Dramatic Economic Times Impact Mining Sector – by David Robinson

Dr. David Robinson - Laurentian University Economics ProfessorDr. David Robinson is an economist at Laurentian University in Sudbury, Canada. His column was originally published in Sudbury Mining Solutions Journal a magazine that showcases the mining expertise of North Bay, Timmins and Sudbury.

drobinson@laurentian.ca

For an economist, these are interesting times. The accumulating American triple deficit – on trade, the government budget and household spending – finally caught up with the people who live by lending. We get to see the most vehemently capitalist governments nationalizing banks and supporting the value of vast pools of imaginary assets. We even get to watch executives leaping off tall buildings with their golden parachutes.

For the mining industry and industry suppliers, the times are more than just interesting. Economic growth is utterly dependent on what the mining sector produces, and good times in the mining sector depend on economic growth.

The question on everybody’s mind as this column goes to press is whether the lunatics in the financial sector have actually pushed the world economy off the tracks. They have done it before.

The most common view out in the infosphere is that a world recession is almost inevitable. The majority of guesses say it could last six months to two years. There are a few who think the world will end, and a few who think that unprecedented co-operation among governments will have unprecedented results.

No one really believes that the long run story has changed. The BRIC nations – Brazil, Russia, India and China – still have the population, the potential and the momentum they had when Goldman Sachs identified them in 2001. They have been driving world growth, with help from the American consumer. Those BRIC consumers are just getting going.

Rio Tinto chief executive Tom Albanese reminded shareholders in October that China’s economy is driven far more by industrialization and urbanization than by exports to the USA. The company expects demand in China to strengthen across a range of Rio Tinto products.

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1995 PDAC Prospector of the Year Award Winners – Albert E. Chislett and Chris L. Verbiski

The Prospectors and Developers Association of Canada (PDAC) represents the interests of the Canadian mineral exploration and development industry. The association was established in 1932 in response to a proposed government regulation that threatened the livelihood of Ontario prospectors. The William (Bill) W. Dennis Prospector of the Year Award is presented to individuals or groups who have made a significant mineral discovery, offered noteworthy contributions to the PDAC, or have been involved in some important service or technological invention or innovation that helped improve the Canadian prospecting and exploration industry.

Originally looking for diamonds, in 1993, Albert Chislett and Chris Verbiski instead, discovered one of the world’s major nickel sulphide deposits near Nain, Labrador. The deposit was eventually bought by Inco Limited and most experts confirm the deposit will be a major source of nickel and regional prosperity for generations to come.

Mr. Chislett was born in Islington, Trinity Bay, Newfoundland in 1949. After studying business administration at Ryerson Polytechnical Institute in Toronto, and working in the accounting department at Swift Premium in Ontario for five years, he established a successful construction company in St. John’s and operated it for 15 years.

His interest in geology and mineral exploration began in the late 1980s, stemming in part from his love of the outdoors. In 1988 he started operating an independent mineral exploration company and began prospecting full time. He was soon one of the most active prospectors in the province, and was the first to receive a provincial Prospector’s Assistance Program grant.

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1992 PDAC Prospector of the Year Award Winner – Charles E. Fipke

 The Prospectors and Developers Association of Canada (PDAC) represents the interests of the Canadian mineral exploration and development industry. The association was established in 1932 in response to a proposed government regulation that threatened the livelihood of Ontario prospectors. The William (Bill) W. Dennis Prospector of the Year Award is presented to individuals or groups who have made a significant mineral discovery, offered noteworthy contributions to the PDAC, or have been involved in some important service or technological invention or innovation that helped improve the Canadian prospecting and exploration industry.

Charles E. Fipke discovered Canada’s first diamond mine in the Northwest Territories about 300 kilometers northwest of Yellowknife.

Mr. Fipke is recognized as a leader in the diamond indicator mineral industry and has published a number of papers and articles that are widely used in the industry. In 1983, he founded Dia Met Minerals Ltd. The company went public the following year with the help of many local Kelowna investers.

As founder of the company, Mr. Fipke is credited with the original discovery of the Point Lake diamondiferous kimberlite pipe, where diamonds, including those of gem quality, were returned from drilling and bulk sampling program. The discovery was made after more than ten years of tenacious field exploration.

