Base Metals: An overview of Canada’s major non-precious, (March 01, 1991)

Demand for nickel in the Western world increased in 1990 to an estimated record level of 680,000 tonnes (t), compared with 660,000 t in 1989. The increase was led by the stainless steel sector, particularly in Japan and parts of western Europe.

In 1990, most producers in the Western world continued to operate at or near capacity. Preliminary statistics indicate that exports from the U.S.S.R. may have declined in 1990 to 80,000 t compared with 85,000 t in 1989, but Cuban exports increased to 16,000 t from 11,000 t.

The nickel price on the London Metal Exchange (lme) averaged $US4.03 per lb. in 1990 compared with $6.04 in 1989 and $6.25 in 1988. Nickel market conditions were weak in the first quarter, strengthened in the second and third quarters (partially due to lower supply), and then weakened again in the fourth quarter, the price, for example, averaging $3.70 per lb. in December.

Canadian Developments

Canadian mine production of nickel decreased slightly in 1990; preliminary data indicated that production was 199,400 t compared with 200,900 t in 1989. Inco and Falconbridge reduced production, starting in the second quarter, in response to weak markets early in the year. But this was partially offset by increased production at the Namew Lake mine near Flin Flon, Man.

Inco commenced development of the McCreedy East mine near Sudbury, Ont. The total cost of the project will be $179 million. The mine is expected to be in production in 1993, producing 18,000 t of nickel and 9,000 t of copper per year by 1996. This mine is the first major new mine to be developed by Inco at Sudbury in more than 20 years. The operation will utilize the latest bulk mining methods and is expected to be Inco’s most productive mine at Sudbury.

Inco announced that, in addition to the $108 million already committed for mine development at Thompson, Man., a further $287 million would be spent. The 1-D orebody is being developed, at a cost of $209 million, to connect with the existing Thompson shafts. The Birchtree mine is scheduled to produce about 4,100 t of ore per day when full production is achieved in 1997. The Thompson Open Pit South mine is also being developed.

Falconbridge proceeded with the $280-million development of the Craig mine at Sudbury. The mine is scheduled to produce more than 20,000 t of nickel per year when it is in full production in 1993. The mine will replace other depleting mines; no overall increase in production is planned.

Falconbridge continued with its $33-million underground development program at the Lindsley property near Sudbury. A shaft is being sunk to 1,390 metre. This will be followed by a drifting and drilling program on the 1,310-metre level. Several potentially minable ore zones have been identified. The program will be completed in 1991.

Sherritt Gordon produced about 18,100 t of nickel in briquettes and powders at its Fort Saskatchewan, Alta., refinery, compared with 21,000 t in 1989. The refinery was closed in July and August, due to a shortage of feed. The company’s 10-year supply contract with Inco expired at the end of 1989 and, while the company was able to replace part of the Inco material, it was unable by year-end to secure a long-term source of supply. In the fourth quarter, Sherritt treated, for the first time, some nickel matte from the U.S.S.R. This matte contained 1,100 t of nickel.

Early in 1990, Timmins Nickel responded to weak markets by reducing production at its small, high-grade nickel mine near Timmins, Ont. As market conditions improved, the company increased production. Production commenced at the Langmuir No. 1 orebody and was completed by year-end. The nearby Carshaw mill was leased from Marshall Minerals to reduce milling costs and permit expanded production. The mine is 51% owned by Timmins Nickel (the operator) and 49% by BHP-Utah Mines. Sherritt Gordon refines the concentrate under a 10-year contract.

Mining difficulties were resolved at the Namew Lake mine, which is owned 60% by Hudson Bay Mining & Smelting (HBM&S) and 40% by Outokumpu Mines. Nameplate capacity is 9,200 t of nickel and 3,500 t of copper in concentrate per year.

Production in 1990 reached about 75% of capacity, which was about double the rate in 1989. Reserves, when the mine opened, had been reported at 2.6 million t grading 2.44% nickel and 0.9% copper. Sherritt processes HBMS’s share of the feed and Inco processes Outokumpu’s share.

New Quebec Raglan Mines completed 26,700 metres of definition drilling on its property in the Ungava region of northern Quebec. The deposit has indicated reserves of 10.9 million t grading 3.11% nickel, 0.8% copper and some values in platinum group metals.

The company has indicated that a sustained price of at least $US4.00 per lb. would be necessary to bring the deposit into production.

Environment

Under a 1985 Ontario government regulation, Inco and Falconbridge must reduce their annual emissions of sulphur dioxide to 265,000 t and 100,000 t, respectively, by 1994. In 1985, the limit was 685,000 t for Inco and 154,000 t for Falconbridge.

