Metall offering

Metall Mining Corp., a wholly- owned Canadian subsidiary of Metallgeselschaft AG, says it has filed a preliminary prospectus for a common share issue to be offered in Canada and internationally.

Metall Mining says it is to acquire the principal, international mining investments of Metallgesellschaft, including equity interests in Teck Corp., Cominco, and M.I.M. Holdings, as well as joint venture participations in Canada, Australia, Turkey and Papua New Guinea.

It will continue to expand the mining business of Metallgeselchaft through operations headquartered in Toronto.

Canadian underwriters for the proposed issue are Burns Fry, McLeod Young Weir and Nesbitt Thomson Deacon Inc., with the international offering led by Burns Fry International, Deutsche Bank and Dreadner Bank.

Mr Merrithew introduced the new mineral policy late on the conference day. Earlier, a number of speakers addressed the theme Living in a New Market Environment.

Looking at problems and prospects for metal markets Robert Lesemann, president of CRU, consultant, New York, identified seven universal and fundamental factors that have had a negative impact on the base metal markets.

The seven factors are persistent over-capacity, market resistant rates of production, declining rates of consumption growth, growth in the state-owned production sector, increasing numbers of producers and weakening of the pricing influence of once dominant producers, breakdown of producer pricing and emergence of terminal market pricing, and a reduced commitment by producers to their once core dominant businesses.

Reviewing prospects for the major base metals Mr Lesemann said, for instance that there is no reason to assume that conditions in the copper market, affected by all seven negative factors, will improve.

“We expect lme prices in constant dollar terms to fall back under 60 cents and stay there for the next five years.”

On nickel, he said the industry’s historically remarkable stability and profitability was destroyed when the technology was developed to process laterites. There was a proliferation of new producers and the market disintegrated into a free-for-all. He said his company sees the nickel stock-to-consumption ratio declining quite steadily from current levels over the next five years and constant dollar prices moving up to and then stabilizing around $2.

The prospect for lead, on the other hand, he said, is for a healthy supply-demand balance and for zinc, “a quite good outlook but it may take another year for the strengthening to develop.” Producer prices for zinc will firm over the next five years into the high 40 cents range.

Forecasing a Canadian dollar worth around 77 cents (US) by 1990, Dr Douglas Peters, senior vice- president and chief economist, Toronto Dominion Bank, said that is a forecast which may at first blush not be welcomed by Canadian mining companies.

“But”, he said, “would this necessarily be a bad thing for the industry in Canada? Whatever the outcome of the current Canada-U.S. trade negotiations, an increase in Canadian exports to the United States tends to be accompanied by an upsurge in U.S. protectionism.”

Thus there are in a sense built-in limits to the advantages accruing to Canadian companies from a depreciated Canadian dollar, he said.

C. H. Brehaut, president of Dome Mines, in an address on future technology, said all companies must place a high priority on the development of technology for the simple reason of maximizing profits.

“We must be equally concerned,” he said, “with the development of technology to improve safety and occupational health in the workplace in developing improved environmental control methods and in providing a stimulating work environment”.

Mr Brehaut cited the establishment of the Mining Industry Technology Council of Canada, whose mission is “to improve the competitive position of the Canadian mining industry by optimising the development and use of advanced technology and methods.”