Annual Report 2010-2011

The Ministry’s mandate expanded in 2010-11 to lead the business and economic aspects of forestry, including industrial strategy, forest sector competitiveness programs, Softwood Lumber and wood allocation, pricing and licensing.

To support new initiatives and existing ministry programs, the government, through the Ministry of Northern Development, Mines and Forestry, projects to have invested over $1.6 billion in the North and in Ontario’s mineral and forestry sectors in 2010-11.

NORTHERN HIGHWAYS AND WINTER ROADS

For 2010-11, the ministry invested over $700 million in northern highway rehabilitation and expansion to improve road safety, quality of life for northerners and spur economic development. Highlights include:

• About $250 million for system Expansion (four-laning) and Safety Initiative projects.
• About $450 million for system Rehabilitation, including additional funding for bridges.
• Work continued on Highway 11 and 69 four-laning as did the multi-year Safety Initiatives program (passing lanes, intersection improvements, illumination) on Highways 11 and 17 across the North.
• Through the 2010 Provincial Budget, three new four-laning projects were also approved on Highways 11/17 east of Thunder Bay, with work scheduled to begin in 11-12 and 12-13.
• Construction was initiated near Thunder Bay on Highway 11/17 in 2010 on a 5-kilometre project in Thunder Bay from Hodder Avenue to Highway 527 and on a 14-kilometre project from Mackenzie to Birch Beach further to the east.
• The provincial and federal governments also demonstrated their commitment to work together to improve northern highways with the announcement of joint funding for a number of rehabilitation projects in Northern Ontario through an $18 million investment from the Infrastructure Stimulus Fund.

Through the Winter Roads Program, residents of 31 remote communities in the Far North have more economical and safe access to services and supplies via the 3,000 kilometre winter roads network. The ministry invested $4.5 million in the construction of the winter road system in 2010-11, and has invested $26.7 million in construction and maintenance costs on the network since 2004-05.

NORTHERN ONTARIO HERITAGE FUND CORPORATION

The Northern Ontario Heritage Fund Corporation (NOHFC) continues to be an important economic development tool throughout the North. The NOHFC’s ongoing partnership with communities, businesses, entrepreneurs and youth across Northern Ontario spurs job creation and economic growth in many communities.

Since October 2003, over 15,866 jobs and 474 co-op placements are being created or sustained in the North as a result of approximately 3,850 projects to which the NOHFC committed more than $635 million. These investments have leveraged another $2.1 billion from project partners.

The NOHFC, with a budget of $90M in 2010-11, supported many key initiatives through its programs. Since the start of the new mandate in January 2005, significant investments have been made, including:

• Over $225 million invested in local community infrastructure development and enhancement projects through the NOHFC’s Infrastructure and Community Development Program;
• Over $39 million approved through the Youth Internship and Co-Op Program. This helped create over 2,000 internships and co-op placements which span the entire North, including Far North remote communities;
• Approximately $7.8 million invested under the Young Entrepreneur Program to over 340 businesses across the North;
• Approximately $119 million invested through the Enterprises North Job Creation Program aimed at creating jobs and positioning small and medium-sized businesses in the North for success;
• Over $127 million invested through the Emerging Technology Program. These investments have provided key support for the emerging film, animation, and biotechnology sectors, while also expanding broadband and cellular service capacity in the North;
• Over $10.2 million has been invested since May 2009 through the Northern Ontario Entrepreneur Program assisting 200 Northern entrepreneurs to start their own businesses in the North.
• Since 2003, the government has invested over $58 million in Aboriginal communities through NOHFC programs, including Telehealth Services expansion, waterfront development, cultural attractions and broadband internet and cellular expansions projects including project in the Far North.

The Northern Ontario Entrepreneur Program and the enhancements to the Enterprises North Job Creation and Private Sector Emerging Technology Programs, announced in May 2009, have been successful in assisting Northern businesses. Since the announcement, the Northern Ontario Entrepreneur Program has exceeded expectations and the Enterprises North and Emerging Technology Programs have seen dramatic increases in uptake by Northern businesses and are helping to create jobs and prosperity throughout the North. In 2011-12, the NOHFC will continue to build on these achievements with its increased budget of $100 million.