Inco has commenced an emissions reduction program that involves construction of two oxygen flash furnaces, a new 2,900 t-per-day sulphuric acid plant, an additional oxygen plant and other plant modifications. The first flash furnace is to be commissioned in 1991 and the second in 1993.

The other component of the program is a mill modernization and rationalization program. The Clarabelle mill is being expanded to handle all of the Sudbury ores. A bulk nickel-copper concentrate will be produced which will facilitate increased rejection of pyrrhotite. A semi-autogenous grinding circuit and large flotation cells are being installed. As well as contributing to the cleaning up the environment, the operating efficiency of the plant will also be substantially increased.

Construction at both the smelter and mill were put about two months behind schedule due to strikes in 1990. Inco stated that there will be a “significant increase” in the earlier projected $494-million capital cost of the project.

While Falconbridge’s actual emissions of sulphur dioxide in 1990 were below the required 1994 level, production was below capacity. The company is conducting research on methods, primarily increased pyrrhotite rejection, to reduce emissions to 75,000 t per year by 1998. The company is spending $38 million on research, development and capital projects to conform to provincial regulations.

International Nickel Study Group

The International Nickel Study Group (INSG) was inaugurated in June, 1990, in The Hague, Netherlands. Initial member countries were Canada, Australia, France, Germany, Netherlands, Indonesia, Sweden, Norway, Finland, Greece, Cuba, and Japan. These countries account for 61% of world trade in nickel. Seven additional countries, including the U.S. and the U.S.S.R., attended as observers. (The U.S.S.R. joined later in the year.)

The primary objectives of the INSG will be to increase the transparency of the world nickel economy through publication of statistics and various special studies. The INSG will also provide a forum for discussion of issues of concern to governments and industry.

Outlook

Because of the economic slowdown in many countries, including the U.S., it is expected that 1991 nickel demand will be slightly lower than in 1990. Producers are expected to continue to operate at or near capacity and, barring any important supply disruptions, there is expected to be some rebuilding of producer stocks in 1991.

The weakness in demand, along with continuing high levels of production, will keep prices under pressure. An average price within the range of $US3.50 to $4.00 per lb. is possible. If prices were to go below $3.50 and were to be sustained at this level, it is expected that some producers would re-evaluate production targets.

In the medium to longer term, it is expected that a price between $3.75 and $4.75 in constant dollars will be sustainable. A price much above this level would result in substantial new capacity, and possible substitution, and a price below this level would not ensure adequate new supplies.

In Canada, nickel production is expected to increase marginally during the next several years. Canada will remain a highly cost-competitive producer, particularly given the effects of the cost reduction programs which had been put in place in the 1980s.

The open pit mine of Rio Algom, near East Kemptville, N.S., is the sole source of tin mine production in Canada. The 9,000-tonne-per-day operation is running efficiently with tin mill recoveries in the 70% range, but the company has been plagued by low tin prices.

The East Kemptville ore is metallurgically complex. In 1989, Rio Algom added a flotation circuit which, in addition to other improvements in the mill, increased tin recoveries from the 30% range. Small amounts of copper, zinc and silver are also recovered as byproducts.

The East Kemptville orebody consists of two zones, the Main zone and the smaller, higher-grade Baby zone.

In 1990, Rio Algom conducted a diamond drilling program to test for the possible extension of the zones along strike.

Association of Tin

Producing Countries

Despite ongoing pressure from the Association of Tin Producing Countries (atpc), Brazil and China have not joined the association. These two countries represent 37% of world tin concentrate production.

Until they become members, it is expected the organization will not be a strong force in controlling overproduction, the major reason for sustained low tin prices. Canada does not belong to the atpc.

Prices and Stocks

The inability of Brazil to curb smuggling of tin concentrates from the Bom Futuro mine, continuing high metal exports from China, the resumption of sales of surplus tin by the U.S. Defense Logistics Agency from its stockpile, rising stock levels, and weakening demand have resulted in a steadily declining price for tin. Tin averaged $US2.82 on the London Metal Exchange for 1990, compared with $3.83 in 1989. Tin stocks were estimated to be around 50,000 tonnes at the end of 1990, an increase of about 7,000 tonnes from the total at the end of February.

Outlook

Consumption of tin in 1991 is expected to decline as the economic downturn in North America and portions of Europe continues for much of the year. Offsetting this fall, a considerable loss of high-cost capacity due to low tin prices took place in 1990, especially in southeast Asia.

This trend is expected to continue in 1991 if higher oil prices add to operating costs.

