The performance of the mining industry is likely to exceed expectations held earlier in the year. The value of mineral shipments was initially forecast to rise by a moderate 0.5%. However, this has since been revised upwards to 3.8%. The value of the Province's mineral shipments is expected to exceed $1 billion for the second consecutive year.
Higher values are supported by a gain in the volume of iron ore shipments. Between January and September, shipments rose by 6.8% over the same period last year. This is expected to be tempered, however, as the year progresses and gains in the order of 2% seem more reasonable. Shipment values have also been favourably impacted by a weaker Canadian dollar. Since iron ore contracts are made in US dollars, any slippage in currency exchange rates boosts Canadian revenues.
The Iron Ore Company (IOC) of Canada, the Province's largest iron ore operation, recently announced a $1.1 billion capital investment plan. About 60% of the investment is earmarked for Western Labrador and is intended to increase the productivity, competitiveness and the long-term viability of the operation.
North Limited, a company with controlling interest in IOC, has a strong global presence in iron ore and natural resources in general. Strengthening its position in Labrador West and Quebec will ensure that the company is well diversified both geographically and in terms of its ability to provide the various products required by different consumers.
Wabush Mines, the other major producer of iron ore and second largest mining operation in the Province, is continuing with efficiency and productivity enhancements to improve its competitive position for the future. The company has yet to reach a decision regarding the construction of a manganese extraction plant at its Wabush operation.
Gold is benefiting from increased production at the Nugget Pond mine on the Baie Verte Peninsula. For the January to September period, Richmont Mines Inc. achieved higher gold production at a lower cost than for the same period in 1997. For the Province as a whole, however, a decline in gold shipments for the year will be unavoidable due to the closure of the Hope Brook mine in September 1997. In 1996, this mine accounted for 90% of gold production in the Province.
Industrial and structural minerals represent a relatively small proportion (about five percent) of total mineral shipments. They are, however, important generators of employment and are used extensively in the production processes of other industries. A projected drop in shipment value to $42 million from $46 million in 1997 is primarily due to the closure of Lodestone Limited, a magnetite operation that supplied ballast material for the Hibernia project's Gravity Base Structure.
Robust exploration is ensuring the present and future vitality of mineral activity in the Province. Exploration expenditures, while down from the 1996 peak ($92.5 million), remain high in an historical context. Expenditures for 1998 are forecast to reach $46 million. In addition to major mining companies and traditional prospecting, junior mining companies are playing a more active role in the search for viable mineral deposits, bolstering an activity that is essential to the industry's future.
While global market conditions have delayed the development of Voisey's Bay, the project has progressed on a number of fronts. Voisey's Bay Nickel has proceeded with its 1998 drilling program resulting in the discovery of new mineralized zones and an increase in the total current estimated resource to 124.4 million tonnes (up from 116.3 million tonnes). Public hearings for the mine/mill environmental review process concluded in early November. By mid-February the panel overseeing this process must submit recommendations to the provincial and federal governments, who will then determine their respective positions regarding environmental permitting. In October, Franco-Nevada Mining acquired 25.4% of Inco's Class VBN shares giving it an effective 25% net profits interest in the project. Voisey's Bay remains one of the richest nickel deposits in the world.
The local mining industry exhibits growth potential both in terms of its core sector - iron ore and through the wealth of other minerals that contribute value, employment and diversity. The industry continues to play a key and dynamic role in the provincial economy.
Contents Previous Next