Canadian Mining Investment Opportunities in the Context of Investment Climate

CIM Vancouver 2002
Abstract Persistently weak metal prices continue to fuel concerns about the future of mining in Canada. Despite periodic increases in the prices of certain metals, new mine developments and mine openings are lacking and ore reserves continue to decline. In order to stay financially afloat, many mines have stepped up production and thus accelerated their rate of ore depletion. In addition, many operations had to raise their cutoff grades to match decreasing prices. In doing so, they are putting further pressure on overall mine reserves. All of this and the fact that principal mines in Canada now numbered only about 200 compared with 330 in 1988 appears to support the theory held by many that mining may indeed have aged beyond return and that Canada can no longer offer attractive mineral projects for investment.

The present study shows that the lack of new mine development in Canada is not due to a lack of interesting and promising mineral deposits but rather due to the lack of investment, and the lack of investment is not only the consequence of lingering weak metal prices and the lack of investor confidence but also the result of an unbalanced and unsustainable investment climate.

Despite dismal levels of exploration and development spending in recent years, especially in gold and base metals, the list of interesting and promising deposits in Canada remains impressive. However, the lack of investment interest has created immense financing difficulties which has hindered further exploration and deposit appraisal of many of the projects into more attractive targets for mine development. Although many factors affect investment, lengthy challenges to the environmental assessment process, land claims and a lack of adequate infrastructure in the far north have become the biggest remaining obstacles for investment decisions. These obstacles have created an imbalance in an otherwise healthy fiscal, social, economic, legal, financial and technical investment climate in Canada. Significant improvements in these areas will enable Canada to gain needed investor confidence and competitive edge in the international market.

Keywords: Investment opportunities, Promising deposits, Ore reserves, Production, mine openings, Principal mines, Mining, Investment climate, Obstacles for investment decisions, Environmental assessment
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