In addition, decreased production at Brazil’s Bom Futuro mine, because of low prices and uncertainty as to the legality of independent mining operations, will likely take place. The price of tin is expected to rise modestly in 1991, averaging between $3.25 and $3.75 per lb.

Longer-term prospects for tin consumption are not buoyant. Tin in chemicals offers the best prospects, but consumption of tinplate is likely to continue to fall slowly in the longer term.

All three Canadian magnesium producers should reach full capacity by mid-1991. Total production capacity in 1991 will be 60,000 tonnes (t) per year, making this country the Western world’s second-largest producer behind the U.S. Canada’s magnesium output in 1990 reached 26,726 t or about 10% of Western world production. Canadian consumption in 1989 reached 15,407 t, an increase of 9.5% over the 1988 revised total of 14,066 t.

Norsk Hydro Canada’s plant in Becancour, Que., was inaugurated officially on May 4, 1990. By the end of the year, the plant was reportedly producing at 75% of its total 40,000-t-per-year rate. At full capacity, estimated magnesite consumption will be 160,000 t per year from China.

Norsk Hydro announced that it will build a $7-million refining facility to convert magnesium scrap into high-purity alloys. The company also announced a $3-million expansion of its casting facilities to produce alloy billets for supply to magnesium extruders.

The Magnesium Co. of Canada (Magcan) commissioned its 12,500-t-per-year plant at Aldersyde, Alta., during 1990. Start-up problems resulted in significant construction cost overruns. In August, Alberta Natural Gas announced that it acquired a controlling interest in Magcan from Houston-based Magnesium International Corp. Raw material for the plant comes from the Baymag deposit, near Radium Hot Springs, B.C.

Timminco Metals produces magnesium metal of up to 99.95% pure at its 6,000-t-per-year plant in Haley Station, Ont. The company produces metallic calcium and strontium as well and has set up a research and development team to explore new applications for these specialized metals. The ferrosilicon used in the process is produced by the company at Beauharnois, Que., and dolomite is mined at the plant site.

Developments

The Magnola joint venture of Noranda Minerals and Lavalin Inc. concluded that the production of magnesium metal from asbestos tailings is feasible. They are seeking partners interested in investing in the proposed 50,000-t plant, estimated to cost $600 million.

The Institute of Magnesium Technology (IMT) was inaugurated in Quebec City on Sept. 19, 1990. The new facility was built to accommodate about 15 researchers and five support staff. Imt promotes the development of a downstream magnesium industry in Canada and generally greater use of the metal. The Institute’s membership includes producers, converters and end users. Currently, more than 80% of imt’s research projects are from companies outside Canada.

Prices

In September, 1990, magnesium stocks had increased by 11,500 t over the September, 1989, level of 28,000 t. In that context, Dow Chemicals Co. announced a 20 cents cut in primary ingot and alloy prices from $US1.63 per lb. to $1.43. However, the official price for die-casting alloy AZ91D remained unchanged at $1.43 per lb. Startup of the Norsk Hydro and Magcan facilities were suggested as reasons for the price declines.

Canadian lead and zinc mine output in 1990 declined for the third straight year, as a result of mine closures, labor disputes and technical difficulties. Zinc production fell by 32,000 tonnes (t) in 1990 to 1,183,000 t, while lead output dropped to 224,000 t from 268,887 t in 1989.

Zinc metal production was 579,000 t, down from 670,000 t in 1989.

Primary refined lead output dropped 54,630 t in 1990, to 102,700 t. However, secondary lead metal production from recycled material rose by 7.9% to 92,300 t.

British Columbia

Cominco closed its Sullivan mine in Kimberley in January and laid off 700 workers because of falling metal prices and rising production costs. The mine reopened in November after the completion of an $11-million development program. The decision to re-open the mine followed a 14-day strike at Trail in July.

Problems at Cominco’s new 160,000-t-per-year qsl smelter and related operations at Trail continued through 1990. In December, the company announced it had halted extensive modifications to the plant and deferred the planned March, 1991, start-up, pending the outcome of tests by supplier Lurgi Gmbh at Metallgesellschaft AG’s new qsl plant in Stolberg, Germany. The old, 136,000-t-per-year conventional sinter and blast furnace smelter is reported to be operating at 80% capacity.

In the north, Curragh Resources continued to develop its large Cirque deposit. The orebody has a geological reserve of 13 million t grading 14% combined lead/zinc and 70 grams of silver per t, with an additional reserve of 20 million t at lower grade. Capital costs to bring the deposit into production in 1992 are estimated at $130 million. Cirque will produce 28,000 t of lead and 100,000 t of zinc in concentrates per year when in full production.