Mr. Fipke was born in Edmonton and received a bachelor of science degree (honours) in geology from the University of British Columbia. In the early part of his career, he worked as a geologist for Kennecott Copper Company in New Guinea; for Samedoan Oil Company in North Queensland, Australia; and for Johnesburg Consolidated Investments, in Barberton, South Africa.

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1987 PDAC Prospector of the Year Award Winner – Walter N. Baker

 The Prospectors and Developers Association of Canada (PDAC) represents the interests of the Canadian mineral exploration and development industry. The association was established in 1932 in response to a proposed government regulation that threatened the livelihood of Ontario prospectors. The William (Bill) W. Dennis Prospector of the Year Award is presented to individuals or groups who have made a significant mineral discovery, offered noteworthy contributions to the PDAC, or have been involved in some important service or technological invention or innovation that helped improve the Canadian prospecting and exploration industry.

In 1961, while prospecting for a syndicate funded by Fred Jowsey of Denison Mine fame, Walter Baker discovered a 3,000 foot long gold bearing shear west of the Williams Claim that hosted a small gold resource formerly drilled by Teck Hughes.

He would go down in mining history as the old Kirkland Lake prospector who first suggested to Donald McKinnon that claims around the CPR whistle-stop of Hemlo might be worth looking into. Mr. McKinnon did look at those claims in northwestern Ontario and they are now the site of three of Canada’s major gold mines and many in the mining industry, might consider this prospector of wide repute as the “godfather” of the Hemlo mining camp.

Born in 1904 on the east side of Lake Winnipeg in the small village of Manigotogan, Manitoba, Walter Baker began prospecting at the age of nineteen in the Rice Lake Greenstone Belt.

He joined the San Antonio Gold Mine exploration staff in his early twenty’s and prospected almost every summer for that company focusing on virtually all of the remote greenstone belts extending through northwestern Ontario and northeastern Manitoba up until 1950. That year, he accepted a prospecting position for Teck Hughes and for the next nine years worked for that company using Kirkland Lake as a base.

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1978 PDAC Prospector of the Year Award Winner – Alex C. Mosher

The Prospectors and Developers Association of Canada (PDAC) represents the interests of the Canadian mineral exploration and development industry. The association was established in 1932 in response to a proposed government regulation that threatened the livelihood of Ontario prospectors. The William (Bill) W. Dennis Prospector of the Year Award is presented to individuals or groups …

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Sudbury – The Republic of Nickel (Part 4 of 4) – Stan Sudol

The summer of 1969 was the beginning of the end of Sudbury’s commanding control of global nickel production. The labour disruptions that summer and fall would impact the industry for the next few decades. The Inco miners went on strike on July 10, 1969 with the Falconbridge workers joining them in the third week of August. They did not settle with until mid-November. The industrial economies of Britain and the U.S., both of which imported almost all of their nickel from Canada suffered greatly.

The London Times headlines screamed “The Nickel Crisis” and “Whitehall and CBI May Soon Declare Nickel Emergency.”  It was the most severe materials shortages both countries had experienced since World War Two. In the U.S. nickel stockpiles had to guarded by armed police to prevent theft. U.S. military production remained unaffected due to the government strategic stockpile.

It was the last time the “Sudbury nickel lion” roared. By bringing U.S. and British industry to their knees the Sudbury workers ensured that billions would be spent over the next few years to finally break their monopoly on this strategic metal.

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Sudbury – The Republic of Nickel (Part 3 of 4) – Stan Sudol

The decade ended with King George VI and Queen Elizabeth visited the community in June 1939. It was the first time a reigning British monarch had ever visited Canada, let alone Sudbury. Precedence was broken by allowing the Queen, the first women ever to go underground at the Frood Mine. Traditionally miners thought women would bring bad luck if they were allowed underground. There were a few miners who probably thought the beginning of the Second World War was a result of her visit.

Second World War

Shortly after the second world war started, nickel was one of the first metals to require government allocation. Non-essential use of this strategic material was banned which included most of International Nickel’s civilian markets.

Labour shortages were a constant struggle requiring the company to hire women in its surface operations for the first time in history. Over 1,400 women were hired in production and maintenance jobs for the duration of the war at the Sudbury operations and the Port Colborne refinery.

