Mineral reserves on the decline says MAC chairman

Delegates to the recent Mineral Outlook Conference here were told that everyone is seeking a competitive edge. “However, in today’s world, any such edge is temporary,” said Keith Hendrick, chairman of conference co-sponsor, the Mining Association of Canada, and also chairman of Noranda Minerals.

Canada is a perfect case in point. This country ranks among the best in studies of competitiveness, quality of life and gross domestic product per capita. Yet figures show our ranking as a mineral producer has declined both in terms of production and of costs, he said.

Between 1987 and 1990, the cost of producing a pound of copper in Canada rose to US80 cents from US50 cents. Average zinc production costs went up almost as much, to 45 cents from 31 cents per lb. Exchange rates, inflation and factors related to mining lower grades are all reflected in these increases. Labor rates relative to those in the U.S. also played a part. “Canada has moved from a position where we had an advantage of almost 15% six years ago to a 10% disadvantage in 1991,” Hendrick said.

This country’s developed mineral base is on the decline. Not surprisingly, this situation parallels a sharp decline in exploration expenditures since 1988.

“The downward trend (in Canadian reserves) is apparent for copper, nickel and zinc. Lead, molybdenum and silver have a similar pattern,” Hendrick said. “Only gold has risen due to its relative attractiveness in the second half of the 1980s. But now, it too has started to slip.

“Nonetheless, the mineral industry will continue to be a powerful force for Canadian growth and prosperity.”

Hendrick listed seven actions that government can take to improve the competitive position of Canada’s mineral producers: a lower dollar, market access, elimination of inter-provincial barriers, rationalized federal and provincial jurisdictions, reasonable environmental requirements, predictable land access and the provision of infrastructure on the frontier.