GROWTH PLAN FOR NORTHERN ONTARIO

The Growth Plan for Northern Ontario, 2011 was released on March 4, 2011. This Growth Plan, developed under the Places to Grow Act, 2005, is the product of extensive engagement with northerners.

The plan’s development has been led by the Ministry of Northern Development, Mines and Forestry, the Ministry of Infrastructure and 16 partner ministries of the Ontario government. It is based on input of more than 1400 northerners who participated in a review of the Proposed Growth Plan for Northern Ontario released in October 2009. More than 300 written submissions also informed the Plan’s development.

The Growth Plan for Northern Ontario, 2011 is a strategic plan that guides decision-making and investment planning over the next 25 years. The Plan aims to strengthen the economy of the North by:

• diversifying the region’s traditional resource-based industries;
• stimulating new investment and entrepreneurship;
• providing more education, training and career opportunities; and
• nurturing new and emerging sectors with high growth potential.

Along with the Growth Plan’s release on March 4, early action was announced on several key initiatives:

• Formation of a Northern Policy Institute including a $5 million investment by the Northern Ontario Heritage Fund;
• Development of a Northern Ontario Multimodal Transportation Strategy led by the Ministry of Transportation and supported by a $2.2 million investment by the Northern Ontario Heritage Fund and up to $1 million from MTO; and
• Organization of two regional economic summits to inform the development of two regional economic planning area pilots. One pilot in northwestern Ontario will be anchored by the City of Thunder Bay. A second pilot in northeastern Ontario will be anchored by the City of Greater Sudbury.

In 2011-12, the Ministry will continue to work with northern municipalities and associations, Aboriginal communities and organizations, Francophone organizations, business and industry, the research and education sectors and other non-government organizations to advance the Growth Plan’s implementation. Copies of the Growth Plan for Northern Ontario, 2011 are available in MNDMF and ServiceOntario offices across Northern Ontario and online at http://www.placestogrow.ca .

NORTHERN INDUSTRIAL ELECTRICITY RATE PROGRAM

On March 25, 2010, the government announced the creation of the Northern Industrial Electricity Rate (NIER) Program to assist Northern Ontario’s largest industrial electrical consumers (forestry, mining and manufacturing) develop energy efficiency and sustainability programs. The NIER Program will operate over the fiscal years 2010-11, 2011-12, and 2012-13 (ending March 31, 2013) with an average investment of $150 million each fiscal year for electricity price relief.

The program offers eligible participants a rebate of $0.02 per kilowatt-hour (kWh) for companies that commit to electricity efficiency and sustainability plans. The objective of the NIER Program is to assist Northern Ontario’s largest industrial electricity consumers develop and implement long-term efficiency and sustainability measures. As an incentive program, the NIER Program is intended to provide a bridge for participants to achieve greater electricity efficiency by committing to the development and implementation of an Energy Management Plan (EMP).

The program was launched in September 2010, and as of January 31, 2011, 18 applications for 25 facilities were submitted. These applications are potentially eligible to receive retroactive rebates for the 2010-11 fiscal year.

NORTHERN ONTARIO INVESTMENT AND TRADE

Northern Ontario investment opportunities continue to be serviced through targeted calls on foreign investors whose strategic direction is a “fit” with Northern Ontario and by promoting the capabilities and location advantages of Northern Ontario.

Dedicated International Business Development Representatives have been established in Europe, Asia and the U.S. and will represent Northern Ontario’s strategic sector opportunities abroad. Last year many of these investors took the opportunity to come to Ontario and to visit potential sites in Northern Ontario. Relationships are being established and cultivated with these potential investors.

In terms of promotional activities, there were approximately 150 insertions in target sector and general business publications regarding the business capabilities and location advantages of Northern Ontario. An internet advertising campaign also drives online traffic to Northern Ontario website which is featured as part of the Invest in Ontario website.

Three media tours were held, including a mining tour with a focus on equipment and services, and a green energy and green technology tour. These tours took journalists from Europe and Asia to the cities of Sudbury, North Bay and Sault St. Marie. These and other tours resulted in considerable coverage in business and industry publications in these markets.

