Commodity prices have declined around the world and in times of reduced revenue, there is a risk industry and governments pull back and wait it out.
But these tough times are when both parties should work together to provide stability, according to Newfoundland and Labrador Prospectors Association president Norm Mercer.
“When times are tough and everyone is heading for the door, that’s the time to roll up your sleeves,” said Mercer. “We have to be creative and strategic and carefully spend and invest.”
According to figures from the provincial department of Natural Resources, mineral exploration spending is falling steadily, having gone from $194 million in 2012 to a forecasted $62 million in 2015. Over that same timeframe, the number of claims staked in the province has fallen from about 10,000 to 4,000. Diamond drilling has also tapered off from 181,000 metres to 97,000 metres.
“The industry and support is still strong within our organization,” said Mercer. “This downturn is certainly steep and quite protracted, but prospectors are optimistic.
“Hopefully, as we get into the second half of 2016, the bottom will have been reached and the commodity prices will be recovering.”
Mercer noted his members provide an early step in the mining exploration and development process and their work must continue to help meet the industry’s promise once a turnaround in commodity prices comes.
He also said a positive attitude and approach by the new government will be key.
“We are pleased that they have committed to the prospectors’ grant program,” he said. “That is a strategic investment because the work of prospectors has led to many discoveries. … They are the people with the boots and the hammers.”
The grants support field work by prospectors and have been in existence for more than 20 years, Mercer said.
The group is also pleased the new government indicated during the election campaign it plans to continue support to junior mining companies.
“Many prospectors look to these junior mining companies to option properties,” he noted.
The prospectors association has put together a presentation for new Natural Resources Minister Siobhan Coady and requested a meeting to discuss its ideas.
Directive letters from Premier Dwight Ball to Coady and Finance Minister Cathy Bennett also contained some encouraging references for Mercer.
He said the government appears ready to consider a venture capital fund to boost investment, the Research and Development Corp. is to explore continued investment in metallurgic work on base metal sites in the Buchans area and there will be a review of the taxation regime.
“Other provinces, like B.C. and Quebec, offer a top-up tax incentive in addition to a federal tax credit for exploration activity,” Mercer added. “The companies need to be on a level playing field. (The government) won’t need to reinvent the wheel, they just have to look at some of the best practices.
“The mining industry is one of the mainstays, especially in the rural areas, whether that be on the Baie Verte Peninsula, in the central region or in Labrador. I think government is getting the message … and if nothing is happening, there’s no taxes coming in.”