The labour shortages also finally allowed a permanent union to be established. Inco’s nickel operations were well known to have an extensive system of anti-union spies who ensured any person discussing organization activities would be quickly fired.

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Sudbury – The Republic of Nickel (Part 2 of 4) – Stan Sudol

Thomas A. Edison the famous inventor came to Sudbury in 1901 searching for nickel. He was unsuccessful as he didn’t drill deep enough. Years later Falconbridge would develop a mine on this very claim.

The strategic military importance of nickel attracted major American corporations. In 1902 J.P. Morgan of U.S. Steel helped establish the International Nickel Company by combining the Orford Copper Company’s New Jersey refinery with the Canadian Copper Company’s Sudbury mines. Samuel Ritchie was ousted be his partners back in 1891 giving Robert M. Thompson control. Ambrose Monell, who came from U.S. Steel was the first president.

In 1905, Sudbury nickel production surpassed that of New Caladonia for the first time and would continue it stranglehold on the world’s largest supplies of nickel until the late 1970s.

The growing importance of Sudbury and all of northern Ontario was formally recognized by the provincial government of Premier James Whitney (1905-1914) by appointing Sudbury businessman and former mayor  Frank Cochrane as the province’s first northern cabinet minister. He served as the as the provincial minister of lands, forests and mines from 1905 to 1911. At the turn of the last century northern Ontario’s vast resources were supplying about 25 per cent of Queen’s Park revenues.

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Sudbury – The Republic of Nickel (Part 1 of 4) – Stan Sudol

Since the beginning of mankind, access to important mineral deposits for economic or military applications have changed the destinies of entire civilizations.

The rich gold mines of Thrace gave Alexander the Great the enormous wealth to bankrole a powerfull army and establish one of the greatest empires the world had ever seen. Ancient Chinese metalurgical expertise with iron and steel allowed the Middle Kingdom to become a powerful military and economic force during the prosperous Han dynasty.

For much of the twentieth century, the nickel mines of Sudbury were not only the principle source of this strategic metal, but also had a disproportionate impact on the industrial and military history of the world.
 
As with all good things, this story begins with a bang. Actually, it was one cosmic explosion and two smaller earth-bound blasts. The first happened about 1.8 billion years ago when a massive ten kilometer wide meteor, wider than Mount Everest, and traveling at about 75 km per second, collided with the earth at a site roughly 400 km north of present day Toronto. The impact, equal to the force of about 10 billion atomic bombs, melted the crust and concentrated the nickel-copper mineralization already at the site.

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Sudbury’s Copper Cliff South Mine Suspending Production – by Bill Bradley

Northern Life, Greater Sudbury’s community newspaper, gave Republic of Mining.com permission to post Bill Bradley’s article. www.northernlife.ca

Greater Sudbury’s economy will now be further affected by the growing world economic crisis.

In early November, Xstrata Nickel announced it will cease operations at Craig and Thayer-Lindsay nickel mines, affecting 250 employees. Early retirement options are being pursued by the company and union.

Now the city’s largest employer, Vale Inco, with over 5,000 employees, is stopping production at one mine and mothballing a development project due to slumping prices and demand, said Vale Inco spokespersons Thursday.

Vale Inco announced production cutbacks at its Greater Sudbury operations Thursday morning.

However, for now, the shutdown of the Copper Cliff South Mine and the one year postponement of the Copper Cliff Deep project will not involve layoffs of any Vale Inco employees, said Cory McPhee, director, Vale Inco communications and public affairs.

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SAMSSA Hall of Fame 2008 Winners – Robert S. Lipic and Don Rastall

SAMSSA Executive Director Dick DeStefano at their Annual MeetingThe SAMSSA Hall of Fame recognizes management leaders who have developed and provided mining advancing technologies and/or products and services that  have improved the efficiencies of mining globally and domestically and have built or assisted in building companies in Northern Ontario that have proven to be successful.

The leaders in the mining supply and service industry have proven that mining is only as efficient and productive as the quality of products and services provided from mining supply companies.  Over 400 Northern Ontario mining supply and service companies can boast of their historical influence in mining camps worldwide and their significant employment opportunities for skilled personnel making this sector larger in number than all direct mining and refining jobs in Northern Ontario. – Dick DeStefano: Executive Director.

Robert S. Lipic – President & CEO
Mining Technologies International Inc.

