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Blow to Canada's mining competitiveness

Staff Writer |
The Mining Association of Canada (MAC) expressed its profound disappointment and frustration with the government's removal of a Senate amendment relating to Final Offer Arbitration (FOA).

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The Mining Association of Canada expressed its profound disappointment and frustration with its modification of an amendment giving the Canada Transportation Agency own-motion power, in Bill C-49, legislation that amends the Canada Transportation Act.

"The effectiveness and reliability of rail freight service is critical to Canada's mineral investment competitiveness, and this move by the government will diminish that competitiveness," stated Pierre Gratton, President and CEO, MAC.

"How many mill closures and job losses, lost customers and abandoned investments will it take before a Minister of Transport and his or her department recognize that their oversight of Canada's railway system is failing.

"Despite a commitment to ensure that our industry remains competitive, the government has failed to modernize the Canada Transportation Act in a way that balances the interests of shippers and railways and ensures that our wealth and job creating industries are protected from the railway's unbridled market power."

As the single largest customer group of Canada's railways, mining accounts for 19% – one-fifth – of the total value of Canadian exports and over half of total rail freight revenue generated each year, yet an unlevel playing field renders many shippers, including many mining companies, captive to one railway and therefore beholden to railway market power.

The amendment on FOA, introduced by Senator Rosa Galvez – a member of the Independent Senator's Group – and supported by all but one member of the Senate Transport and Communications Committee, was also supported by a coalition of eight captive shipper industry associations.

The amendment would have increased data transparency in the FOA process, which is the only remedy available to captive shippers to seek rates more like those that might prevail under conditions of effective competition, to address its erosion by CN and CP.

Minister Garneau's response in a motion sent to the House of Commons erodes FOA even further, strengthening CN and CP, and leaving captive shippers at their mercy.

In his motion to Parliament, Minister Garneau's does not provide a rationale for rejecting the amendment.

Instead, he repeats arguments regularly made by CN and CP and ignores or defies the state of the law regarding the purpose of FOA, undermining the ability of the most captive shippers to obtain competitive rates and levels of service.

The amendment on own-motion power, also introduced by Senator Galvez and supported by the Senate Committee, was modified by Minister Garneau in a manner that will reduce the Agency's independence and further strengthen the hand of Transport Canada and the politicization of rail service.

"This is a damaging signal to our members' international customers who have been closely monitoring C-49 and its potential impacts as a measure of Canada's reliability as a source for raw materials.

"There are significant costs associated with transporting goods to and from the mine site, and companies need to get their goods to their international customers on time." stated Gratton.

The mining industry is a major sector of Canada's economy, contributing $57.6 billion to national GDP and responsible for 19 percent of the value of Canadian goods exports in 2016. Canada'smining sector employs 596,000 people directly and indirectly across the country.

The industry is proportionally the largest private sector employer of Indigenous peoples in Canada and a major customer of Indigenous-owned businesses.

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