Foreign opportunities downplayed at PDAC

This year’s annual convention of the Prospectors and Developers Association of Canada attracted about 1,500 delegates and 800 exhibitors but the general mood seemed anything but upbeat.

The convention is the mining industry’s biggest draw in the country. It gives an insight into what the industry thinks of itself, and, most importantly, the direction in which it thinks it should be heading. Uncertainty and introspection were rife among the delegates this year, most of whom are hurting from the current recession, and if the PDAC had a hand in selecting the technical papers, there were no specifics on the “ore at the end of the tunnel.”

The overseas projects that were aired would have more appeal to the academic and the curious rather than to the entrepreneur struggling to keep his exploration business afloat.”

Apart from papers on Burkina Faso/Ghana, the North China platform, Kazakhstan, Uzbekistan and Southeast Asia, substantial data was offered on the overseas experiences of Cominco (TSE) and Placer Dome (TSE). The picture given by these two companies is that geology and favorable tax regimes are the main advantages for investing overseas. But, contrary to common belief, low wages and lax environmental regulations do not give an edge over Canada. Low wages are countered by much lower productivity and lending agencies require comprehensive environmental plans before approving the major financings needed to bring new mines into production. And international financing is a must. Canadian banks are not in the picture because of Canadian regulatory requirements. And where those regulations do not apply, there is the not-too-distant memory of burned fingers in developing nation adventures.

The convention started off with a chilling scenario of metal prices during the next 30 years. “The long-term outlook for minerals fills me with foreboding,” said Simon Hunt of Hunt and Associates of Chertsey, England. “If we forecast the demand for copper from the last few years’ data, we would need another 19 Escondidas to meet the demand in 2025. But history is an amalgam of cycles, and non-linear progression is its characteristic.” What Hunt was driving at is that there are major breaks in the cycle. We are at the start of one now. Other breaks in the last 60 years were the 1930s depression, the Second World War and the two oil-price scalpings of the 1970s. Take a metal price forecast for that 60-year period and the demand for copper, for example, is not much more than 2% (which is less than half the figure derived from a projection based on the last few years). Some speakers presented more cheerful views, in particular John Gammon, assistant deputy minister, Ontario mines ministry. Gammon emphasized the advantages of finding and operating mines in Ontario.

A more arms-length appraisal was given by Robert Horn, a vice-president at BP Canada (TSE). Horn is a newcomer to Canada with exploration experience in Latin America, Africa and Australia.

“Canadians do not realize how lucky they are — stable government, a skilled workforce and some of the world’s most metallogenic geology.” he said. “The Abitibi greenstone belt has produced more wealth than all the world’s Archean rocks put together and there is more to come.”