Yukon

Curragh’s Vangorda and Grum deposits continued to be developed for production in late 1991. Output from the open pit mines will maintain current production at the Faro operation of 120,000 t of lead and 200,000 t of zinc per year.

In September, Curragh (80%) and partner Hillsborough Resources (20%) started construction of the mill and tailings dam at the Mount Hundere lead-zinc deposit north of Watson Lake. The mine is expected to come on-stream during 1991 and produce 30,000 t of lead and 52,000 t of zinc in concentrate per year. Open pit and underground reserves currently stand at 5.1 million t grading 4.7% lead, 12.6% zinc and 65 grams of silver per t.

Manitoba

Hudson Bay Mining & Smelting Co., (HBM&S) completed a new 652-metre circular shaft and ore-handling system at its Trout Lake mine near Flin Flon. The company also announced the discovery of a new, high-grade zone of zinc-copper mineralization beneath the current mine workings. At HBM&S’s Ruttan mine near Leaf Rapids, an underground fire destroyed the ore conveyor system. Ore is currently being skipped to surface and trucked to the mill until a new conveyor system becomes operational.

HBM&S has proposed to upgrade its Flin Flon smelting complex with an investment of $170 million to reduce sulphur dioxide emissions by 25%. HBM&S has requested government assistance under the Acid Rain Abatement Program.

Ontario

Secondary lead producer Tonolli Canada completed the second phase of its new cx battery-processing operation in January, 1991. The new plant, which can process 26,000 kg of scrap batteries per hour, produces both sodium sulphate (for fertilizer) and lead carbonate that can be processed by the existing smelter or a proposed electrowinning refining plant.

Falconbridge continued to develop its No. 3 mine at Kidd Creek. An internal shaft is being sunk to the 6800 level and active exploration is continuing in the lower levels of the mine.

A significant new copper-zinc discovery was made by Minnova Inc. about 1.5 km from the main shaft of its Winston Lake mine near Schreiber.

Quebec

Near Joutel, Breakwater Resources brought its 500-t-per-day Estrades polymetallic massive sulphide mine into production at a capital cost of $15 million. Ore from the underground mine is custom-milled at Noranda’s Matagami mill. Proven reserves are 941,400 t grading 10.7% zinc, 0.94% copper, 0.92% lead, 182 grams of silver and 5.6 grams of gold per t.

At the Mobrun mine near Rouyn-Noranda, Audrey Resources continued drilling the 1100 lens. A new discovery, the C lens, was made about 50 metres south of the 1100 lens at a depth of about 610 metres. A feasibility study on mining the 1100 and C lenses was completed in November. The project has ore reserves of 25 million t grading 3.53% zinc, 0.75% copper, 30.8 grams of silver silver and 1.1 grams of gold per t.

Reserves exhaustion forced the closing of Mines Abcourt’s Abcourt mine near Barraute. The mine produced 7,000 t of zinc in concentrate per year.

The legal dispute between Aur Resources and La Societe Miniere Louvem over the ownership of the Louvicourt massive sulphide deposit near Val d’Or was settled in September, allowing for the commencement of a $4.6-million exploration program. Undiluted geological reserves at Louvicourt currently stand at 33.7 million t grading 3.6% copper, 1.6% zinc, 19.3 grams of silver and 0.9 grams of gold per t, using a cutoff grade of 1% copper equivalent.

New Brunswick

At Brunswick Mining & Smelting’s (BM&S) Bathurst operations, 1,100 mine workers went on strike on July 1 and 470 lead smelter employees walked out on July 22. With management running the operations, output decreased to 25% of capacity throughout the latter half of 1990. In December, the company retracted its latest offer, which had been rejected by union members, and announced that production would continue at 25% of capacity until March, 1991.

The Caribou mine, now owned by Breakwater Resources, reopened in March, 1990. Breakwater increased the mining rate to 3,000 t per day, improved mill recoveries and concentrate grade, and commenced a $30-million development program which was to include the sinking of a 471-metre production shaft. In October, Breakwater suspended operations based on projections of falling base metal prices.

Stratabound Minerals ran a 10,900-t bulk sample from its Captain North Extension deposit through the Heath Steele mill near Bathurst, as part of a feasibility study.

Nova Scotia

Westminer Canada began mining the Gays River orebody northeast of Halifax in January at a rate of 725 t per d. Mining operations by the former operator were suspended in 1981 due to grade and ground control problems. Westminer is using a more selective mining method to increase grades to the mill. Annual production is rated at 16,000 t zinc and 10,000 t lead.

