By Heather Douglas
The mining industry, like the energy sector, is coming out of a recent commodities downturn, yet still continues to help underwrite Canada’s economic strength. Employing more than 373,000 full-time workers across the country, miners participate in mineral extraction, smelting, fabrication, and manufacturing. Another 190,000 Canadians are indirectly employed.
According to Statistics Canada, this industry contributed $56 billion to this country’s GDP (gross domestic product) in 2015 (latest figures) and of that, $24.6 billion came from mineral extraction and $30.9 billion in mineral processing and manufacturing.
Canada’s Enviable Rankings
Canada ranks as “one of the leading mining countries and one of the largest producers of minerals and metals,” reports the Canadian Mining Association (CMA). “The industry accounted for 19 per cent of the value of Canadian goods exports in 2015, selling a diversified array of minerals abroad.”
Canada is richly endowed with natural resources and ranks in the top five countries in the global production of 13 major minerals and metals:
- First in potash;
- Second in uranium, nickel, and niobium;
- Third in cobalt, aluminum, and platinum group metals;
- Fourth in salt, sulphur, and tungsten; and
- Fifth in diamonds, graphite, and gold.
Canadian companies export aluminum, copper, gold, iron and steel, iron ore, nickel, silver, uranium, zinc, diamonds, potash, coal, and other mineral products worth from several hundred million dollars to $17.6 billion.
Natural Resources Canada reports Canadian exploration and mining companies have assets abroad worth more than $170 billion in over 100 countries. “At 32 per cent, Canadian-headquartered mining and exploration companies accounted for the largest portion of worldwide non-ferrous (non-iron) exploration budgets in 2015.”
“Canada remained the world’s top destination for non-ferrous exploration spending last year, but experienced a 19 per cent decrease in allocations year-over-year,” reports the CMA, adding this is the fourth consecutive year this country’s share of international exploration investment has fallen. “This is indicative of the fierce competition for global mineral investment and the financing challenges junior companies are facing.”
The CMA attributes Canada’s slipping investment appeal to several factors:
- Regulatory burden – recent changes to the Canadian Environmental Assessment Act resulted in a deterioration of review and permitting processes between federal and provincial governments making it a costly jurisdiction;
- Global ranking — lost first-place to Australia as Canada slipped to second-place;
- Infrastructure and transportation challenges – major barrier to opening new mines in remote areas is the ability to move products to market efficiently and at competitive prices;
- Human resources challenge – the industry needs to hire 106,000 workers in the next decade to replace retirees and another 51,000 by 2025; and
- Climate change and carbon taxes – challenge of remaining competitive while reducing greenhouse (GHG) gases;
According to the CMA, the past three decades has seen a marked decline in proven and probable mineral reserves in all major base metals. “Since 1980, the most dramatic decline has been in lead (99 per cent), zinc (87 per cent), and silver (84 per cent) reserves, while copper (33 per cent) and nickel (67 per cent) reserves have fallen significantly as well,” it reports.
Future is Bright
Conversely, the CMA predicts a bright future for Canadian mining companies. “Clean energy and green products require metals and minerals as building blocks. Water purification systems rely on nickel and a host of rare earth elements. Hybrid cars draw energy from nickel hydride batteries and use far more copper than traditional vehicles. Efficient, lightweight vehicles and aircraft need aluminum as well as lighter composites and alloys involving nickel and other metals to improve efficiency. Clean energy sources – such as nuclear, solar, wind, and hydrogen – use a range of minerals and metals in their equipment and processes.”
Only a handful of major discoveries and projects will come into production in the next five years, CMA reports, and believes most will be smaller-scale developments. “The industry is still paying for the period of low exploration spending in the 1990s and early 2000s when the super-cycle began. The dramatic rise in this spending during the 2000s, in tandem with rising metal prices, was offset to some extent by the rising costs of drilling, assaying, geosciences expertise, fuel, and other inputs. As well, regulatory and infrastructure challenges are lengthening the time it takes for new discoveries to develop into producing mines.”
British Columbia’s government has announced plans to extend a new power transmission line into the Northwest part of the province, roughly parallel to Highway 37. Its stated aim—to spur exploration and mine development in a mineral-rich area—is clear. But for all the hoopla, very little attention has been paid to whether a large power line would, in fact, bring net benefits to the area. From the outset, the British Columbia Transmission Corporation (BCTC) took a critical design decision—about the power line’s size—without public consultation, opting for a capacity of 287 kilovolts (287-kV). But whereas a line of this size could power up to five major mines, only one mine has been operating in the region for the last few years. This means that the Northwest Transmission Line (NTL) could lead to unprecedented industrial expansion in one of the most pristine parts of the province.
In good economic times, five mines would certainly generate new jobs—but probably far more than can be filled locally, thus bringing thousands of job seekers to northern communities. Meanwhile, mineral prices are nothing, if not fickle. When prices fall, many mines will scale back their operations and lay off staff. Local communities could end up trapped on a roller coaster of successive booms and busts. There are also serious environmental risks. Five mining projects would create mounds of acid-generating rock, new tailings ponds, new access roads, and increased traffic. In addition, a power line sized at 287-kV is too large to follow the curves of Highway 37 or of a smaller line serving Stewart. Instead, a new, straighter, right-of-way up to 80 metres wide would need to be cleared for most of the Northwest Transmission Line’s 335-km length, from Terrace to Bob Quinn Lake. The reality—often unacknowledged—is that in NW B.C., a power line isn’t merely a power line; it’s a pivotal piece of infrastructure that will influence the speed and scale of industrial development for decades to come. Whether or not it goes ahead will permanently shape the area’s economy, environment, and cultures.
