Dec '06/Jan '07

Québec

Vitality of the Quebec mining industry

By André Lavoie, director, communications and public relations, Quebec Mining Association

According to Dan Tolgyesi, CEO of the Quebec Mining Association, the Quebec mining industry is in a very dynamic period. After several years of depressed markets marked by stagnant prices and under-investment, the industry is now enjoying a spectacular resurgence of energy.

The strength of metal prices on the world market, boosted by the growth of the demand, especially in China and India, explains the good health of the industry. The price of gold has more than doubled since 2002 and is now around US$600 per ounce; meanwhile, the price of base metals attained historic heights: silver at US$11.40 per ounce, copper at US$3.50 per pound, zinc at US$1.70 per pound, and nickel at US$15.00 per pound.

Each year, Quebec is recognized by the Fraser Institute as offering the best environment for mining investment in Canada and one of the most advantageous in the world. Exploration and ore deposit development projects have multiplied during the past year. In exploration, it is estimated that investments will attain about $250 million, a record for Quebec. In this field, some major investments merit mention:Cambior, for its Westwood Project;Canadian Royalties, in Nunavik; Goldcorp for its James Bay Éléonore Project; the SOQUEM-Ashton partnership for a diamond project in James Bay; and Alexis Minerals Corporation for its West Ansil and Herbin Lake projects. Exploration for iron ore and uranium is also showing renewed strength on the North Shore and in James Bay.

Development and ramping up projects are going very well for mine operators. Agnico-Eagle announced work for production startup at the Goldex, Lapa, and LaRonde II mines, representing investments of more than half a billion dollars in the Abitibi region. Last August, Wesdome mine (gold) launched its Kiena mining complex near Val-d’Or. In November, Aurizon started production at the Casa Berardi mine, north of La Sarre. Large-scale projects will also see the light of day in the Nord-du-Québec region, at the Raglan mine in Nunavik and at the Perseverance mine in Matagami, with investments attaining nearly $700 million. Breakwater Resources is also targeting the reopening of the Langlois mine in Lebel-sur-Quévillon.

Notwithstanding this favourable context, we must not forget that operating costs are on the rise; according to observers, this rise could attain about 25 per cent for the industry. The exchange rate must also be considered; the strength of the Canadian dollar limits the benefits of the increase in metal prices.

The stock exchange boom also increased the appetite for mergers and major acquisitions. In Quebec, the acquisition of Falconbridge by Xstrata and that of Cambior by IAMGOLD bear witness to this trend.

Along with these numerous development projects, new mines starting up, increases in the number of jobs, and many retirements, the mining industry is now faced with a major challenge, to ensure the succession of the workforce. Workforce skills and expertise are the backbone of this industry. Worker attraction and retention is critical to ensure the operation of the current mines and to be able to bring into production all the newly announced projects. Mining is an activity with major benefits; it is essential for the economic development of Quebec and its regions.

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