Bob Lipic has had an extensive career in the mining industry and is well known in international mining circles.  As President and CEO of Mining Technologies International (MTI), Bob Lipic has spent more than 30 years building, consolidating, expanding and adapting his company to the challenges of the mining industry.  This Canadian owned company was established in 1995 as a result of a merger of several companies, with names familiar to the mining industry: Drillex International of Canada, Continuous Mining Systems, LHD Equipment, John Clark Inc., Drillex U.S. Inc., CMS Pacific, and Drilco Australia PTY.

Robert S. Lipic - President and CEO of Mining Technologies International Inc.Although the company has not been immune to industry recessions, MTI’s push for innovation has allowed the company to prosper and compete in both domestic and international markets.

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OMA President Addresses North Bay CIM Members

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.

Ontario Mining Association President Chris Hodgson encouraged members of the Canadian Institute of Mining´s Northern Gateway Branch in North Bay to help the public gain a broader appreciation of what mining does for society and the economy.  In speaking to about 120 members of the CIM Branch at a luncheon meeting on December 3, he saluted many of the innovative communications initiatives carried out in North Bay including activities during the city´s Mining Week and reminded them of the many tools the OMA has developed to support these efforts.

“We need to encourage more people to recognize the value of mining to support the industry´s social license to operate,” said Mr. Hodgson.  “Mining benefits all regions of the province and people need to see mining as a benefit to their communities. The outdated image of mining is not something one person, or one company, can change.”  He provided a brief history of the OMA and its origins in 1920. 

In striving to promote our industry, Mr. Hodgson provided the audience with a catalogue of communications tools developed by the OMA — most of which are available on the OMA website www.oma.on.ca.  He mentioned the representative mine study conducted by economists at the University of Toronto “Ontario Mining: A Partner in Prosperity Building” which illustrates the local benefits in employment, Gross Domestic Product and tax revenues from one mine.  This study follows through with the direct, indirect and tertiary level benefits.  One representative mine can generate more than 2,200 well paying jobs on different levels, contribute $278 million to the GDP and provide $84 million in taxes annually.

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Deal With Ontario Aboriginal Groups or No Deal? – by Marilyn Scales

Deal or no deal? – by Marilyn Scales 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 long-simmering dispute between Frontenac Ventures of Oakville, Ontario, and the native bands with claims on a stretch of wilderness north of Sharbot …

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Postponements to Ontario Mining Act Revisions Best for Industry and Aboriginal Groups – by Gregory Reynolds

Gregory Reynolds - Timmins ColumnistWhen it comes to timing mining cycles or stock movements, when everyone believes something it usually turns out that they are wrong.

The 10-year boom in commodities turned out to be less than four years and no one knows when it will resume.

Yet, there is a bright side for the Canadian mining industry, and especially the Ontario segment. The provincial government has postponed its planned revisions to the Ontario Mining Act.

Bowing to several pressure groups, the McGuinty government had intended to ram through major changes before the New Year. The world-wide meltdown in credit facilities brought the Liberals to their senses.

Ontario has four major industries, new vehicle and parts manufacturing, mining, forestry and tourism. Even before the housing crisis in the United States spread into every sector of the world economy, the forestry industry was written off by Queen’s Park.

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Debt Reduction Begins at Teck – by Marilyn Scales

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.

Teck Cominco of Vancouver has announced the first steps of its debt reduction plans by suspending the 2009 dividend on its Class A common shares and Class B subordinate voting shares. The move is expected to result in annual savings of $486 million.

“Current global economic and financial market conditions dictate that we take all prudent steps available to us to significantly reduce spending,” said Don Lindsay, president and CEO. “The measures announced today, combined with previously announced tax savings, amount to $2.4 billion and should significantly enhance our ability to address our near-term debt obligations and better position Teck to refinance the bridge loan when conditions improve.”

The large number of cuts Teck is making is a measure of just how deep current global economic woes are. But management has a plan to conserve cash and prepare for better conditions in the future. From its news release dated Nov. 20, 2008, here are the details of its plan.

Sustaining Capital: Company-wide spending will be reduced to approximately $250 million for 2009, down from a forecast of $580 million for 2008. Teck’s operations have been well capitalized in recent years, creating an opportunity to defer sustaining capital costs while ensuring operations are maintained to a high standard.

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