Drop in value of mineral output worries MAC

Concern about Canada’s 1991 mineral production results released by Energy, Mines & Resources (EMR) has been expressed by the Mining Association of Canada (MAC).

Based on estimates prepared by EMR, the total value of production of non-fuel minerals, including metals, non-metals and structural materials fell, to $15 billion in 1991 from 17.8 billion in 1990, a drop of 15.9% (T.N.M., Feb. 17/92).

“On the one hand, the lower production values are disappointing but understandable, given the weak commodity markets during this recession,” said MAC President George Miller from his Ottawa headquarters. “On the other hand, production volumes for many commodities have held up pretty well.” The significant drop in the value of metals and non-metals reflects the lower prices Canadian producers are receiving for mineral commodities as demand has considerably decreased because of the recession. Compounding the situation are deteriorating trade factors, such as the high value of the Canadian dollar.

About 80% of the mining industry’s output is exported and most of that is sold in U.S. dollars. Structural materials have been hit by the slow pace of construction in Canada.

For many international commodities, little, if any, improvement is expected for 1992. “Minerals and metals are characterized by being the last sector into a recession,” Miller said, “but they are generally the last out of it as well.”

MAC pointed out that continuing flat prices are putting great economic pressure on Canadian producers, reinforcing the need to strive for lower costs and improved productivity.

“There are increasing concerns about the attractiveness of the Canadian mining investment climate,” Miller said. “Significant flows of capital are being directed toward the mining industries in other countries, even though Canada remains endowed with a vast mineral potential. Reversing this situation depends on the perception of Canada as a good place to do business and there is increasing evidence that our situation is deteriorating.” He pointed out that burgeoning environmental delays and complications, for instance, inevitably add to costs, as do taxes and unnecessary regulations. “If industry is to retain its competitiveness,” he said, “governments must be mindful of the impact of their policies. Industry has certainly much work to do itself and is prepared to take its responsibilities, but governments cannot be exempted from the process.”