Property portfolios take on growing international look

Turkish copper project of Cominco Resources nears feasibility stage — News item

Goldbelt Mines looks to two former Soviet republics for joint venture projects — News Item

Falconbridge Ltd. to close Vancouver office and set up new exploration branch in Santiago, Chile — News item

What’s going on? Why does there suddenly seem to be a surge in mining exploration by Canadian companies outside of their own borders, in Africa, the Pacific Rim and particularly in Mexico and Latin America? An estimated 30% of the combined mineral exploration budgets of Canadian mining firms is currently spent outside of Canada.

Those same private studies also point out that an amount equal to about one-half of that 30% is spent by foreign mining companies on exploration inside of Canada’s boundaries.

In fact, during the past decade, it is estimated that Canada, along with the United States and Australia, accounted for about 75% of all of the Western world’s mining exploration expenditures.

(Estimates reported by the Prospectors and Developers Association of Canada place total mining exploration expenditures across Canada in 1991 in the $580 million range, down from $800 million in 1990 and $828 million in 1989.) Still, the news of the day seems to be filled with stories about Canadian firms making deals or announcing development plans for overseas properties. And while the perception may differ from the reality, the truth is that taxation laws and environmental issues may have made “away” more attractive than “home,” at least during the early part of the 1990s.

“One of the biggest attractions,” said Babu Gajaria, president of Toronto-based Starmin Mining (TSE), which is active in the Far East, “is that there are orebodies elsewhere in the world that are all drilled off, and we could get them at a good price.”

Starmin and Adonos Resources (VSE) are jointly exploring a potentially large copper-gold project on Negros Island in the Philippines.

Exploration financing inside of Canada, Gajaria noted, has dried up. While he is optimistic about raising funds outside of the country for his Philippines project, he agreed that “money is very tight all over the world.” A paper published in 1990 by Charles Johnson of Hawaii lists possible risks –technical, economic, legal, political and security — associated with exploring and/or developing overseas. The paper refers to an expected shift (gradually increasing) in exploration dollars to developing countries by multi-national mining firms:

“The reasons given in the survey for this modest increase in exploration activity included one or more of the following: (i) increased competition in the traditional exploration areas of Australia, Canada and the U.S.; (ii) improved legislation and policies toward foreign investors; and (iii) increased exploration budgets in the 1980s.”

The president of the Mining Association of Canada, George Miller, while commenting recently on a drop in the 1991 value of Canadian mineral production from the previous year, stressed the need for lower costs and improved productivity within the country.

“There are increasing concerns about the attractiveness of the Canadian mining investment climate,” Miller said. “Significant flows of capital are being directed towards the mining industries in other countries, even though Canada remains endowed with a vast mineral potential.

“Reversing this situation depends on the perception of Canada as a good place to do business and there is increasing evidence that our situation is deteriorating.”

On the west coast, the Mining Association of British Columbia is concerned about the future of minerals industry activity, which it says is at a crucial crossroads, in the province.

“Signals from governments in recent years increasingly suggest that mining is seen as passe and that high tech and service industries are in,” said Tom Waterland, association president. “But if you get rid of primary resources, where are the wealth generators for this province’s economy?” Government-imposed cost increases (for example, for water rental fees) are a serious concern to the industry, as are the duplication of regulatory efforts by the federal and provincial governments and uncertainties over the status of land use.

“Unless the political will exists to enhance the competitiveness of current and potential new mines in this province, the corporate head offices may remain in downtown Vancouver, but the operating mines belonging to these companies will be in South America and elsewhere in the world, where foreign investment policies and other requirements to allow for a good return on investment are present,” Waterland said.

Brian Felske, a consultant, speaking earlier this year (T.N.M., Feb. 3/92) at a Toronto mining function, made the point that “there is no such thing as a Canadian mining industry, only a global industry. Canadians have to go where the best advantage is, which usually means grade.” In particular, he said, Canada has lost the grade advantage when it comes to copper. A list of Canadian mining companies active abroad would not be a short one, nor would most of the major firms on that list be found to be newcomers on the world stage. The current overseas trend may simply be a case of more Canadian companies raising their horizons in hopes of finding the “big one” that is proving to be so elusive at home.