There is also significant interest in government initiatives related to the development of renewable energy and the bioeconomy which is fuelling interest in Northern Ontario.

The Northern Communities Investment Readiness (NCIR) program continued to help communities, economic development corporations and First Nations identify investment opportunities and prepare for investment attraction. Since its launch in November 2005, more than $2.3 million in NCIR funding has been approved for 248 initiatives across the North and 157 communities, including 56 First Nations, have benefited from NCIR funding. In 2010-11, the ministry approved 46 projects and assisted 29 separate communities including 6 First Nation.

The ministry commenced the implementation of the Export Assistance for Mining and Forestry Program in 2010-11. A component of that program is the Mining Supplies and Services Export Assistance Program is comprised of the Export Readiness Training; and Sector Promotion and Assistance Projects. These projects have been developed to help Northern Ontario mining supply and services companies enter new global markets and increase and diversify their revenue streams through Introductory Export Readiness Seminars; One-on-One Consultation; In-Market Mentorship; Private Sector Export Marketing Assistance; Tradeshows; and Sector Promotion and Awareness.

Over 100 company representatives attended the exporting seminars across Northern Ontario, a trade mission to India was completed, and 20 companies are developing their strategic export plans to enter new markets.

The ministry has actively pursued opportunities to increase trade and foreign direct investment in Northern Ontario. While focusing on strategic sectors that have the best opportunity to create employment and attract investment, staff attended 12 internationals events, and completed over 150 in person corporate sales calls that resulted in new jobs for Northern Ontario.

By strategically identifying and matching investment opportunities in the North with national and international companies, the ministry has contributed to the economic prosperity of the region.

ONTARIO NORTHLAND TRANSPORTATION COMMISSION (ONTC)

The ministry provided the ONTC with over $43 million of capital and operating support in 2010-11 for the delivery of passenger transportation services and its commercial rail capital program across the Northeast.

Rail Services

ONTC continues to assist and support businesses in Northeastern Ontario with the provision of reliable and competitive transportation services.

In support of economic development and prosperity in the North, ONTC continues to partner with regional tourism groups and communities to deliver the Polar Bear Express and Dream Catcher Express. Polar Bear Express ridership has seen an increase of more than 13% over last year.

ONTC remains committed to ensuring the safety and integrity of its rail infrastructure, and in 2010-11 invested $23 million in capital projects including installing new and relay rail; installing new railway ties; surfacing track; maintaining and upgrading bridges and culverts and maintaining stations.

Motor Coach Services

Ontario Northland’s Motor Coach Services Department continues to pride itself on exceptional on time performance and customer service, resulting in an increase in ridership of nearly 10% over target for the year.

Ontera (Telecommunications)

Ontera completed the purchase of North Bay Hydro Services’ dark fibre network in June 2010. This acquisition will allow the division to continue providing services to existing customers in the area as well as adding new locations for ultra-high bandwidth access.

Refurbishment

The ONTC delivered 108 refurbished commuter cars as of March 25, 2011 as part of its $86 million contract with GO Transit to refurbish 121 cars. The agency expects to deliver the final car by December 2011. With the knowledge and expertise gained through this contract, the division is well positioned to seek other opportunities in the passenger car refurbishment industry.

Moosonee-Moose Factory Ferry Service

Construction of a new passenger and cargo ferry to service the communities of Moosonee and Moose Factory continued in 2010-11. The new $3.5 million vessel will replace the Manitou II, which currently provides ferry services to both communities. Improvements to the service will also include a new docking and loading area.

OWEN SOUND TRANSPORTATION COMPANY (OSTC)

The M.S. Chi Cheemaun ferry service operates seasonally between South Baymouth, Manitoulin Island and Tobermory on the Bruce Peninsula. On average it transports over 200,000 passengers per year. The Ministry provided OSTC with $800,000 in operating assistance for the service.

In 2010-11, OSTC completed a $1.4 million investment in capital improvements to the M.S. Chi Cheemaun to further meet the Ontarians with Disabilities Act, 2001 requirements, health & safety upgrades, and ongoing capital improvement.

