Overview of the Baseline Data

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• Overview of the Baseline Data
• For
• Ontario Mineral Industry Cluster
• December 8, 2005
• James Milway, Executive Director
• Institute for Competitiveness Prosperity

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Baseline Data for Quantitative Assessment -
background

• Institute for Policy Analysis, University of
  Toronto engaged by OMICC to gather baseline data
  to enable quantitative assessment of Ontario
  mineral industry cluster
• Data collected from
• OMA biannual survey (with extra questions added
  in 2004)
• Publicly available data largely, but not
  exclusively from Statistics Canada
• Special Input Output analysis of mineral cluster
  at provincial level
• Authors proved caveat that Quantitative
  Assessment is preliminary and exploratory
  more data collection and analysis required
• Final report released in August 2005
• Institute for Competitiveness Prosperity
  prepared overview of Quantitative Assessment in
  November 2005 summarized in this presentation

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OMIC Schematic View
End Users
Venture capital financing
Venture/equity/ other financing
Downstream
Metal Fabrication Industries End Users (e.g.
aerospace, automotive, etc.)
Metal Smelting
Upstream
Metal Refining
Metal Trading
MetalMarketing
MetalDistribution
Mineral development, production and rehabilitation
Mineral Exploration
Non-metalsMarketing
Non-metals Processing
Non-metals Distribution
Other End Users (e.g. construction, chemical,
pharmaceutical, other manufacturing)
Exploration services and contracting
Mine-site services and contracting
Construction (buildings, surface facilities)
Equipment and service Suppliers (camps,
aircraft, trucks, line-cutting, claim-staking,
prospecting, analytical)
Business Services (e.g. marketing, sales,
accounting, stock brokerage, insurance and risk
management)
Specialized technical and other services (e.g.
transportation, metallurgy, materials science,
materials handling)
Mining Services (surface, underground)
Equipment (vehicles, mining equipment and
supplies)
Specialized technology services (geological,
geophysical geochemical surveys, diamond
drilling, remote-sensing)
Specialized services (drilling, blasting,
engineering, analytical, metallurgical,
environmental, management, accounting, HR)
Specialized Institutions (e.g. Academic
Institutions, Training Centers, Industry
Associations, Financial Institutions, Mines and
Aggregates Safety and Health Association,
Environmental non-governmental organizations,
Sudbury Development Corporation, etc)
Source Executive Projects Office, Ministry of
Northern Development and Mines
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Key Findings

• 1 billion mining output shock would create
  5,719 new jobs in Ontario 57 in mining sector
  and 43 in other industries would add 818
  billion to GDP (balance is mostly imports from
  abroad)
• Toronto/Mississauga and Sudbury/North Bay are
  centres of activity in supply ands services firms
• Largest source of employment is minerals/metals
  manufacturing
• NE Ontario accounts for two thirds of mining
  employment and 70 of mining labour income
• Average weekly wages at 1,092 (2002) in mining
  were 49 higher than all Ontario sectors related
  to high value added per employee of 239 thousand
  among the highest in the province
• Safe work environment is a key feature of the
  cluster
• Quantitative Assessment indicates opportunity for
  production of more value-added products in the
  cluster but deeper research is required to
  identify true potential

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Porters Diamond and Clusters
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Porters Diamond and Clusters Factor Conditions
(I)

• Key Findings on Factor Conditions
• Assessment indicates that natural resource
  endowment is a reason for recent productivity
  growth
• TSX and TSX Venture Exchange are identified as
  important factor conditions
• Increases in power costs are identified as
  important challenges for the cluster
• RD spending has enhanced the mining industrys
  competitive position
• Report implies that transportation infrastructure
  is a strength for the cluster
• Full range of development agencies to support
  Aboriginal entrepreneurs and broader range of
  economic development needs

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Porters Diamond and Clusters Factor Conditions
(II)

• Questions for OMICC
• Is ongoing exploration and development adequate
  for ensuring the replenishment of mineral
  reserves to meet global demand opportunities?
• What are the critical skills requirements in the
  cluster and are they being adequately developed?
• Are management skills sufficiently developed to
  ensure the cluster is innovative and competitive?
• Does the financial know-how inherent in the
  cluster represent unexploited export
  opportunities?
• Are investments in the clusters physical
  infrastructure adequate for its future
  development?

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Porters Diamond and Clusters Demand Conditions

• Key Findings on Demand Conditions
• Level of sophistication of local demand is not
  discussed in Quantitative Assessment
• Stringent regulatory requirements may present
  export of know-how to less developing mining
  industries
• Questions for OMICC
• Are there meaningful ways in which local
  customers spur innovation and do these present
  export opportunities?
• What unique factors of the local geology have
  relevance to the development of specialized
  mining equipment for local demand and for
  export?

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Porters Diamond and Clusters Related
Supporting Industries

• Key Findings on Related Supporting Industries
• Quantitative Assessment specifies balance of
  trade in key parts of supply to the cluster
  however, the data are not necessarily specific to
  the mining cluster
• Questions for OMICC
• Can we identify more precisely where the import
  replacement (with major mine operators) and
  export opportunities are in the mining cluster?
• How can we determine whether or not local
  suppliers are capable of realizing these
  opportunities?

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Porters Diamond and Clusters Firm Strategy
Rivalry

• Key Findings on Firm Strategy Rivalry
• Quantitative Assessment indicates high degree of
  RD which indicates local participants are
  competing on basis of innovation
• Report also identifies various elements of local
  co-operation
• Report does not discuss unique local strategies
  that are driving innovation
• Questions for OMICC
• How significant is local rivalry in driving
  innovation?
• What are the common challenges skills,
  infrastructure, basic RD, tax policy, etc.
  that can be solved through collaboration?

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Other questions? Thank you