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Booming economy, exploding nickel prices define 2007

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.

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.