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THE CANADIAN PRESS – MONTREAL – Investments in Quebec’s mining sector plunged deeper than expected last year, declining nearly 37 per cent from a record year in 2012 and marking the first annual drop in a decade, Quebec’s statistics agency said Tuesday.
Preliminary numbers suggest investments in the sector fell to $3.25 billion from $5.13 billion a year earlier, due largely to lower gold prices and softer demand in China and emerging markets.
In October, the agency forecast a drop of at least 10 per cent in 2013 based on surveys of mining companies completed during the summer. However, Raymond Beullac, an official with the statistics institute says he had a “gut feeling” that the numbers were optimistic and warned of a possible decrease based on comments expressed by executives.
“Between last summer up until January the situation has greatly degraded and the numbers have come down so the companies who at that time expected to be spending more money exploration-wise in Quebec were not able to raise the capital to do the work,” he said in an interview.
He said a lot of big mining companies were expecting to see metal prices remain high, but were squeezed by rising costs when they fell.
“The first thing that goes in this situation is always exploration budgets so some of these investments they were expecting to be doing on some of their projects they’re just sending that into the future,” Beullac said.
“Hopefully in the next two to three years they’ll come again looking at these projects and maybe at that time start investing again major amounts of money to bring them into production.”
More than 96 per cent of the investments last year were in Quebec’s mining regions of Abitibi-Temiscamingue, the North Shore and Northern Quebec, which all experienced decreases ranging between 27 and 37 per cent. Junior mining companies accounted for 65 per cent of all exploration expenditures last year.
Gold remained the most sought after metal. But its 37 per cent share of all exploration expenditures was down from 54 per cent in 2011. The price of gold fell to US$1,225 per ounce in December, from US$1,750 in September 2012.
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