Similarly, the extension of the Monts Otish Highway, in northern Quebec, will improve future prospects for the development of gold, diamond, and copper projects in the surrounding region. The 240-km extension will provide better access to mineral resources, improve ecotourism opportunities, and give Cree families a way to travel to their trap lines.
The Monts Otish area has seen a lot of exploration investment in recent years, and many mining rights have been acquired. Although exploration is possible without road access, the situation becomes more complicated when a deposit is brought into production. Advanced projects, such as the Renard, Matoush and Lac McLeod projects, require road access. The construction of a highway to serve an area with strong mineral potential will act as an economic lever for sustainable development in the region, maximizing the benefits for neighbouring communities and for Québec as a whole.
Current + Future Investments
Potash — The CMA reports Saskatchewan produces one-third of the world’s potash from mines that are four decades old. “Several new projects, however, have either just come online, are in development, or have been identified for future development. Significant new investment by Mosaic at Esterhazy K3 mine ($1.7 billion), K + S Potash Canada ($4.3 billion), and PotashCorp Rocanville at the new Scissors Creek shaft ($3.0 billion) are progressing. Other projects that may advance, subject to market conditions are Vale Potash Canada’s $3.6 billion Kronau project and BHP Billiton’s $3.8 billion Jansen mine.”
Uranium – According to the CMA, Cameco’s Cigar Lake in northern Saskatchewan began production in 2014 and has the world’s second-largest, high-grade uranium deposit, “with grades 100 times the world average. The mine has proven and probable reserves of more than 216 million pounds of U308, at an average grade of 18.3 per cent.” The mine is scheduled to ramp up to full production of 18 million pounds by 2018.
Diamonds – The CMA believes there is still potential for good growth, despite the recent decline in exploration spending. Stornoway’s Renard Diamond project, located near Monts Otish (NE Quebec), officially opened last October, becoming the province’s first diamond mine. As well, the Northwest Territories newest mine, De Beers Gahcho Kue officially opened in September (2016). “Encouraging too is the Kennady North Diamond project in the NWT, which recently announced a positive valuation, suggestion a population of high-value gem-quality white diamonds,” the CMA says.
Gold – Goldcorp opened the Eleonore mine in the James Bay region of Quebec in 2015 and it is currently producing 268,100 ounces/d). New Gold is preparing to open its Rainy River project, located in NW Ontario, this summer and with production slated at 21,000 tonnes/d.
Copper, Nickel, and Precious Metals — Vale launched its Totten Mine in Ontario in 2014 (designed to produce 2,200 tonnes/d for 20 years).
Iron Ore — Baffinland opened its Mary River project in Nunavut. “It’s turned out to be one of the world’s richest and largest iron ore deposits, containing roughly 365 million metric tonnes of high-grade ore,” the CMA says, adding the ore can be shipped directly without processing that produces tailings.
“Altogether, an estimated $145.0 billion worth of mining-related projects have been proposed for Canada in the coming years,” the CMA concludes. “They will proceed subject to market and regulatory conditions, demand, and Canada’s relative attractiveness as a destination for mineral investment. Billions of dollars in these proposed projects are slated for British Columbia, Alberta, Saskatchewan, Ontario, Quebec, Newfoundland and Labrador, Nunavut, and the Northwest Territories. Several gold and iron ore projects are proposed for Nunavut, and gold, diamond, and rare earth projects are in the works for the NWT.”
Mining Facts: Did You Know?
- The Toronto Stock Exchange (TSX) and the TSX Venture (TSX-V) are the global hub for mining finance and account for 62 per cent of the world’s publicly traded mining companies and accounted for $6.8 billion in 2015.
- Vancouver has the world’s leading cluster of exploration companies.
- Montreal is home to major aluminum and iron ore organizations.
- Mining accounts for more than 50 per cent of all rail-freight revenues for both CN and CP.
- The average annual pay for a Canadian miner is $115,000 and surpasses earnings in forestry, manufacturing, finance, and construction sectors.
- Mining companies invest $677 million yearly in research and development.
- Number of mines in Canada: 1,192 with 72 in metals and 1,120 in non-metals.
- Quebec has 24 mines, Ontario 19, and British Columbia eight.
- Value of Canada-wide mining was $42.8 billion (2015) with Ontario accounting for $10.8 billion, Saskatchewan $8.5 billion, Quebec $7.7 billion, and British Columbia $5.9 billion.
- Newfoundland and Labrador have one refiner; New Brunswick has one smelter; Quebec has nine smelters, four refineries, and two secondary smelters; Ontario has two secondary smelters, three refineries, three smelter/refineries, one conversion facility; Manitoba has one smelter/refinery and one refinery; Alberta has one refinery; and British Columbia has one smelter, one secondary smelter, one smelter/refinery, and one processing plant.
Selected Products that Rely on Mining:
(courtesy of Canadian Mining Association)
- Batteries – nickel, cadmium, lithium, cobalt;
- Circuitry – gold, copper, aluminum, steel, lithium, titanium, silver, cobalt, tin, lead, zinc;
- Display screens – silicon, boron, lead, barium, strontium, phosphorus, indium;
- Electric cars – copper, lithium, aluminum, nickel, cadmium, cobalt, zinc;
- Other vehicles and tires – steel, copper, zinc, barium, graphite, sulphur, bromine, iodine;
- Musical instruments – silver, steel, nickel, brass, cobalt, copper, iron, aluminum;
- Sports equipment – graphite, aluminum, titanium, calcium carbonate, sulphur;
- Wind turbines – steelmaking coal, iron ore, copper, nickel; and
- Energy – coal, uranium, oil sands.
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