he two-year slump in commodity prices may dominate debate at the 2014 Mines Quebec convention in Quebec City next week, but the 2,000 participants will have their sights firmly set on a market upturn within two years.
“Quebec sits on one of the world’s great stores of minerals and the mining industry has navigated many past downcycles,” said Josée Méthot, CEO of the Quebec Mining Association, a lead sponsor.
“Now, large and small producers and explorers are all cutting costs drastically to survive these lean times and be ready to compete when the upturn begins,” she said in an interview.
“Mining is for entrepreneurs and risk-takers and even in a long downturn optimism shines through … we think global demand will catch up and metal prices will rebound,” said Méthot, a chemical engineer and MBA who has worked in industry.
“Our big challenge is distance to market and it won’t go away,” she added. “Technology is moving very rapidly, helping us to boost efficiency and offset distance and long project lead times.”
Andre Gaumond, whose Virginia Mines Inc. sold the rich Éléonore gold property in Northern Quebec to Goldcorp Inc. late in 2005 for $500 million when bullion fetched $531 U.S. an ounce, was more definite.
“Gold at $1,100 an ounce, if sustained, would put many mines out of action and force others to reduce production and cut exploration,” he said. “I’d say we’ve hit bottom.”
He said world mine output is already in a long-term decline, so this would set the conditions for a strong rebound, sustained by economic growth in China, India and most of Asia.
Virginia is holding annual exploration spending at $12 million to $15 million Gaumond said. He hopes to develop Virginia’s Coulon copper project when markets improve.
Nochane Rousseau, a partner in consultants PwC Canada and group leader for Quebec mining, said the juniors’ struggle for survival for lack of finance and the pace of mergers and acquisitions signal “we’re near the bottom.”
He expects 2015 will be another tough year for gold, base metals and Quebec-Labrador iron ore. “We could see an upturn developing by mid-2016 … the money will flow to large projects first.”
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