The head of Hudbay’s Manitoba operations blames weak capital markets and cash-strapped junior miners for a drastic decline in mineral exploration across the province.
New government figures show mineral exploration investment by all companies in Manitoba plummeted more than 80 per cent between 2011 and 2014.
“The decline in exploration spending is mainly driven by capital markets and the ability of juniors to access money to explore,” said Rob Winton, vice-president of Hudbay’s Manitoba Business Unit. “When exploration and investment dollars are scarce, investors look to very low-risk, high-reward ventures.”
Exploration cuts are impacting not only junior miners, but also mid-tier miners such as Hudbay.
The company planned to spend $20.4 million on exploration in 2014, about one-third as much as the approximately $59 million budgeted in 2011. In both cases much, but not all, of those dollars were spent in Manitoba.
“At Hudbay, our capital-intense growth projects have allowed us the opportunity to focus our exploration team on determining the best targets,” Winton said, “through geophysical and data amalgamation before resuming the more costly drilling programs.”
Across Manitoba, mineral companies spent $25 million on exploration in 2014, down from $140 million three years earlier.
The sharp drop has government and opposition politicians trading barbs.
“These numbers show the extent of the damage failed NDP policies have done to the ability of Manitoba business to attract investment,” Cliff Cullen, mineral resources critic for the Progressive Conservatives, said in a news release. “One important example is the NDP is one of the only provincial governments that charge and have hiked the PST on mining.”
The release added that provinces to the east and west of Manitoba “have attracted significantly more spending on mineral exploration.”
Caedmon Malowany, a spokesman for the NDP government, said although exploration investment was down in 2014, the province expects the numbers to rise this year.
He said the province’s Mining Advisory Council is bringing stakeholders together while grant programs provide aid to prospectors and companies carrying out mineral exploration in the province.
The government has also doubled work assessment credits, Malowany said, helping companies maintain their properties through tough times for the mining sector.
And the province “continues to work with the mining sector and local and Aboriginal communities to attract investment to Manitoba,” he added.
Winton hopes to see the investment climate change for the better.
“The future of mining in Manitoba is dependent on attracting exploration and investment dollars into the junior sector and ensuring government policy and actions are aligned with all of the stakeholders,” he said. “This alignment is critical to allow companies and investors the confidence that their money is being spent in a low-risk jurisdiction. The majors will set their exploration expenditures based on their short- and long-term business needs, knowing that the internal competition for capital requires the same risk reduction as the juniors.”
