The Trudeau years and mining

by Leonard Melman

The Canadian mining industry entered a new era on October 19, 2015 with the election of Justin Trudeau as Canada’s new Prime Minister. His Liberal Party gained a solid majority in the House of Commerce, thereby giving him a relatively free hand for the next four years.

His initial policy paper outlining his goals contained no specific statement on resource extraction industries, but rather concentrated on goals that might be regarded as ‘politically correct’ including support for abortion, women’s rights, Indigenous support, and support for efforts to control so-called global warming or climate change.

Judging by the TSX Venture Exchange Index, the mining world greeted Trudeau’s arrival with some optimism as the index rose from near 600 in late 2015 to around 820 in mid-2016, but the performance ever since has been mediocre and that index now stands below 600 as of September 2019. The number of junior miners has dropped during the Trudeau years.

One of the conundrums relating to Trudeau is that while declaring some support for the economic contribution from both mining and petroleum development, he staunchly supports two sources of many regulations which have impeded both those industrial sectors – namely support for Indigenous peoples and imposing controls to reduce environmental impacts.

Miners want to be good environmental stewards and Indigenous people to be treated fairly; however, they need clear and doable regulations that will work for everyone.

These apparent contradictions became public when the Prime Minister was interviewed at the March 2019 PDAC Convention in Toronto and delivered a mixed message.

While reiterating his support for the industry thanks to its economic and employment contributions and while promising to do everything possible to shorten regulatory approval delays and simplifying the process where possible, he re-stated – in the strongest possible terms – his continuing legislative support for Aboriginal rights and climate change controls.

Unfortunately for mining, it appears the Prime Minister might be more concerned with environmental and Indigenous matters than resource development. Economist Jack Mintz addressed this in a recent column published in the Financial Post when he commented on proposed bills C-48 and C-69, noting, “…Prime Minister Trudeau‘s government has said it wants to ‘develop our resources responsibly’. Both these measures will almost certainly make resource development more difficult if not impossible.”

Mintz also noted that there seems to be no definite program being put forward for resource development by asking, “What is Canada’s actual plan for resource development in the future?”

Mintz adds another particularly chilling (to the resource industries) comment when he notes, “…Numerous politicians have expressed their desire to stop resource development entirely…Some politicians are even going so far as considering putting an end to mining. In other words, no more responsible resource development. No resource development at all.”

One can only wonder why the Prime Minister has been mute in the face of such comments. Mintz closes his piece with this seemingly rational comment; “We need a resource policy that allows for responsible development, just like other countries are doing. That’s not the direction we appear to be headed now.”

In fact, others have said mining may have little to look forward to in terms of the outcome of the national election slated for October 21, 2019.

Most Canadian political ‘professionals’ believe the coming election will see either Trudeau’s Liberals or Andrew Scheer’s Conservatives emerge victorious – but there are striking similarities in their approaches to climate change. Trudeau’s support for regulatory impositions to support measures to control this supposed ‘menace’ are well known and Scheer joined the same crowd by noting, “Canada, yes us, is going to ‘invent’ the world out of climate doom.”

Noteworthy is the reality that both support the regulatory impositions called for in the Paris Climate Accord. These include such directives as limiting petroleum production and usage; major financial contributions from advanced economic nations to those more disadvantaged; passage of tax impositions to decrease energy and materials consumption and a host of other categories which are sufficiently intrusive to cause the US to withdraw from the Accord.

When attempting to judge the future impact of Trudeau on Canada’s mining industry, a new reality is emerging and that is the sudden drop in the Prime Minister’s popularity. Political columnist John Gurney recently noted, “Justin Trudeau’s personal popularity has utterly collapsed (due to) a series of very public and very avoidable major errors in judgement, including the entire SNC-Lavalin fiasco.”

On balance, with the elections less than two months away, a Liberal/Trudeau loss would appear to be a plus for the mining world – but only moderately so as neither party has forthrightly confirmed strong support for our industry.

This material is taken from sources believed to be reliable and is provided for information only. Any investment decision should be made only after prior consultation with investment professionals. Leonard Melman is a financial and political writer who focuses on issues relating to the resource sector.