This column was published in today’s Sudbury Star , the City of Greater Sudbury’s daily newspaper. It is the start of a monthy mining column for the Sudbury Star.
Last year the global population reached seven billion. More than half of us now live in urban centres and experts estimate that figure will climb to 70% by 2050. China is witnessing the largest rural to urban migration in the history of mankind in its stampede to industrialize and modernize. China also has become the world’s second largest economy and currently needs to build the equivalent of two cities the size of Toronto and Sydney Australia every year to accommodate this rapid growth. India, Brazil, Russia, Indonesia and other developing countries are following in its footsteps but at a less frenzied pace.
According to a recent study by McKinsey & Company, “up to three billion more middle-class consumers will emerge in the next 20 years compared with 1.8 billion today, driving up demand for a range of different resources.” Notwithstanding the current depressed prices of some metals, most analysts feel that the current mining commodity super-cycle will last for decades. It is estimated that over the next 25 years, we will need to dig out of the ground as many minerals as consumed since the beginning of time.
Prior to 2001, years of low commodity prices led to massive underinvestment in mining projects around the world. During the dot.com boom/bust between 1995-2000, mining was often considered a sunset industry according many in the Toronto media. This negative and dismissive attitude towards the mining sector influenced politicians who did not understand the strategic value of mineral resources.
Combined with lower grade deposits that are much harder to find and usually located in more politically risky countries, skilled labour shortages, resource nationalism, increasing capital costs and more rigorous but appropriate environmental regulations, is it any wonder that political and military planners are now frequently talking about mineral shortages and its impact on industrial production.
Sudbury is the richest mining district in North America and among the top three hardrock mining regions in the world. Only South Africa’s Witwatersrand gold region and the country’s legendary Bushveld platinum complex can match the concentration and innovation of underground mining in the Sudbury Basin.
This mining knowledge makes Sudbury the luckiest city in North America. The region is even more fortunate than Fort McMurray the booming oil sands capital of Alberta because Sudbury has four vibrant and innovative clusters of mining expertise.
Clusters are geographic concentrations of related companies in a specific field. They compete with each other resulting in global innovation and the jobs of the future. Internationally known Harvard Professor, Michael Porter, has traveled around the world and advised many nations about the benefits of industrial clusters.
California’s Silicon Valley – south of San Francisco – is the most famous high-technology cluster in the world. Houston, Texas has established itself as the leading cluster of oil and gas industries, services, research and educational institutes related to that sector. Sudbury has established itself as one of the world’s primary centres of the underground mining innovation and excellence.
Our first cluster is the numerous polymetallic mines that have been producing nickel, copper, PGMs and many others metals for almost 130 years. The Ministry of Northern Development and Mines estimates that roughly $170 million was spent on exploration in the Sudbury Basin last year. A similar amount was spent throughout the entire province ten years ago. Many experts feel we will still be mining in Sudbury for at least another hundred years.
QuadraFNX’s Victoria mine, currently under construction will be one of the richest in decades. Xstrata’s Nickel Rim South mine started in 2009 and will be in operation for at least 15 years while Vale is working to bring its Totten mine – slightly delayed and over budget – into production near the end of 2013. Vale is also spending $200 million on the Clarabell Mill complex to increase metal recovery and is investing an extraordinary $2 billion on their Copper Cliff smelter to further reduce sulphur emissions.
The Mckinsy & Company study states that the world must start “mobilizing for a resource revolution” and the “the race is on to boost resource supplies, overhaul their management, and change the game with new technologies.” Sudbury’s mining supply and services sector – our second cluster – is part of that “resource revolution” collectively using their innovative skills and technology to help keep the local miners among the most skilled, innovative and competitive globally.
There are more jobs in supply and services hardrock mining cluster – the largest in Canada and possibly North America – than in the region’s mines. The sector employs about 13,800 people with an economic value estimated at $4 billion in 2011. Throughout northern Ontario, the sector employs about 23,000 and produced roughly $6.5 billion of economic activity last year. Dick DeStefano deserves the credit for establishing the local industry organization – Sudbury Area Mining Supply and Service Association
(SAMSSA) – and getting a ground-breaking study done that confirmed this cluster’s economic impact.
Companies like Fuller Industrial that export their specialty pipe products to mine projects in Madagascar and Mongolia, MTI Technologies which sell their underground equipment globally and Bestech, an engineering, automation and software development company are largely independently owned with an entrepreneurial innovative mindset. These and many other supply and service companies are putting Sudbury on the global mining map.
Third, Sudbury supports the largest cluster of post-secondary mining education in Canada that will only grow with the recent announcement of Laurentian’s International School of Mines initiative. This is attracting enormous interest from the corporate sector as the recent $10 million donation to the University’s Engineering School by Stan Bharti, chairman and CEO of Forbes & Manhattan Inc., a leading private bank with a global focus on the resource-based sectors.
According to the Mining Industry Human Resources Council, half of the current mining workforce is eligible for retirement by 2021 and between 75,280 and 141,540 people will need to be hired by then depending on the strength of the economy. The expertise of mining graduates from Sudbury’s colleges and university will be in demand around the world.
The final cluster is the mining research that is being done at Laurentian, CEMI, Vale, Xstrata, Norcat and other locations. The Laurentian geology department’s Mineral Exploration Research Centre represents the largest concentration of geoscientists conducting ore deposit-related research in North America.
The affiliated Centre of Excellence in Mining Innovation (CEMI) focuses its research in mine process engineering, deep mining and environmental reclamation. In 2009, Rio Tinto, the third largest global miner, donated $10 million to further enhance CEMI’s research capabilities and establish a new global centre for underground mine construction.
Xstrata’s Technology Centre in Falconbridge and Vale’s expertise in underground mining research are helping establish Sudbury as Canada’s Silicon Valley of hardrock mining. We are in the biggest commodity super-cycle in the history of mankind. From the perspective of a resource-starved world, Sudbury is lucky indeed!
Column on Sudbury Star website: http://www.thesudburystar.com/ArticleDisplay.aspx?e=3445793