VIOLENCE AGAINST WOMEN PREVENTION INITIATIVE PROGRAM

The Violence Against Women Prevention Initiative (VAWPI) Program in Northern Ontario supports projects and initiatives that seek to safeguard women and children from domestic violence.

In 2010-11, the ministry provided a total of $280,000 to 96 projects across Northern Ontario. Funding recipients include family resource and sexual assault centres, public health groups, school boards, multicultural associations, women’s shelters, and agencies working with people with disabilities. In 2011-12, the VAWPI program will be realigned with MCSS, MAG and OWD. Through these ministries and OWD, additional operating support will be available to women’s shelters and sexual assault centres located in Northern Ontario to address domestic violence issues.

NORTHERN ONTARIO GROW BONDS

The five-year Northern Ontario Grow Bonds Pilot Program raised nearly $13 million through the sale of Grow Bonds. The proceeds from the bond issuance were used to provide loans to northern businesses. The bonds have a five-year term and matured on April 11, 2010. Bonds are being repaid as bonds are surrendered.

In December 2009, in preparation for the wind-up of the pilot program, and the repayment of the bonds, the Grow Bonds loan portfolio was transferred to the Northern Ontario Heritage Fund Corporation.

The Northern Ontario Grow Bonds Corporation and its board will remain in place until the wind-up of the Corporation’s business affairs is complete by May 1, 2012 at which time the Corporation will be dissolved.

As the Northern Ontario Grow Bonds Program was a pilot project, an initial review was undertaken and a full evaluation of the program was completed. The findings from the evaluation will assist in the development of other government programs.

SUPPORTING A PROSPEROUS MINERALS SECTOR

In 2010-11, the ministry continued its efforts to implement the Mineral Development Strategy, to attract new mineral investment and facilitate meaningful partnerships with Aboriginal communities and the mining sector.

MINERAL SECTOR HIGHLIGHTS

Ontario continued to be Canada’s leading jurisdiction for the production of non-fuel minerals, and a major player in the world. The province’s mineral production in 2010 was valued at $7.7 billion, with its metal mines generating $4.8 billion for the economy.

Ontario led the country in exploration expenditures in 2010 with $801 million and is expected to lead again for the third time in a row in 2011. Active mining claim units remained strong in 2010 reaching 312,000.

Ontario is creating a vibrant, growing diamond cluster. Ontario’s first diamond cutting and polishing facility located in Sudbury, opened in August, 2009 under contract with a private sector service provider.. On a yearly basis, the facility is cutting and polishing an estimated $25 million worth of rough stones derived from DeBeers Canada’s Victor mine, located in the James Bay Lowlands, about 90 kilometres west of Attawapiskat.

As the existing service contract runs to March 31, 2012, the Ontario government through MNDMF has announced the start of a globally competitive selection process of the second allocation of Ontario mined rough diamonds from the De Beers Victor mine in Ontario’s Far North. This contract will run from April 2012 to March 2015. Once again Ontario is seeking candidates who can contribute by the establishment of a financially viable, self-sustaining cutting and polishing facility in Ontario. The successful bidder for the Ontario diamond allocation will also participate in Ontario’s program to certify Victor mine diamonds as “mined, cut and polished in Ontario”.

THE RING OF FIRE

The “Ring of Fire” initiative refers to one of the most promising development opportunities in northern Ontario in perhaps a century. Located in Ontario’s Far North, current estimates from one of the companies exploring in the area suggest the potential for decades of chromite production, as well as significant production of nickel, copper and platinum.

Development of the Ring of Initiative forms a key pillar of Ontario’s Open Ontario plan, and was recognized in both the 2010, Ontario Speech from the Throne and Ontario’s 2010 Budget. The Ring of Fire represents an unparalleled opportunity to think strategically and plan for development in an environmentally sustainable manner.