Newfoundland

The Newfoundland Zinc mine near Daniel’s Harbour closed in August because of reserve exhaustion. The mine, operated by Teck Corp., had an annual capacity of 40,000 t of zinc in concentrate.

Prices and Outlook

Zinc prices remained strong through the first half of 1990 on fears of production disruptions, before falling in the latter half of the year on weakening demand and projections of an oversupply of metal in 1991. The average zinc price (in U.S. dollars) for 1990 on the London Metal Exchange (lme) was 69 cents per lb.

The outlook for zinc in 1991 calls for prices to remain in the 50 cents-to-55 cents-per-lb. range in the first quarter, reflecting a short-term tightness in the concentrate market. As an oversupply of metal, weakening demand and a return to normal stock levels develop later in the year, zinc prices are predicted to fall further. The average price of zinc in 1991 is expected to be about 51 cents per lb.

The price of lead on the lme averaged 36.9 cents per lb. in 1990, up substantially from 30.6 cents in 1989. Western world consumption dropped for the first time in eight years, by 34,000 t to an estimated 4.393 million t.

The lead market during 1991 is predicted to be in surplus as a result of softening demand from weakening economies and growing supply as labor disputes are settled, production difficulties are resolved and new capacity comes on-stream. Subsequently, the annual lme price for lead is expected to drop significantly and average in the range of 25 cents to 30 cents per lb.

As a cautionary note, the market performances of zinc and lead may be affected by events in the Persian Gulf war. Demand for zinc and lead may decrease if there is a decline in economic activity. Countries dependent on imported oil will be especially vulnerable to economic decline if oil prices rise substantially.

During 1990, Canadian producers benefited from the continuing strength of international copper markets. Domestic copper production in 1990 made a strong recovery with mine shipments (recoverable copper) estimated at almost 768,000 tonnes (t) compared to 704,400 t in 1989. The estimated value of mine shipments in 1990 was $2.49 billion versus $2.39 billion in 1989. On the other hand, estimated refined production declined slightly to 500,000 t from 511,000 t in 1989.

Western World mine production of copper is estimated to have fallen slightly in 1990 to 7.10 million t from 7.15 million in 1989. It is estimated that consumption of refined copper in 1990 increased slightly to 8.80 million t from 8.66 million t in 1989.

Canadian Exploration

While there was only a slight increase in Canadian copper mine capacity in 1990, there was significant exploration activity for copper. Some of the more advanced projects follow:

* In northwestern B.C., Geddes Resources continued work on its Windy Craggy deposit, which hosts reserves of at least 165 million t in the North and South zones, grading 1.9% copper 0.8% cobalt, along with recoverable gold and silver. In October, 1990, the company confirmed the existence of the new Ridge zone.

* Geddes submitted to the B.C. Mine Development Steering Committee a revised mining plan at the end of 1990. The new plan would reduce the amount of potentially acid-generating waste by more than 50% to less than 100 million t. This will be accomplished by reducing open pit operations and increasing underground production. The company plans to store all potentially acid-generating waste in an artificial lake.

In order to maintain an acceptable rate of return for the project, in view of the additional expenditures required for environmental protection, the company has increased its planned mining rate to 30,000 from 20,000 t per day. At this rate, the mine should have an average annual output of 140,000 t of contained copper during the first 14 years of operation.

* Exploration work continued on the Mt. Milligan copper-gold property in north-central B.C. The property is controlled by Placer Dome, which bought out BP’s 30% interest and purchased Continental Gold, which held the remaining 70%. The deposit, which could be producing in 1993, contains estimated reserves of 400 million t grading 0.2% copper and 0.48 grams gold per t.

* Also in B.C., Imperial Metals is conducting work on its Mt. Polley copper-gold property near Williams Lake. Total geological reserves are estimated to be in excess of 105 million t grading 0.34% copper and 0.471 grams gold per t.

* Cameco commenced feasibility studies on its Hanson Lake project in Saskatchewan, 65 km west of Flin Flon, Man. Late in the year, Trimin Resources sold its 32.9% interest in the project to Billiton Metals Canada. The Hanson Lake deposit has an estimated reserve of 9.8 million t grading 0.95% copper, 5.76% zinc, 0.42% lead, 0.51 grams of gold and 25 grams of silver per t.

Canadian Mine Activity

* In November, it was announced that Nippon Mining and Sumitomo Corp. had agreed to finance the reopening of the Goldstream copper-zinc mine near Revelstoke, B.C. The mine, owned by Bethlehem Resources and Goldnev Resources, contains reserves of 1.86 million t grading 4.81% copper, 3.06% zinc, plus silver. Annual output at the Goldstream is expected to total 16,000 t of contained copper and 3,000 t of contained zinc.

