PDAC president illustrates Canada’s falling exploration

The Australian mining industry spends $10 on exploration and development for every $100 in production revenues. By comparison, the Canadian industry spends about $2.50, says Fenton Scott, president of the Prospectors and Developers Association of Canada (PDAC).

These damning statistics dropped some jaws at a workshop held as part of this year’s mines minister’s conference in Halifax and attended by some of Canada’s top exploration managers and government geologists. While the numbers are a rough estimate, they provide an effective snapshot of Canada’s exploration scene in comparison to that of other countries. Scott attributed Canada’s poor relative position to several obstacles including uncertainties over land access, negative tax treatment of risk capital and duplication of regulations by the two levels of government in Canada.

“Figures on exploration activity in this country indicate that fewer individuals and companies are willing to tackle these obstacles,” said Scott. The PDAC expects exploration to decline to $500 million in 1991, down from about $800 million last year and more than $1.4 billion in 1988. The decline is especially alarming, he said, in light of the steep slide in Canadian base metal reserves during the 1980s. Since 1981, nickel and zinc reserves have dropped 26% while copper reserves have dropped 27%, according to the Canadian Minerals Yearbook, 1990.

Meanwhile, foreign countries are changing their laws to encourage investment in the mineral sector. Canadians are taking the bait. Between 1988 and 1989, average exploration expenditures by Canadian companies decreased by 20% in Canada, doubled in the U.S., and increased by 200% in other countries, Scott noted in a speech to the provincial and federal ministers.

“We in the exploration industry are scared, very scared.”