Ontario’s push to accelerate mine approvals risks running into a shortage of skilled workers that could inflate construction costs and stall investment, executives from Agnico Eagle Mines (TSX, NYSE: AEM) and Vale’s (NYSE: VALE) base metals unit warned Wednesday.
Agnico’s underground mining school at Macassa in the province’s north drew 500 applicants within two weeks for 25 training places, while Vale sees billions of dollars in potential Ontario projects competing for a limited workforce, executives told a Toronto Region Board of Trade conference.
“We’re gonna run out of miners before minerals,” Jeff Gaulin, Vale Base Metals’ vice-president of corporate affairs, said. “We are not graduating enough mine engineers to meet our ambitions.”
The warnings expose a practical limit to Ontario’s effort to turn faster permitting into a mining expansion. More predictable approvals can help attract capital, but companies still need trained crews, competitive electricity and enough construction capacity to deliver projects on time and earn investors a return.
The discussion came two days after Ontario added Mayfair Gold’s (TSXV: MFG; NYSE-A: MINE) Fenn-Gib gold project to its One Project, One Process framework, making it the fourth development selected for coordinated provincial reviews. The designation aims to accelerate approvals; it does not itself authorize construction.
Training bottleneck
The workforce challenge is partly a shortage of training capacity, rather than simply a lack of interest in mining careers, Agnico’s Ontario operations vice-president Andre Leite said.
That interest reflects a wider shift. A Mining Industry Human Resources Council (MiHR) survey of 3,000 Canadians aged 15 to 24 found 42% would consider a mining career, up eight percentage points from 2023. Positive impressions now exceed negative ones, although mining still trails technology and health care.
Agnico is training 25 people per quarter through its Macassa school in Kirkland Lake. But limits on how many apprentices can train alongside qualified tradespeople constrain its ability to expand the workforce, Leite said.
“We do have youth in Northern Ontario. They want the jobs,” he said. “But we didn’t train them in the past to be in these positions.”
Northern Ontario could need about 20,000 more workers as the industry grows and existing employees retire, he said, without specifying a deadline for that requirement. Training skilled tradespeople takes years, making it difficult to respond quickly once projects receive approval.
“When we look at the pool of talent that we have, it’s just not deep enough,” he said. “So we need more people. We need more training.”
Labour accounts for 40% to 50% of Agnico’s costs, Leite said. Access to people who can execute projects is therefore central to investors’ questions about whether developments will arrive on schedule and within budget.
Automation can help improve productivity, but Leite cautioned against expecting technology to advance quickly enough to close the entire workforce gap. Operating mines need to serve as training grounds for the next generation of workers, he said.
Gaulin described the scale of demand through a conversation with an unnamed Canadian provincial premier about expanding a mining engineering program. Asked how many graduates Vale would hire from a class of 40, the company’s answer was all of them for the next decade, with their school fees covered, he said.
Efforts to attract students include Franco-Nevada’s (TSX, NYSE: FNV) partnership with The Northern Miner Group on an education portal highlighting Canadian post-secondary programs and scholarships. CEO Paul Brink discussed the initiative on TNM’s podcast in March, stressing the need to attract more people to mining.
Power costs
Electricity is another test of whether Ontario’s ambitions translate into competitive operations, Gaulin said. He urged the province to renew its northern industrial electricity rebate for the long term and expand it.
The Northern Energy Advantage Program’s current five-year term ends March 31. It supports large industrial electricity users in the north, including mining operations.
Matthew Rae, Ontario’s associate minister of energy-intensive industries, acknowledged the approaching expiry in a subsequent discussion. He said he was working with Northern Economic Development and Growth Minister George Pirie on potential future versions of the program, but announced no renewal.
Rae also acknowledged the challenge of aligning transmission and generation with proposed northern mines. Ontario’s relatively clean electricity supply can attract investment, but the province would not match Quebec’s hydroelectricity prices, he said.
Keeping smelters supplied
Ontario Mining Association president Priya Tandon urged governments to give existing mines and expansions the attention being directed towards flagship projects.
Permitting delays can leave companies paying to retain scarce contractors while waiting for authorization to proceed. Releasing those contractors risks losing them to another project, she said.
Red Tape Reduction Minister Andrea Khanjin said Ontario is reviewing 375 economic permits, extending its reforms beyond projects selected for special treatment. The work includes allowing activities to proceed under prescribed rules and developing an online system for proponents to track applications, with mining permits first in line.
Tandon also warned that Sudbury’s energy-intensive smelters need competitive operating costs and a steady supply of feed from existing operations and nearby mineral developments. Protecting that processing capacity is essential to supplying both domestic industry and allied countries, she said.
“Well, what keeps me up at night is ensuring that they’re consistently fed,” she said.
Investment discipline
Gaulin put Vale’s potential Ontario projects over the next five years at about $5 billion (US$3.6 billion). That was an opportunity rather than an investment commitment: he warned that Vale and other companies moving ahead together could bid up costs and struggle to find enough people to build.
Both executives welcomed closer cooperation between governments and industry. Leite still ranked permitting as the largest obstacle to investment decisions, followed by costs and access to skilled workers.
But strategic importance alone will not persuade boards to approve construction, Gaulin said. Projects must deliver attractive net present values and internal rates of return.
“Mining CEOs don’t get rewarded by their boards and investors for building strategically important assets,” he said. “They get rewarded for the disciplined capital allocation of projects that give the best returns.”
Source: www.northernminer.com — article syndicated from the publisher’s feed; all rights remain with the original publisher.