* It had been planned that Brenda Mines would close its copper-molybdenum mine near Peachland, B.C., on June 29, 1990 because of depletion of reserves. However, in April, a rock slide in the pit forced the company to advance the closure date to June 8.

During 1990, a preliminary feasibility study was completed which concluded that a copper smelter in B.C. would be economically viable. The report proposes the construction of a $500-million facility at Kitimat, due to the availability of low-cost power.

* In November, 1990, Hudson Bay Mining & Smelting (HBM&S) announced the discovery of a new, high-grade zone of zinc-copper mineralization beneath the current workings of the Trout Lake mine in Manitoba, which the company jointly owns with Granges Inc. and Manitoba Mineral Resources. HBM&S also completed a new 4.9-metre-diameter circular shaft, 652 metres deep, which will allow about 300 t of material per hour to be hoisted to the surface.

HBM&S intends to upgrade its Flin Flon, Man., smelting complex with an investment of $170 million. The project will lower operating costs while reducing sulphur dioxide emissions 25% and airborne particulates 50% by 1994, as required by Manitoba law. The modernization of the copper smelter includes the replacement of concentrate roasting and calcine smelting processes with Noranda continuous converter technology.

* During 1990, Falconbridge Ltd. continued to develop its No. 3 mine at Kidd Creek near Timmins, Ont. This work, which consists of an internal shaft from the 1,400-metre level, will allow the company to gain access to ore to the 1,825-metre level and also permit continued exploration at depth. While the mine has considerable remaining reserves, output is expected to decline through the 1990s because of the diminishing width of the orebody at depth.

* A significant new copper-zinc discovery was made by Minnova Inc., 1.5 km southwest of the main shaft of its Winston Lake mine near Schreiber, Ont. Referred to as the Deep Pick zone, the massive sulphide deposit is about three times deeper than the Winston Lake orebody.

* In May, production at Westminer Canada’s copper-gold mines near Chibougamau, Que., was suspended when the company locked out its workforce. An agreement between management and labor was finally reached in October at which time the Portage mine reopened. Operations at the Copper Rand mine resumed at the end of November.

* The legal dispute between Aur Resources and La Societe Miniere Louvem over the ownership of the Louvicourt massive sulphide property near Val d’Or, Que., was settled in September. Under the terms of agreement, Aur increased its ownership in the property to 55% from 50% while Louvem’s share fell to 45%.

The settlement has enabled the partners to proceed with a $4.6-million exploration program, which will include the sinking of a 915-metre shaft. The Louvicourt mine, which could begin production in 1993, is expected to cost between $150 million and $200 million to develop. The mine is expected to produce 4,000 to 4,500 t of ore per day. Geological reserves are estimated at 33.6 million t grading 3.6% copper, 1.59% zinc, 21.3 grams of silver and 0.9 grams of gold per t.

* At the Mobrun mine near Rouyn-Noranda, Que., owned by Audrey Resources and Minnova Inc., work continued on the 1100 (B) lens. In addition, a new discovery, the C lens, was located about 45 metres south of the 1100 lens at a depth of about 610 metres. A feasibility study estimated capital costs of $90 million for a 3,000 t-per-day operation through a new shaft or $40 million to mine the orebodies at 2,000 t per day through the existing Mobrun workings. The project’s ore reserves are 25 million t grading 0.75% copper, 3.53% zinc, 30.8 grams of silver and 1.1 grams of gold per t.

* Near Joutel, Que., Breakwater Resources brought its 500 t-per-day Estrades polymetallic massive sulphide mine into production at a cost of $15 million. Ore from the underground mine is treated at Noranda’s Matagami mill. Proven reserves at Estrades are 941,400 t grading 10.7% zinc, 0.94% copper, 0.92% lead, 182 grams silver and 5.6 grams gold per t.

* In May, the Mines Gaspe division of Noranda announced that it would develop its E-29 orebody at its mine in Murdochville, Que. The deposit, which contains reserves of about 2.4 million t grading 2.69% copper, is expected to extend the life of the mine until the year 2003.

* A strike by the 1,100 workers at Brunswick Mining & Smelting’s Brunswick mine at Bathurst, N.B., began on July 1 and was unresolved at year-end. During the strike, the mine, which normally produces 6,000 to 10,000 t of copper per year in concentrates, operated at 25% of capacity.

