NEWS RELEASE: Future demand for mineral and metal products

This article was provided by the Ontario Mining Association (OMA), an organization that was established in 1920 to represent the mining industry of the province.

Okay, it looks like all the votes have been counted. It appears that experts, pundits, industry insiders and outsiders alike are almost unanimous in concluding that 2013 was not a great year for the mining industry around the world. Canada’s mining industry did not escape from the grips of downward trends.

Impacting Ontario’s mining industry particularly hard was the 20% decrease in nickel prices through 2013 and the 30% drop in gold prices. By value in recent years, gold accounts for about 42% of Ontario’s total metal production and 28% of the province’s total mineral production (metals and non-metals). Also, in recent years by value, nickel in an average year accounts for 22% of Ontario’s metal production and 13% of total mineral production.

On a global basis, the general consensus was that the slowdown in China’s economy in 2013 cast a broad shadow over global mineral production. Lessening demand lead to lower prices and companies found themselves struggling with controlling costs and boosting productivity.

Also in 2013, shareholders became restless and a large number of mining company chief executives found themselves looking for new employment opportunities. Closer to home, the tremendous potential of the Ring of Fire region in northwestern Ontario, conservatively estimated at $60 billion, made only tiny steps towards realization.

Any despair about the industry, however, should be kept in perspective. Mining has always been a cyclical industry with swings caused by fluctuations in demand and supply balance for various mineral commodities. Short-term swings should not be mistaken for underlying forces at play and longer term trends.

In countries such as China and India, the unrelenting forces of urbanization and development are seen leading the way in global demand. Building new infrastructure and raising living standards of populations cannot be carried out without minerals.

In developed nations, the Mineral Information Institute provides estimates about the demand and consumption of a variety of minerals by each and every person over the course of a year. It is estimated that per person on an annual basis, 420 pounds of iron ore (steel), 410 pounds of salt, 70 pounds of bauxite (aluminum) and thousands of pounds of sand, gravel and cement are consumed.

On the metal side of consumption, individuals are estimated to require each year 18 pounds of copper, 12 pounds of lead, 10 pounds of zinc, six pounds of manganese and 30 pounds of other metals including nickel and precious metals. Meeting those demands requires a great deal of mining from numerous production facilities around the world.

The world’s population is estimated at 7.1 billion with 1.3 billion and 1.2 billion of those people living in China and India, respectively. For 2014, China’s economic growth is projected to be 7% while India’s is expected to be 4.4%. Closer to home, economic growth in Canada and the United States is in the vicinity of 2.3%.

There is no denying mining companies have to make significant adjustments, become more innovative and work hard to survive and hopefully thrive. Civilization is constructed on the building blocks of society provided by minerals and metals. Let’s hope the bigger picture provides the promise of the next upswing in the industry’s fortunes.

 

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