Given the complexities and challenges of such wide-scale development a dedicated secretariat was created to ensure that multi-agency and stakeholder initiatives were undertaken in a coordinated and timely manner. As part of this, the Ministry announced the hiring of an Assistant Deputy Minister, Ring of Fire Secretariat to work and consult with Aboriginal peoples, northern Ontarians and the mining industry to encourage responsible and sustainable economic development in the region.

GEOSCIENCE MAPPING

Building on the 2008 Provincial Budget commitment to allocate $20 million over four years toward enhancing geoscience activities to identify economic opportunities across all of Ontario, the Ontario Geological Survey delivered its full complement of geoscience activities. Some highlights include: surveying projects in the Far North, delivering of bedrock and surficial geochemical geoscience surveying in support of community development in the near-north and south, a new energy-related geoscience initiative to assess the geothermal and unconventional energy potential in the South, a range of detailed groundwater-related and environmental geoscience projects in the South in support of public health and protection of source water inventories. Availability of these geoscience goods and services continues to be an important pillar in the Ministry’s international marketing efforts that have attracted mineral investment into Ontario.

The modern geoscience goods and services continue to provide remote First Nation communities with data and information to support their community-based land-use planning and partnerships in private sector economic activities while informing the ministry’s efforts as the government moves forward with its commitment to protect 225,000 square kilometers of the Boreal Forest.

The Ontario Geological Survey continued to work in partnership with Aboriginal communities, conservation authorities, industry, universities, other Ontario Ministries, municipalities, and the Federal Government to ensure that Ontario’s geoscience knowledge is current, credible, and available to inform the range of Ontario policy priorities.

INVESTMENT MARKETING

The ministry continued building on the success of a new investment and marketing strategy. The addition of sector specific Resource Intelligence now allows the ministry to target national and international investors as well as exploration and mining companies. This new resource tracks exploration and mining companies and their projects throughout the world. Using this valuable information, over 75 mining and exploration companies were directly identified and targeted at 12 separate marketing events in 2010.

In 2008, a Google Earth-based viewing tool was developed allowing Ontario's geological information to be overlain on satellite imagery of the earth’s surface. In 2009 the ministry has dramatically increased access to various data sets, assessment files and OGS publications. This product increases the ease of access and use of Ontario's Geoscience information via the internet to create an effective and competitive tool for attracting investor interest.

In July 2010, MNDMF and the Ministry of Mines, Republic of India signed a historic mining-related Memorandum of Understanding (MOU) in Toronto. The MOU promotes collaboration between the two jurisdictions in exploration, geoscience information, mineral processing, research and development, professional development and training, increased export of mining-related equipment and supplies, and increased inbound and outbound investment.

ADMINISTRATION OF THE MINING ACT

One of the most significant measures undertaken to advance Ontario’s status for mineral investment has been the modernization of the Mining Act. This ground-breaking legislation which received royal assent in October 2009, provides greater clarity and certainty to the industry by setting out a clear framework for the responsible management and sustainable development of the province’s mineral resources.

The new Act promotes fair, balanced and sustainable mineral development that respects communities and the environment, and benefits all Ontarians. It will bring about positive change in the way the industry does business. MNDMF launched a new phase of consultation with industry stakeholders, First Nations and Métis and non-governmental groups to help develop the best possible regulations, programs, policies, procedures and information technology solutions that will bring the legislation to life. Different sections of the amended Act will be proclaimed into force as relevant details are developed and phased in over the next three to four years depending on implementation and transitional requirements.

The Ministry completed the initial public consultation on the development of the new regulations in April 2010 that concluded the 130 day posting of “Ontario’s New Mining Act, Workbook on Development of Regulations” on the Environmental Registry. From December 2009 to the end of April, 2010 the Ministry held 15 formal meetings and received 25 written submissions. The public consultation was followed up with a series of focused stakeholder and Aboriginal community meetings and workshops through March 2011. By end of March 2011, MNDMF held a total of 50 meetings with over 700 participants representing stakeholders from the mineral industry, NGOs, and mining communities and members of Aboriginal groups and communities.