Prices

The price of copper (in U.S. dollars) increased from under $1.00 per lb. on the London Metal Exchange ([lme]) in January, 1990, to a high of $1.54 in September. The price peak came as a result of actual or threatened supply disruptions as well as for purely technical and speculative reasons. With the slowdown of economic activity, particularly in North America, and an increase in lme and Comex stocks, copper prices experienced some weakness in the fourth quarter of 1990. The average lme cash price December was $1.13. The average price of copper in 1990 on the lme was $1.21 per lb. compared with $1.29 in 1989.

Outlook

With the likelihood that the current economic slowdown in North America will continue into 1991 and that growth may slow in certain parts of Europe, it is expected that the demand for copper will ease somewhat in the first half of 1991. Although an economic recovery may begin to build in the second half of 1991, significant increases in copper supplies, principally as a result of the commissioning of the new Escondida project in Chile, will constrain the recovery of prices.

The slower demand and increased supply, which is forecast for 1991, will drive up copper stocks and could push copper prices on the lme to below 90 cents per lb. by year-end. It is expected that the average copper price on the lme in 1991 will be around 95 cents per lb. For the remainder of the 1990s, it is expected that copper prices will average between 68 cents and 95 cents per lb. (constant 1990 cents).

Although a significant number of promising new copper deposits have been discovered in Canada in recent years, Canadian mine production of copper is expected to decline in the early 1990s as the growth of new copper capacity is unable to match mine closures or the decline of capacity at existing operations. In the late 1990s, however, production will increase when a number of large deposits, particularly in B.C., come on-stream.

Aluminum demand through 1990 remained relatively strong, with prices ending the year at levels similar to those which prevailed in January. Despite the fact that economic growth, particularly in North America, slowed somewhat in the second half of the year, aluminum stocks remained at relatively low levels.

Canadian production of primary aluminum in 1990 is estimated at 1.556 million tonnes (t) compared with 1.555 million t in 1989. Exports of primary smelter products from Canada, during the first nine months of 1990, were 944,400 t compared with 874,600 t for the same period in 1989. Exports to the U.S. totalled 660,500 t compared with 608,200 t for the same period in 1989.

In November, the five existing or prospective aluminum producers in Quebec — Alcan Aluminium, Aluminerie Alouette, Aluminerie de Becancour, Aluminerie Lauralco and Canadian Reynolds Metals Co. — announced the creation of the Quebec Aluminum Association. The role of the association will be to inform the public, to promote solutions to common problems, and to make representations to governments concerning policies dealing with the industry.

In September, Alcan announced that it would start up phases iii and iv of its new 200,000 t-per-year Laterriere smelter between Nov. 15, 1990 and the end of February, 1991. During that time, Alcan will begin the permanent closure of three Soderberg potlines at its Arvida smelter in Jonquiere, lowering capacity at that plant to about 230,000 t per year. This capacity will be further reduced to 140,000 t per year when the four remaining Soderberg potlines at Arvida are replaced by the company’s proposed smelter at Alma, which will likely be built in the late 1990s.

According to the company, the $800-million Laterriere plant incorporates pollution control technology that captures more than 99% of the dust particles and fluorides in process gases. For the Saguenay-Lac-St-Jean region, the start-up of the new smelter and the permanent closure of an equal amount of old Soderberg capacity will reduce emissions of polycyclic aromatic hydrocarbons by 60% and fluoride emissions by 50%.

Despite the fact that Alcan announced that it would reduce capital spending in 1991, the company has earmarked $200 million for further work on its $1-billion Kemano hydroelectric project in B.C. When completed in 1994, the company’s hydroelectric capacity there will increase from 896 MW to 1,436 MW. Until Alcan needs the additional power, the company plans to sell surplus power to B.C. Hydro.

During 1990, Alcan commenced production of Duralcan aluminum composite material at its new Dubuc plant in Jonquiere. Duralcan composites are metal matrix composites made of aluminum and ceramic materials. The plant, which cost $36 million, will produce foundry ingot, wrought extrusion billet and sheet ingot. The capacity of this facility will be about 11,000 t per year.

In July, Alcan announced that it had completed the acquisition of four more collection and processing units for used aluminum beverage cans. This includes Reliable Recycling and UBC Recycling (in Ontario) and R. Johnson Management Services and Camco Recycling Services (in Quebec). With these facilities and the previous purchase of the recycling operation of Pacific Metals in B.C., Alcan’s recycling capacity in Canada totals 28,000 t per year or two billion containers, making it the largest collector and processor in the country.

