Canada Mining

Marilyn Scales is a field editor for the Canadian Mining Journal, Canada’s first mining publication. She is one of Canada’s most senior mining commentators.

The MINING ASSOCIATION OF CANADA (MAC) released its latest “Facts and Figures 2008” publication at the recent Mines Ministers Conference in Saskatoon. In it are details about the production, reserves, exploration, trade and investment, innovation, tax and human resource aspects of our industry. That’s a lot of ground to cover in 65 pages, but MAC is once again the most comprehensive source of such numbers.

Here are a few of them:

VALUE: The contribution that the metals and minerals industry makes to Canada’s economy by value is relatively stable at 3.5% to 4.5%. Meanwhile, the gross domestic product (GDP) grew to $1.2 trillion in 2007. Of that amount, mineral extraction contributed $9.68 billion and mineral manufacturing $32.22 billion.

TOP TEN: Canada’s top ten minerals by value in 2007 were nickel ($9.90 billion), copper ($4.53 billion), potash ($3.14 billion), coal ($3.14 billion), uranium ($2.76 billion), iron ore ($2.51 billion), gold ($2.38 billion), zinc ($2.09 billion), cement ($1.80 billion) and diamonds ($1.45 billion). The biggest money is to be had in the oil sands. The value of synthetic crude oil last year was $14.80 billion.

RESERVES: Canadian reserves continue to decline as they have for the past 25 years. Years of rising commodity prices led to a “modest” increase in 2006 and 2007, but without exploration spending in this country, production will also decline.

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Marilyn Scales is a field editor for the Canadian Mining Journal, Canada’s first mining publication. She is one of Canada’s most senior mining commentators.

The MINING ASSOCIATION OF CANADA (MAC) released its latest “Facts and Figures 2008” publication at the recent Mines Ministers Conference in Saskatoon. In it are details about the production, reserves, exploration, trade and investment, innovation, tax and human resource aspects of our industry. That’s a lot of ground to cover in 65 pages, but MAC is once again the most comprehensive source of such numbers.

Here are a few of them:

VALUE: The contribution that the metals and minerals industry makes to Canada’s economy by value is relatively stable at 3.5% to 4.5%. Meanwhile, the gross domestic product (GDP) grew to $1.2 trillion in 2007. Of that amount, mineral extraction contributed $9.68 billion and mineral manufacturing $32.22 billion.

TOP TEN: Canada’s top ten minerals by value in 2007 were nickel ($9.90 billion), copper ($4.53 billion), potash ($3.14 billion), coal ($3.14 billion), uranium ($2.76 billion), iron ore ($2.51 billion), gold ($2.38 billion),

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Marilyn Scales is a field editor for the Canadian Mining Journal, Canada’s first mining publication.

I am no economist, and I don’t have a magic formula to predict the future of commodity prices. Instead I read other people’s prognostications and watch for trends. Sadly, the trend that has is emerging involves a downturn in the cyclical high that miners have enjoyed since 2002.

For what my advice is worth, watch the US dollar get stronger. It would appear the recession caused by the sub-prime mortgage fiasco in that country was short-lived. The relative worth of the American dollar affects global commodity markets.

The price of crude oil has dropped from its US$145/bbl high in mid-July to below US$109 despite Hurricane Gustav’s trek across the Gulf of Mexico. The storm blew through the oil-producing region at a relatively mild strength of Category 2 and 1. Analysts who said only a week ago that Canadian gas prices would skyrocket to C$1.75/litre are now saying they will drop even further than the C$1.25/litre it is in Eastern Ontario today.

Everyone jumped on the bandwagon as the gold price topped US$1,000/oz in mid-March. Exploration, development and takeover activity reached a fever pitch. But the high cannot be sustained. With the exception of a brief rise to US$977/oz six weeks ago, the gold price continues to slide, closing just short of US$800/oz on Sept. 2. I would hazard a guess that no other metal price reflects such an inverse correlation to the value of the U.S. dollar.

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Marilyn Scales is a field editor for the Canadian Mining Journal, Canada’s first mining publication.

We have all heard that “timing is everything”, and that truism applies as much to mine development as to anything. It seems that there is a growing number of new mines planned in Canada just as analysts warn of major corrections in commodities prices.

Softer prices are a result of a strengthening U.S. dollar, according to analysts. Oil prices have dropped to a three-month low, if one considers $119/bbl to be low. Perhaps it is compared to $140/bbl. The much-anticipated $1,000/oz threshold for gold was topped only three days in March 2008. The price of the yellow metal has been bouncing up and down since then from $850 to $990, averaging $900 so far in August. Copper has fallen from its high of over $4.00/lb in June this year back to approximately $3.50, and the pundits predict further losses. The zinc price is continuing to slide from its late 2006 high of slightly over $2.00/lb to under $1.00. Nickel reached a high of $24.00/lb in the first half of 2007, but it, too, is giving up ground, finishing June 2008 in the $8.00 neighbourhood. Analysts are beginning to say that even potash prices have peaked. And so it goes.

All of us mining industry watchers know this is a cyclical sector. Five years of rising prices have spurred exploration efforts around the world and across Canada. Many would-be miners want to cash in on the boom. The question becomes how many of them can do that before prices soften to the point that projects are once again shelved?

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