The Ministry continued work on developing the new regulations and introduced the first phase of the regulations in Jan 1, 2011 and April 4, 2011. The Phase I regulations were focused on matters of interests to private surface rights owners and general improvements to administrative processes under the Mining Act. The new regulations included a requirement to provide notification of claim staking to surface rights owners, the introduction of a map staking process in southern Ontario and the addition of further criteria for considering requests for withdrawals of Crown mining rights by surface rights owners in northern Ontario.

The Ministry also began developing the Phase II regulations that will include provisions for plans and permits for exploration activities, an awareness program for prospectors and the withdrawal of sites of Aboriginal cultural significance.

The ministry has introduced a ‘one window’ coordination process for mineral development projects in Ontario, which coordinates activities relating to permitting and approvals, and defines a framework that outlines the roles, responsibilities and expectations of the various parties.

The ministry also continued work under the Abandoned Mines Rehabilitation Program. This program has been successful in eliminating or reducing environmental and physical safety hazards. Since 2003, approximately $56 million has been invested in this program.

ABORIGINAL ENGAGEMENT

The ministry has been working over the past several years to progressively improve relationships and engagement processes with Aboriginal peoples through enhanced information sharing and communication projects.

Since 2003, the government has invested over $58 million in Aboriginal communities through NOHFC programs, including Telehealth Services expansion, waterfront development and cultural attractions.

This includes investments such as $637,000 to train 120 Aboriginal youth in Red Lake for the Ontario Common Core Hard Rock Mining certificate. These investments are helping facilitate economic agreements between First Nations and the minerals sector, such as the Impact Benefit Agreement signed by DeBeers and Attawapiskat First Nation.

The ministry is also aware of more than 60 similar agreements that have been signed between First Nations and industry since 1999, at the early exploration stage right through to the extraction phases of the mining sequence.

Through the ministry’s Aboriginal Relations Unit in 2010-11, the ministry continued its efforts to support First Nations and Métis participation in the mineral sector. The ministry entered into formal funding agreements with a number of Aboriginal organizations to support their capacity development to engage with the mineral industry, including agreements with the Union of Ontario Indians, Grand Council Treaty 3, the Algonquins of Ontario, the Matawa Tribal Council, the Mushkegowuk Council and the Métis Nation of Ontario. The agreements enabled these Aboriginal organizations to develop their capacities in a number of ways which include hiring mineral advisors and coordinators, obtaining basic skill training in GIS and values mapping, the development of information sharing protocols and developing interim guidelines for community level engagement with the mineral industry. The ministry has also partnered with the Ministry of Natural Resources on a number of agreements that support each ministry’s mandates.

In some of the above mentioned agreements, the ministry has established technical tables with Aboriginal organizations that allow for the exchange of information, the diffusion of on the ground issues and in some case, the withdrawal of Sites of Aboriginal Cultural Significance.

In addition to promoting capacity development, the ministry supported First Nations and Métis participation in numerous mineral sector educational forums including the Canadian Aboriginal Mineral Association and the Prospectors and Developers Association of Canada.

FOREST SECTOR HIGHLIGHTS

Ontario’s forest sector is a key component of the province’s economy and is the second largest industrial sector in the province. In total, it supports almost 200,000 direct and indirect jobs in over 260 Ontario communities. Of these communities, 40 are categorized as highly dependent on employment in the forest sector to survive. An additional 63 are identified as being moderately dependent.

Ontario forests represent two per cent of the world’s total and are home to approximately 85 billion trees. Of the 71 million hectares of forested land in Ontario, fifty-seven million, or 80 per cent, are publicly owned and known as Crown forest. Approximately 13 per cent of the forested land in Ontario is held in other types of ownerships (private, First Nations, Federal, and protected areas.) The Government of Ontario oversees the management of Crown Forests, including commercial logging (harvesting) on over 26 million hectares.

The importance of our forests to the province’s future has never been more apparent. Ontario has the opportunity to strengthen its position as a leading global forest jurisdiction known for:

• Sustainable management of a world class forest asset;
• An innovative, diversified and competitive forest sector;
• Aboriginal involvement and entrepreneurship in the forest sector; and
• Providing expertise in green services and technology.

To support the industry’s recovery, the Ministry of Northern Development, Mines and Forestry has implemented two significant initiatives in addition to continuing with programs designed to enhance the competitiveness of the sector.