In July, workers at Alcan’s Kitimat aluminum smelter in B.C. staged a 3-day strike after rejecting a tentative agreement. Non-union staff continued to operate the plant during the work stoppage, and only a small amount of production was lost.

At the end of December, Canadian Reynolds began the start-up of its new 120,000-t-per-year potline at its Baie Comeau smelter in Quebec. The company expects that the new capacity will be fully operational in May, 1991, significantly earlier than originally anticipated. When the project is completed, the capacity of the Baie Comeau plant will increase to 400,000 t per year.

In July, Canadian Reynolds began construction of a new $49-million redraw rod plant at Becancour, Que. Production at the facility was expected to begin at the end of 1990 with completion of the 80,000-t-per-year-capacity plant expected in mid-1992.

In October, Reynolds Metals announced that it had agreed to acquire a 75% interest in an aluminum wheel plant in Collingwood, Ont., from Lemmerz Canada. Lemmerz will retain a 25% ownership share of the 2-year old plant, which has an annual capacity of one million wheels.

On Oct. 29, Aluminerie de Becancour (ABI) commenced the start-up of the third potline at its Becancour smelter. It is expected that the line will be fully on-stream in the spring of 1991. With the completion of the new line, capacity at the smelter will increase to 360,000 from 240,000 t per year.

Faced with significant cost over-runs, the principals of the Aluminerie Alouette consortium were forced to re-evaluate the smelter project at Sept-Iles, Que. While the consortium decided at the end of July to continue with the project, it introduced various modifications to the plant in order to keep costs at an acceptable level. This included the decision to alter the technology used for the anode baking furnace, as well as to produce only 50 lb. remelt ingots as opposed to sheet metal ingots, extrusion ingots and wirebars. Even with the changes, the cost of the 215,000 t-per-year smelter is expected to increase to $1.4 billion from an original estimate of $1.25 billion. In August, it was reported that the governments of Canada and Quebec would contribute $60 million toward the increased cost of the project.

It is expected that Alouette will now come on-stream in June, 1992, two months later than originally scheduled. At the end of 1990, the project was well under way, with about 30% of construction having been completed.

During 1990, Aluminerie Lauralco began construction of a new 215,000 t-per-year aluminum smelter at Deschambault, Que., 60 km west of Quebec City.

The company expects that the $1-billion plant will be fully on-stream in mid-1992. After plans to build alumina unloading facilities in Quebec City ran into stiff opposition from local residents, Lauralco confirmed that it would utilize existing port facilities at Trois-Rivieres during the first five years of operation.

Prices and Stocks

Prices (in U.S. dollars) on the London Metal Exchange, which averaged around 70 cents per lb. during the first half of 1990, rose sharply at the end of July because of strong physical demand combined with a variety of technical and speculative factors.

This rise continued through August and into September, when prices exceeded $1.00 per lb. Prices eased during the fourth quarter of 1990, the price of aluminum averaging 69 cents per lb. in December.

At the end of 1990, spot alumina prices were reported to be in a range of $225 to $250 per t. This compares to a price of $450 to $500 per t at the end of 1989.

The International Primary Aluminium Institute reported that total aluminum inventories fell in November, 1990, to 3.098 million t from 3.145 million t in October and from 3.287 million t in January 1990.

Western world primary aluminum production in 1990 was estimated at 14.45 million t compared with 14.46 million t in 1989. On the other hand, consumption was expected to fall from 14.68 million t in 1989 to about 14.60 million t in 1990.

Outlook

With the completion of the two new greenfield smelters and two capacity expansion projects in Quebec, Canadian primary aluminum smelting capacity will increase from about 1.635 million t at the end of 1990, to more than 2.261 million t at the end of 1992 or early 1993.

While it had been expected that these projects plus other new capacity in the world would have some dampening effect on aluminum markets in the short term, the likelihood of significant over-capacity has diminished in view of the delay experienced for a number of new smelters, particularly in Venezuela.

In the longer term, it is anticipated that significant additional capacity will be needed to meet the strong growth of demand which is forecast for aluminum through the 1990s. Moreover, it is also expected that a large amount of new capacity will be required to replace aging plants in Europe and the U.S. that are inefficient to operate and pollute the environment.

It is expected that aluminum prices will weaken somewhat in the first half of 1991 as the economic slowdown persists in North America and possibly spreads in Europe. However, it is anticipated that lower interest rates will stimulate economic activity in the second half of the year and thereby boost prices. For 1991 as a whole, it is expected that the price of aluminum will average US65 cents per lb. For the remainder of the 1990s, the price of aluminum is forecast to average between 68 cents and 79 cents per lb. (constant 1990 cents).