The two biggest mining stories of the year in Greater
Sudbury were a booming economy and the exploding price of
nickel.
In 2007, Sudbury experienced a 20 percent rise in housing
prices - the biggest increase in Ontario. It ended the year
with one of the lowest apartment vacancy rates in the country
and the recent unemployment level is at 5.1 percent, lower than
the provincial average of 6.2 percent.
It was thirty years ago, in October 1977, when the first big
layoffs of about 3,000 workers were announced. The following
decades - aside from a brief respite in the late 1980s - saw an
endless round of layoffs, crashing property values and high
unemployment. In the early 1980s, the New York Times called the
city the "unemployment capital of North America" and even half
a decade ago Toronto media pundits were talking about mining as
a "sunset industry" with no hope for communities like Sudbury.
The north's forestry economy is in terrible shape. Southern
Ontario's manufacturing and auto economies are taking a double
hit from a high Canadian dollar and low priced goods from
China. Ontario's mining industry, especially that grayish-white
metal that German miners in the middle ages used to call
kupfernickel - the devil's copper - is this province's saving
grace. You can't relocate a mine to China.
The LME cash price for nickel hit a historic record high of
$24.59 on May 16, 2007 - nosebleed territory. The metal was
selling for more than a dollar per ounce.
Reports of metal thefts around the world made me wonder if the
nickel-containing, stainless steel kitchen sink should now be
under lock and key. On a more serious note, a truck driver
transporting Vale Inco nickel-containing material was severely
beaten when robbers hijacked his truck. The stolen product was
never recovered. The price has dropped back to the $10-$12 (US)
range in recent months.
In May, Vale Inco announced a $400 million investment to open
the Totten Mine and an additional $45 million for more
feasibility work on the Copper Cliff Deep Project.
Exploration at the 104-year-old Creighton Mine indicates a
potential doubling of proven and probable reserves to 32
million metric tons that may entail a further $800 million to
the local economy if it is brought into production. And in
December a confirmed $132 million was allotted for the
development of the Coleman Mine's 170 ore body. In addition,
$300 million will be spent on repairing buildings, replacing
equipment and underground development in 2008.
Xstrata Nickel continues with the development of its Nickel Rim
Mine, on schedule for a 2009 start, while FNX Mining is in the
process of bringing its third mine in the Basin - the Podolsky
- into production next year. The company has two other
promising deposits in the district.
Even the small guys like First Nickel, URSA Major, and
Wallbridge Mining, just to name a few, are bringing on new
mines or discovering more promising deposits.
On a global level, another Canadian mining icon, Montreal-based
Alcan Inc. was swallowed by Rio Tinto. At present time the
world's biggest mining company, BHP Billition, is trying to
take over Rio Tinto. Most pundits feel this deal will not
succeed.
Xstrata PLC has been in talks with Anglo American and Vale over
a possible buyout. What this potential takeover or merger will
do to joint venture talks between Vale Inco and Xstrata Nickel
over local mining synergies is anyone's guess. Will Vale try to
buy Xstrata or just the Sudbury nickel operations? Will we see
a new corporate presence in the Basin? The dust may have not
settled and the corporate rumble in the nickel basin jungle may
continue next year!
In Ontario, the country's traditional mining powerhouse, the
past year has highlighted many challenges that must be overcome
if the industry is to continue to provide the enormous economic
benefits especially in the isolated areas of the north.
A powerful, media savvy environmental movement in southern
Ontario wants to close off vast parts of the north from mineral
exploration. How many potential mines are we going to give up
as these restricted areas keep increasing? A new Ontario Mining
Association report, "Ontario Mining: A Partner in Prosperity
Building" indicates that the economic impact of an average mine
is extremely large. In the construction phase this average mine
adds about $140 million to Ontario's GDP and generates almost
2,000 jobs annually. For each year of the mine's production
phase, about $280 million is added to the provincial economy
and $84 million goes into government revenues and employs
2,300.
The mining sector is also the largest employer of Aboriginal
people in the country. Yet land claim conflicts and no
agreements on resource revenue sharing with First Nations hold
back further exploration in Ontario. Quebec, on the other hand,
successfully implements resource revenue sharing with
Aboriginals.
The mining sector has enormous potential to alleviate poverty
in First Nation communities, however many impoverished reserves
do not understand the long process of mineral development or
have the capacity to make informed choices. The province has to
step in with educational and capacity building initiatives -
both of which are costly and take many years - if everyone is
to benefit in the long term.
Back in the Sudbury Basin exploration activities are reaching
levels not seen in decades. But nickel is not the only metal
being sought. Global demand for platinum is expected to reach
record levels over the next few years and the price recently
hit almost $1,500 (US) an ounce.
Sudbury is the world's third largest source of this precious
metal and the mines along the north range of the Basin are well
known for their platinum-rich ore deposits. Wallbridge Mining
Company has the third largest land holdings in the Sudbury
Basin after Vale Inco and Xstrata Nickel. Many of their
properties are located on the north range and their 2007
exploration budget is in excess of $6 million. South Africa
based, Lonmin PLC, the third biggest producer of platinum,
bought 18 percent of this junior explorer last spring.
In addition, Anglo Platinum the world's largest producer of
platinum, in a joint venture with junior explorer Pacific North
West Capital Corporation, is intensifying their exploration
efforts on the River Valley PGM project 65 km northeast of
Sudbury.
For over 125 years, the Sudbury Basin has created enormous
wealth. It has been called the "trillion dollar basin" and is
Ontario's metallic version of the Alberta tar sands. Most
industry analysts and pundits routinely predict another hundred
years of production at the very least.
We have a traditional toast in Polish - "sto lat" - that is
usually sung at celebrated events like birthdays, weddings and
anniversaries. A rough translation is "may you live a hundred
prosperous and healthy years.
Considering the time of year, I would like to give a heartfelt
toast of "sto lat" to the Sudbury Basin and all the
extraordinary hardworking men and women who make us the richest
mining district in North America and among the top ten most
significant in the world.
Merry Christmas and a Happy New Year and to all my readers "sto
lat".
Stan Sudol is a Toronto-based communications consultant who
writes extensively on mining issues.
[email protected]
