Stellar results for 2006 mining sector.

The minerals and metals sector has played a huge part in the Canadian economy last year.

In 2006, both sectors contributed $40 billion to the Canadian economy, while total exports rose to $75 billion, says Cassie Doyle, deputy minister with Natural Resources Canada.

"Minerals and metals made up almost 40 per cent of the volume handled in all of Canada's ports," she says speaking at the Prospectors and Developers Association of Canada conference in Toronto.

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Forty-two per cent of the $12 billion raised in equity financing for mining worldwide was generated through the Toronto Stock Exchange.

Exploration expenditures reached $1.7 billion and the fourth cap will exceed $2 billion.

"That brings us into the highest level of exploration since 1989," she says.

Canada is considered the number one country for world exploration and yet, against all the positives, the industry faces some challenges ahead.

During the 1990s, lower commodity prices contributed to reduced mining and exploration, she says.

Since the downturn, Canada's base and precious metal deposits have declined substantially. The ministry and mining agencies have to replenish research and exploration goals. The overall effectiveness and efficiencies within the system are slow and unpredictable in part because of the increased demand. The regulatory system risks being a disincentive to investors and a factor to Canada's global competitiveness.

"This situation cannot continue," she says.

To address some of these issues a task force aimed at developing practical options for improving the effectiveness, sustainability accountability, predictability, effectiveness and transparency of the regulatory system was put in place.

Skilled labour shortage throughout the sector also requires attention. All skilled occupations have particular shortages, however, miners and mechanics have become particularly scarce. There are opportunities in the mine sites' vicinity where people close by reside. Aboriginal communities will receive training and skilled experience through a $3 million financial investment from the Aboriginal Human Resources Development Council of Canada.

As well, new geoscience technology will improve access to new resources, now that junior miners are being supported by banks, equity capital is abundant, says analyst Gordon Bogden with National Bank Financial.

However Bogden reiterated that there is a shortage of new property and projects. This means the juniors that have found mineralization are being acquired by larger mining companies, so there are few mid-tier mining houses in Canada.

What may end up happening will be a merger of two or three juniors that will form the next big company After all, "it is easier for juniors to double in value versus Barrick," Bogden says.

By KELLY LOUISEIZE

Northern Ontario Business