industry builds off the Canada-US Joint Action Plan on Critical Minerals Collaborationfinalized in January this year.  This plan realizes Canada’s critical role as an important supplier of 13 of the 35 minerals that the U.S. has identified as critical to economic and national security.  We have the potential to become a reliable source of other critical minerals - including rare earth elements - key components in many electronic devices that we use in our daily lives. And from some perspectives, we appear to be in a race to the finish line, as the President declared a National Emergency to expand the domestic mining industryin the US and reduce foreign dependence. 

Sound familiar?  It’s like the War Plan Red…without the invasion notes. 

But its actions that matter, not words. I am hopeful the Canadian government will walk the talk and actively champion the industry.  In turn, we need to act responsibly, make sound business decisions, create value for our shareholders and stakeholders and deliver on our purpose.

At this optimistic juncture, I do remain worried on two fronts about our ability to truly unlock the potential of our collective industry.  Bad policy and resource sovereignty.

The first concern is simple - Canada’s ability to compete in the global markets is under threat from all sides.  Bad policy is partially to blame.  I have been an active voice and advocate for sound policies that will help unlock our competitive advantage.  But often, government policies do the opposite and deter resource development projects. Every day we are hearing from Canadian business leaders that policy decisions – or policy inaction – are hampering our competitiveness.

Activism is loud and widespread in Canada against resource development projects and against Canadian-owned resource development projects around the world.  While it’s vitally important to take a measured approach to approving resource development projects, and only responsible actors must be permitted, I’m afraid the outsized voice of activists can hamper the ability to raise capital, advance certain projects and deliver to meet demand. The implementation of Bill C-69 is an example where policy intent may not match policy in action.  Resource development and investment needs certainty and clarity of process. Instead, we often get uncertainty and lack of transparency in decision-making and implementation. 

The second pressing concern is resource sovereignty.  Or, in my view, the potential lack thereof.  If you take a look at the recent Shandong Gold Mining bid for TMAC resources, you see a state-owned Chinese mining company attempting to buy a gold asset in in Nunavut.  The companies involved and geopolitical interactions in the Arctic make this potential sale more than just a foreign acquisition of a struggling Canadian gold miner.  There are supporters and opponents of this deal.  There are special interest groups from across the globe watching this deal. It’s not just a small $200m deal. It’s a potential statement on Canadian policy to welcome China as a partner in the development of our Arctic resources. Last week, I was pleased to see the federal cabinet ordered a national security review of this transaction.  We must consider unintended outcomes and rigorously question what is in our national best interest before we hand over natural resource assets to foreign, and more critically state-owned, parties. Foreign investment inbound and outbound is immensely important – but we must consider all motives and consequences. 

I strongly believe we need to take more active ownership in our ability to responsibly unlock resource wealth and opportunity for generations to come.  We need to retain our brain trust and resourceful talent in Canadian companies, nourished and incubated, not exported for hire.  We need to take more pride in our role as a global and responsible mining leader – and continue to grow that role.  We need to attract global capital into this Canadian leadership.  The more sovereignty we lose over our resources, the more I fear we damage our main competitive advantage, for good.

I believe the key to Canada’s rapid economic recovery and future prosperity should be tied to a more intensive focus on our natural resources, putting responsible natural resource development front and centre,  I believe “Canada’s Future: Natural Resources, Natural Leadership” could become a rallying cry for all Canadians, a unifying factor in these tough times.  Do you?