ONTARIO’S FOREST SECTOR TENURE MODERNIZATION ACT

Tenure modernization is a long-term solution. In 2009, the ministry embarked on a comprehensive review of its forest tenure and pricing system to modernize the system that governs who manages the Crown forests, including how companies get wood and how wood is priced in Ontario.

The economic recession has had a significant impact on Ontario’s forestry sector and Northern Ontario’s economy. A modernized system, by which forest resources are made available to the industry, would protect and create jobs, attract new investment and make Ontario more competitive while ensuring Ontario's forests continue to be managed sustainably. It would make the allocation of Ontario’s wood, and prices, more responsive to market demands, create new opportunities for entrepreneurs and make it easier for Aboriginal peoples and communities to be involved in and benefit from this sector.

The ministry continued to consult with industry, environmental groups, Aboriginal communities and the broader public, and drew on a range of expertise, information and perspectives on ways to restructure and improve the current system.

On February 23, 2011, Bill 151, Ontario Forest Tenure Modernization Act, 2011 was introduced in the legislature. If passed, the Bill would enable the establishment of up to two Local Forest Management Corporations (LFMCs) through the development of a regulation, and would amend the Crown Forest Sustainability Act to support other tenure modernization objectives. The ministry would work with forest industry, other key stakeholders, and Aboriginal communities to design and implement enhanced shareholder Sustainable Forest Licences (SFLs) and to develop criteria to test and evaluate both the proposed LFMCs and Enhanced Shareholder SFLs.

Sustainable forest management remains a key tenet of the province. A modernized system would maintain the government’s authority to regulate this critical public resource while enabling more competition and opportunity in the forest sector.

PROVINCIAL WOOD SUPPLY COMPETITIVE PROCESS

The Provincial Wood Supply Competitive Process was launched in 2009 to put Ontario’s wood back to work and to attract new investment in the forest sector, support new and innovative ventures to stimulate Ontario’s economy and build an industry of top performers – both existing and new.

115 submissions were received and subsequently evaluated against pre-established criteria such as financing, economic viability, operating feasibility, wood supply, Aboriginal benefits, management experience, and social, economic and environmental benefits. The Competitive Process has been overseen by an independent Fairness Commissioner and followed a rigorous evaluation and selection process. This has helped ensure all activities were carried out with fairness, openness, transparency, and in compliance with the process set out in November 2009.

As of March 31, 2011, the ministry had issued 35 wood supply offers, of which 16 were accepted and announced. More will be offered and announced in the Spring of 2011. The next stage of the Competitive Process will focus on the implementation of successful business plans, the issuance of facility licenses and supply agreements, and consider amendments to sustainable forest licences. This stage will be coordinated with the Forest Tenure Modernization initiative to ensure that both remain aligned, including developing provisions that provide a measured and responsible transition to a new framework.

PROVINCIAL FOREST ACCESS ROADS FUNDING PROGRAM

Established in 2005, the Provincial Forest Access Roads Funding Program assists the industry through sharing in the costs of building and maintaining the public access road network in provincial Crown forests: 100% primary road costs, and 50% of branch/secondary road costs.

Beginning in 2005/06, the ministry contributed $28 million to the forest industry for its share of primary road maintenance costs. An additional $47 million was subsequently announced to support the construction and maintenance costs of both primary and branch\secondary forest access roads, for a total of $75 million per year. The program is reviewed each year.

In the past six years, forest companies received a total of $399.5 million from the ministry toward their expenditures on the construction and maintenance of forest access roads. Each year, forest industry expenditures on forest access roads have exceeded funding available for the reimbursements of their costs.

The forest industry submitted more than 430 road invoices on the construction and maintenance of primary and branch/secondary forest access roads for fiscal year 2010-11. Consistent with the program, the ministry reimbursed $74.3 million towards eligible costs incurred by the forest industry.

The government continues to partner with FPInnovations – FERIC Division for the development and transfer of road construction and maintenance techniques and log hauling technologies to assist the forest industry in maximizing the use of the program funding in their woodland operations.

