Does a Record High Gold Price Benefit Ontario?

By Kevin Vincent

In mid-October, The Agenda with Steve Paikin aired an episode that posed a crucial question: does a record-high gold price truly benefit Ontario? With gold prices soaring past US$2,700 an ounce, the implications for Ontario’s vast mining sector, which produces nearly half of Canada’s gold, seem promising on the surface. But beneath the glitter of rising prices lies a more complicated reality. The show featured a diverse panel, including Kirkland Lake Mayor Stacy Wight, Agnico Eagle Mines Chair Sean Boyd, Indigenous leader Michael Fox, and Bruce Tatters of Red Cloud Securities. Together, they tackled the nuances of a booming industry in the face of rising challenges.

“It’s nice that we are here, it’s nice that it looks like it’s going to stay at a strong price,” said Sean Boyd, speaking to the elevated gold prices and their benefits. However, Boyd quickly noted that mining remains a tough business, with a strained funding environment even as demand surges globally.

The show highlighted that while high gold prices often bring optimism, funding for new exploration and development projects is becoming increasingly difficult, a trend attributed to several complex factors, including the nature of global demand and the reluctance of Canadian pension funds to invest domestically.

One factor in Ontario’s favour is its gold-rich landscape, with major operations in Timmins, Kirkland Lake, and Red Lake. “We’ve always been a gold-based economy over the last century,” said Mayor Stacy Wight. The Agnico Eagle-run Kirkland Lake mine employs nearly 1,000 people in a town of just 8,000 residents.

Yet, Wight is keenly aware that the town’s reliance on gold creates vulnerabilities. With this in mind, diversification and infrastructure development are top priorities. “Without funding dollars for infrastructure, a community simply cannot expand,” she said, referring to ongoing partnerships between the local government, mining companies, and the province of Ontario.

In addition to the economic concerns, the show tackled the social and environmental responsibilities that mining operations now face. Michael Fox, an advocate for Indigenous communities, emphasized the evolution of Indigenous involvement in the mining sector, noting that communities have shifted from mere employment to becoming active participants in ownership and decision-making. “Over time, there’s been an evolution of Indigenous participation to partnerships,” Fox explained.

A key issue discussed was the “duty to consult and accommodate,” a legal requirement for companies operating on Indigenous lands. Boyd recounted Agnico Eagle’s efforts in Nunavut, emphasizing how collaboration with local communities has become central to their business strategy. “If we conduct ourselves like visitors, then this will be a successful relationship in the long term,” Boyd said, underscoring the need for mining companies to respect and uplift the communities they impact. For Boyd, this approach isn’t just about compliance—it’s about building lasting relationships that benefit both the industry and the communities involved.

Despite these efforts, Tatters pointed out that Canada’s mining sector faces significant funding challenges.

While gold prices are at historic highs, Canadian pension funds invest only a tiny fraction of their portfolios in the country’s mining industry. Instead, large institutional investors from abroad, such as BlackRock and Fidelity, dominate the space. “Less than 3 percent of their assets are invested in Canada, most are abroad,” Tatters lamented, highlighting a structural issue in Canada’s financial landscape that hinders the domestic mining industry’s growth potential.

In the long term, Boyd, Wight, and Fox all stressed the need for strategic partnerships, particularly in social infrastructure. Boyd argued that the future of Ontario’s mining towns will depend on government investment in housing, education, and healthcare. These are critical to ensure that young people stay in the North and that communities remain sustainable long after the mines close. “We are more than miners,” Boyd said, emphasizing that responsible mining is about nation-building and community development.

The episode concluded with a clear message: while record-high gold prices offer tremendous opportunities, Ontario’s gold-mining sector is not without its challenges. From strained funding environments to the need for diversification and reconciliation with Indigenous communities, the path forward requires careful planning, strong partnerships, and long-term investment in both economic and social infrastructure. The high price of gold, as discussed, is not just a windfall but a moment that Ontario must seize to secure a more resilient future.

To read the Northern Mining Report for 2024, click on this link for your 128 page digital copy. https://issuu.com/canadiantradex/docs/ml_fall_2024

Tags: Northern Ontario / Investment / Gold / All Articles