JUNIOR MINING — Quebec mining industry optimistic

Quebec’s mining industry should profit from this year’s projected moderate growth of the world economy. With the forecast increase in mineral consumption in 1993, the total value of mineral shipments should reach 1992 levels, says Quebec’s Ministry of Energy and Resources in a recently published “Outlook for 1993.”

In 1993, exploration expenses should be near 1992 levels. Discoveries in previous years are significant enough to sustain interest and intensity mining exploration in most regions of Quebec.

The increased involvement of Cambior (TSE) in the Abitibi region, the development of the 1100 Lens and Grevet projects, as well as the development of the Louvicourt deposit, should have a positive impact on exploration activities in the Abitibi region and in Quebec in general.

The new Canada-Quebec subsidiary agreement on mineral development should also favorably influence mineral exploration as a whole.

In 1993, gold prices may move upwards due to increased industrial demand and a leveling off of worldwide production. Such a trend might renew investors’ interest and lead to greater fluctuations in markets, given that it would be accompanied by decreasing real interest rates and increasing inflation. Under this scenario, companies would probably try to offset market risks through forward sales and other financial instruments.

In Quebec, gold production is expected to decline. Mine closures will not be offset by significant new production startups. Less gold will be produced in base metal mines as a result of the closures in 1992. However, the anticipated price recovery should offset this and the value of gold production should remain stable.

In addition to the rapid growth of China’s economy, other factors signal a moderate increase in worldwide demand for copper and zinc in 1993. The demand for these metals should grow slightly in western countries, the effects of the North American and Japanese recovery being partially offset by Europe’s economic slump.

As a result, consumption could increase proportionally more than production in 1993. Since it is possible that stocks might increase even further, the average price in U.S. dollars is likely to be lower in 1993, although a reversal of this trend is possible during the year.

In Quebec, zinc mines will likely ship more concentrates as a result of the opening of the Norita East mine. However, the volume of copper concentrate shipped should drop sharply in 1993, as the Ansil mine should close in 1993, and due to mine closures in 1992. The situation could be different if the Portage and Copper Rand mines should reopen.

Since the steel crisis will likely continue into 1993, the iron ore industry is likely to experience another trying year. Forecasters predict a drop in prices, a slight increase in demand, at best, and a rationalization of mining activities. The outlook for iron remelt in 1993 depends on economic growth in the U.S., Japan and Europe, and is linked to titanium slag shipments. Prospects for Quebec asbestos producers have improved since the U.S. Court of Appeal decided to overturn the U.S. Environmental Protection Agency regulation banning asbestos. Recent scientific data indicate that asbestos can be used safely in a controlled environment. This policy is supported by the Government of Quebec and recognized in several countries. This more favorable regulatory environment, coupled with improving economic conditions in several asbestos consuming countries, should result in increased asbestos sales by Quebec producers in 1993.

Current excess capacity, in both titanium slag feedstocks and pigment production, should continue for several years yet, and could lead to the closure of the least profitable plants. Within this context, environmental constraints and current rates of production will place titanium pigment producers using the sulphate process under growing pressure. — From the Quebec Ministry of Energy and Resources.