November 2009

The school of hard rocks

Operators and insiders discuss lessons learned and future prospects for Northern Ontario

By R. Bergen

Aerial view of FNX Mining’s Levack operation

In daily life it is ubiquitous. It jingles in our pockets and powers our toys; it has a place at our dinner tables and then helps with the clean-up. For industry it is indispensable. It makes steel more durable, flexible and stronger against the elements.

It is fortunate that nickel weathers well, because the value of the ore, as well as those dedicated to its extraction, are being tested by what some have called the “perfect storm.” After a spike in 2007 to over $20 per pound, the price of the metal tumbled along with other commodities. Since then, tight credit markets, labour conflict, high production costs, slack demand and an abundance of supply have fueled the tempest further. 

When nickel prices bottomed out late last year at four dollars per pound, operations in Northern Ontario were forced to drastically cut costs to conserve money. Spotting a break in the clouds may take time. It might also require a dramatic change in perspective and what we mean when we talk about the “Nickel Belt.”

Silicon Valley of mining

Ore bodies in the hard rock were the foundation for the communities in Northern Ontario. The challenge, however, of driving deeper shafts, building better equipment and making mills and refineries more efficient has erected on that bedrock an infrastructure of expertise that reaches around the world. And it ought to, says Dick DeStefano.

As executive director of the Sudbury Area Mining Supply and Service Association, he is convinced that the Nickel Belt has the capacity to challenge others for the title of the “Silicon Valley of mining” because of its capacity to apply local knowledge across industries and markets. The movement is already underway, he insists. “We are beginning to see a lot of mining software applications emanate out of here because of the research base and the partnerships that exist between universities and colleges and the private sector.”

DeStefano admits that the effort is still a work-in-progress, though. Keeping service and supply shops in a century-old mining camp like Sudbury can be a mixed blessing; complacency, he says, can turn a niche into a rut. He estimates that there are 500 firms in Northern Ontario serving the mining industry and suggests that they should start throwing their weight around. “The Australians have convinced the world that they are better than us at deep mining, but if you really go and analyze it, they aren’t,” he asserts. “They have just created the impression that they are.”

He thinks that the time has come for the local supply and service industry to take a look in the mirror and appraise its own impression. “We are trying to make people understand that these 500 companies are a critical mass,” explains DeStefano. “And then if you add 11 research institutes at the university level, and the fact that together our companies have a presence in 48 countries with their software, this is huge.”

A glimpse at exactly how huge will come next year when the Ontario North Economic Development Corporation completes its study of the supply and services sector. Once finished, it should provide a snapshot of the prospects for the sector, the extent of its global reach and the potential for it to extend further.

In the meantime, DeStefano is bent on broadening the horizons of the suppliers in the region. He invites speakers to share news of projects in the wider world. The events, he says, have born fruit. “We brought PotashCorp in a year and a half ago and since that time, 17 of our companies are working for them that weren’t before.”

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