The need for mineral products to feed developing economies, particularly China, has prompted growth in the mining sector in Newfoundland and Labrador.
The impact of the Chinese economy in particular on Canadian mining was noted by president and CEO of the Mining Association of Canada, Pierre Gratton, in an address to the St. John’s Board of Trade Wednesday.
Gratton highlighted growth in the mining sector in the province and said he is confident there will be continued growth here in the coming year.
In total, 2011 turned in the highest value on record for provincial mineral shipments, at $4.6 billion. The provincial government has forecasted shipments to be worth about $5.7 billion this year.
“There are some major investments going on here,” Gratton told The Telegram.
Gratton focused his address on opportunities and challenges for the industry in the near future. He spoke about the need for workers to build and maintain mining projects.
Following his speech, he was asked about the potential for a downturn in the Chinese economy in 2012 and what it might mean for commodity prices and mining here.
“It’s all relative. Growth (in China) has slowed to, what, seven per cent? That’s still seven per cent growth,” he said. “It’s all a question of perspective. Seven per cent growth of an economy that size still has a very significant impact on commodity prices.”
Gratton said there are a mix of views on what might ultimately happen, “but I come back to what my other point was; the fundamentals for the (Canadian) industry, the long-term fundamentals are really strong.”
Even if the Chinese economy slows, resulting in the delay of a project by a year or a junior exploration company having difficulty accessing capital, the long-term outlook remains positive, he said.
“Could we be entering another dip? Maybe, maybe not. The jury’s out. But the long term is still very, very positive and optimistic.”
Provincial Finance Minister Tom Marshall repeatedly made note of the influence of China’s economy in his provincial budget speech Tuesday.
“Canada’s economy fared better than those of the U.S. and most European nations in 2011, benefitting from strong commodity demand from developing countries like China and India,” he said. “Newfoundland and Labrador continues to benefit from this strength in commodity demand and robust prices.”
He then warned of the potential for a mild recession in Europe in the short term. “Growth in developing economies like China and India is also expected to slow to more long-term stable levels,” he said.
Documents providing an overview of the economic outlook for the province stated a slowdown in China in 2012 would present risks to continued growth at present levels.
However, Gratton said, there is potential in the U.S., development in India, with opportunities in other countries including Brazil and Mexico.
“Again I remain — and I think everybody I talk to remains — very bullish in the long term, not withstanding the hiccups we might face in the next couple of years.”
So far this year, companies in Newfoundland and Labrador are moving ahead with exploration and development plans, with projects of all sizes, particularly in the Labrador Trough.
Meanwhile, Mining Industry NL president Gerry O’Connell told The Telegram Tuesday’s provincial budget appears to be “business as usual” for the mining sector.
There is little spending on new incentives for prospectors and mining companies, he said, but there are also few cuts to existing programs spurring exploration and development.
“There’s a $340,000 reduction to the mineral incentives program,” O’Connell said, adding it is the only line item he sees really affecting members of his organization, though Mining Industry NL is still evaluating all the budget details.
A news release from the organization stated the mineral incentive program cuts will come largely from a program for natural stone assessment, rather than from prospector assistance of assistance offered to junior exploration companies.
Mining in Newfoundland and Labrador
➤ $4.6 billion industry: a more than four-fold increase since 2000
➤ $234 million forecast for exploration work in 2012
➤ Number five mining jurisdiction in Canada (behind Ont., Que., B.C.
➤ 8.6 per cent of provincial GDP
➤ Currently eight metal mines in operation, up from two in 2005
➤ Vale’s hydromet nickel plant ($3.6 billion) is the biggest metals project
under construction in Canada.
Source: “The Canadian and Global Mining Scene: Contributions, Opportunities, Issues” a
presentation of the Mining Association of Canada. Apr. 25, 2012