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“Conditions are quite challenging in the mining industry”
Here’s a bleak forecast: this year’s going to be a tough one for the Nunavut mining industry. That was gist of the message from the Scotiabank vice-president and commodity economist, Patricia Mohr, the keynote speaker April 14 at the Nunavut Mining Symposium, now underway in Iqaluit.
“Think and hope” were two words used by Mohr, who spoke in a less optimistic way than in 2013 when she told symposium delegates that the mining industry globally — and in Nunavut — could look ahead to better times by 2015.
“Conditions are quite challenging in the mining industry,” Mohr said at her April 14 talk to delegates meeting at the Frobisher Inn.
These conditions include poor economic growth worldwide, a slowdown in China, rock-bottom oil prices and increased competition in metal and iron ore markets. And these have created challenges, such as low prices for gold, uranium, iron and base metals — copper, zinc, nickel and aluminium.
The price for iron is “extremely low,” Mohr said, which she acknowledged is “very important to Nunavut,” where Baffinland Iron Mines Corp. has recently started producing iron ore. As well, there’s “a market-share war in the iron ore business,” Mohr told symposium delegates.
Four major low-cost iron producers in Western Australia and Brazil, who dominate the world iron ore market, embarked on a mine expansion program in 2013-14, she said.
This was partly to force out high-cost producers in other regions and keep their share of the market.
As a result, iron ore prices are expected to remain exceptionally low until these mine expansion programs are complete, she said.
Meanwhile, Rio Tinto’s mine in Western Australia can produce iron ore at a price as low as $17 US a tonne.
To compete price-wise, “Canadian iron ore miners will be under pressure to cut costs over the next several years,” Mohr said — and cost-competitiveness in the iron industry will remain fierce for the next several years.
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