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MAY 29TH, 2010 Special to The Leader Post

Why mining means big business for Saskatchewan

Mike Shiplack

The easiest way to sum up Saskatchewan's contribution to the global market through mineral resources is diversity. The rich mineral deposits up north have created several exciting economic opportunities for this province and here is why. Mining is Saskatchewan's third largest industry, traditionally contributing about five per cent to the GDP. This province is the largest potash producer in the world. The uranium deposits are the richest in the world, and among the largest. Saskatchewan is also home to one of the largest kimberlite fields in the world, and is also the third largest coal-producing province in Canada.

"Saskatchewan's mining industry needs to be aggressive in continuing to explore for new deposits, and here again there's been some success," said Honourable Bill Boyd, Minister of Energy and Resources. "For example, in 2008 a company exploring for diamonds near Hudson Bay, in east central Saskatchewan, instead discovered coal. This is well outside the boundaries of the province's known coal basins, and leads to all kinds of speculation on what else there might be. Two new gold mines are also under development in our province, and work is also continuing on exploration of a rare earth deposit in the north -- something that is expected to be in increasing demand in the years to come."

The economic effects of mining in Saskatchewan are hard to ignore. About 30,500 people are directly or indirectly employed by the Saskatchewan mineral industry, and these are among the best paying jobs in Saskatchewan -- some of which offer career opportunities for our First Nations people, mainly in Northern Saskatchewan. According to Statistics Canada, capital investment in Saskatchewan's mining sector is expected to reach $2.5 billion in 2010, an increase of almost 10 per cent (9.7 per cent) over 2009. This is driven in no small part by our potash sector.

"We've seen exponential growth in mineral exploration spending in Saskatchewan over the past few years," said Minister Boyd. "As recently as 2003, it was only $31 million. In 2008, we hit an all-time record $474 million. Exploration spending tapered off in Saskatchewan last year as it did everywhere else, but at more than $290 million spending here was still comfortably above our historical average. If commodity prices continue their positive outlook, we may well see an improvement on exploration spending this year."

Despite recent set backs, potash is still expected to produce the most revenue for the province. Not just in direct revenues but also indirectly in jobs, expanding service industries and communities. The potash industry is investing almost $12 billion in the next ten years on existing mine sites. There are also the potential for new potash mines, uranium operations and even diamonds, all of which results in billions more in investments. In the north, exploration of a rare earth deposit is already underway.

In April 2010, the Fraser Institute released its 2009-10 Survey of Mining Companies. This is an annual survey of mining company executives that assesses the resource potential and investment climate of 72 different jurisdictions across Canada and around the world. Saskatchewan was ranked sixth best in the world, up from ninth the previous year, and was one of only three out of twelve Canadian jurisdictions surveyed that showed improvement. This is partly due to insightful strategies such as actively leading trade and investment missions by mineral companies to Asia. Saskatchewan is working to position itself to take full advantage of the resources needed by Asia -- countries like China, Japan, Korea and India.

According to Minister Boyd, success is found by continuing to be aggressive in exploring new ways of doing things. For example, this year changes to the profit tax portion of The Potash Production Tax come into effect. These changes will help to ensure a more level playing field both for existing producers and new companies wanting to enter the industry. Also, the Saskatchewan Mineral Exploration Tax Credit was reintroduced to help maintain a competitive position in the area.

"We've tried to give industry some positive regulatory tools to work with," said Minister Boyd. "However, we also need to remain competitive and continue to offer fair, stable tax and royalty regimes. When companies are looking at places around the world to invest, we want them to see Saskatchewan as a competitive business jurisdiction. We need to continue to tell the Saskatchewan story. Our government is out there telling the world that we are a great place to invest and I believe we are seeing results."

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