November 2006

Mining in Quebec

Introduction

By André Lavoie, director of Communications and Public Relations, Quebec Mining Association

Increase in metal prices and economic upswing in mining activities

The strong international demand and the incredible economic growth of countries such as China and India have driven a significant increase of metal and mineral prices, which have reached historic highs since the beginning of 2006.

The price of gold attained US$700 per ounce at the beginning of May; just five years ago it was US$250. The prices of all metals witnessed spectacular increases. For example, in the last three years, the price of nickel has increased by 87 per cent, copper by 242 per cent, and zinc by 262 per cent.

This incredible increase in metal prices has greatly boosted mining activity in Quebec. Exploration is in full swing with more than 200 on-going projects; several mining projects are at the advanced exploration stage and several others are preparing to go into production. According to analysts, the outlook for the next few years is a growth scenario.

Major benefits for the regions

The mining industry is central to the dynamics of all Quebec regions. Its contribution to the economic and social life of the regions and cities through salaries, electricity, tax fees, social and recreational activities, local and regional purchases, and scholarships amounts to hundreds of millions of dollars.

The presence of the industry also fosters the development of regional expertise for sub-contractors, transformation companies, manufacturers, and suppliers of specialized services. The mining industry also contributes to the implementation of research centres, sometimes far from the big cities.

Challenges

The mining industry is enjoying spectacular growth in Quebec. However, in fields such as exploration, energy, environment, and human resources, the challenges remain tremendous.

In exploration, most projects target precious metals, while base metal reserves have been declining for several years.

Concerning energy, the QMA is preoccupied by the constant impact of rising electricity costs. On an international level, Quebec has always held an advantageous position due to its competitive electricity costs. For the Quebec mining industry, this represents an important element of its competitive position on world markets.

Concerning the environment, the mining industry commits to the concept of sustainable development; the mining sector must, however, contend with a very high number of projects, rules, and regulations at the provincial and federal levels. Technical difficulties are often easier to overcome than the red tape constraining the industry.

The Quebec Mining Association deplores the poor communications between federal and provincial departments concerning the environment. This situation causes duplications and increased regulation levels, which result in non-productive, costly, and heavy environmental management burdens for its industry members.

The greatest challenge for the mining sector remains the lack of personnel. In Quebec, the mining industry generates about 50,000 jobs, of which about 12,000 are in extraction, per se. The industry lacks technicians, engineers, scientists, trades people, etc.

The QMA has set up several projects in partnership with various teaching establishments. Continuing educations programs had been designed with school commissions to maintain workers’ competency levels. Through partnerships, the Association has worked to implement a new sectorial committee concerning workers in the mining sector. Some universities and colleges have been contacted to find ways to attract students into mining engineering.

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