FOREST SECTOR PROSPERITY FUND

The Forest Sector Prosperity Fund (FSPF) was established in 2005 as a three-year conditional contribution program to address the challenges facing the forest sector in raising capital to modernize, boost productivity and efficiency and shift to higher value-added markets. The program was closed to applications in October 2008. The objective of the program was to target and leverage new forest sector capital investments in energy conservation and co-generation, energy generation from biomass, load management, value-added manufacturing, improved wood fibre efficiency, advanced materials handling and efficiencies and new environmental technologies.

As of March 31, 2011, $126.6 million have been committed to assist 37 mills, and $37.4 million have been flowed.

There was one new FSPF offer in 2010/11 for a $6 million project. Some projects did not materialize, and others are delayed as proponents continued to finalize their projects.

The program is not anticipated to be fully spent out as a result of the magnitude of the downturn in the industry, which was not anticipated at the time it was implemented.

FOREST SECTOR LOAN GUARANTEE PROGRAM

The Forest Sector Loan Guarantee (LG) Program was established in 2005 to support the forest sector revitalization initiative and to stimulate private sector investment in capital projects. The program can guarantee up to a total of $350 million in loans, and subject to a bad debt allowance of $35 million.

As of March 31, 2011, the ministry has offered $141.4 million in loan guarantees, of which $97.1 million are currently committed. More than $30.7 million in loans have been drawn to support capital projects for companies in Northern Ontario.

The program is not anticipated to be fully spent out as a result of the magnitude of the downturn in the industry, which was not anticipated at the time was implemented.

The loan guarantee and prosperity programs have leveraged $932.5 million in new private sector investments.

WOOD PROMOTION PROGRAM

In its fifth year, the Wood Promotion Program (OWPP) continued to deliver the $1 million per year commitment to support and foster development of economic activity in value-added wood manufacturing, expansion of domestic and international markets for new and existing value-added wood products, development of skills, knowledge and new technologies to support an expanded value-added wood products sector and establishment of a gateway for emerging companies and entrepreneurs to access new markets, education, training, technology transfer and applied research and development.

2010 brought continued support to promote the use of wood products in industrial and commercial applications. This important initiative increases the domestic demand for value-added forest products and seeks to influence those responsible for design and construction of non-residential buildings. Financial support was given to spur interest in the value-added industry among entrepreneurs and assist current SME’s with market/product development and efficiencies in their current production processes.

In addition, there was focus on the development of skills and knowledge needed to prepare the next generation of value-added workers with research into the current state of the labour market in Ontario as it relates to the forest and wood manufacturing sector and support for capital assistance within the post secondary institutions to upgrade equipment.

NORTHERN PULP AND PAPER ELECTRICITY PROGRAM

The Northern Pulp and Paper Electricity Transition Program (NPPETP) was announced in 2006 to strengthen the northern economy by providing a bridge for northern pulp and paper companies to achieve electricity efficiency and sustainability and help Northern Ontario mills maintain competitive production costs. The program was designed to reduce the cost of electricity mills purchase while they implement a transition plan designed to decrease long-term electricity costs by a minimum 15 per cent.

Originally a three-year program scheduled to expire in September 2009, the program was extended to September 2010 as part of the 2009 provincial budget announcement. Pulp and paper mills participating in the Northern Pulp and Paper Electricity Transition Program received the NPPETP rebate of 1.8 cents/kWh until September 30, 2010.

The rebate rate was increased from $7 per MW hour to $18 per MW hour to the end of September 2010, which significantly enhanced the competitiveness of the participating mills. Participating mills received $21 million in electricity rebates for fiscal year 2010-11 and $124 million to date over the life of the program. These funds have helped the mills to implement energy savings measures such as the installation of a new bio-mass boiler and lower self-generated electricity costs.

Northern Pulp and Paper Electricity Transition Program participants approved for the Northern Industrial Electricity Rate (NIER) Program received a top-up rebate of 0.2 cents/kWh from the NIER Program until September 30, 2010, and a rebate under NIERP of 2 cents/kWh thereafter, until the end of the three-year program.