The Economy 1998


Mining

 

The Province's mining industry continued to build on the gains of recent years, recording a strong performance in 1997. Increases in the value of mineral shipments and higher average employment levels were recorded. The total value of Newfoundland and Labrador's 1997 mineral shipments increased 9.4 percent over the previous year, and are up 40 percent since 1993. Last year's increase, the fourth consecutive, establishes mining in the Province as a one billion-dollar industry. Employment in mining averaged an estimated 3,480 last year, representing a two percent increase over 1996 and the highest level in five years.

There are over a dozen minerals currently being mined in Newfoundland and Labrador. Industrial minerals typically account for about five percent of total shipment value and employ 400 to 600 people annually, but it is metals–iron ore and gold that dominate the industry. In fact, the Iron Ore Company of Canada (IOCC) and Wabush Mines, the two largest mining operations in the Province, accounted for approximately 91 percent of the value of last year's mineral shipments and supplied 50 to 55 percent of Canada's iron ore products.

Developing Mineral Properties
Newfoundland and Labrador


Location Mineral Type

Voisey's Bay
Springdale
Labrador City
La Scie
Wabush
Coles Pond
Colliers Point
Buchans
St. Lawrence
Gander Bay
Keels
Aguathuna
Coal Brook
Plaster Pond
Tabor Island
nickel, copper, cobalt
gold
silica
silica
manganese
marble
barite
barite
fluorspar
peat
slate
limestone, dolomite
gypsum
gypsum
dimension stone
Source: Department of Mines and Energy

METALS

IOCC, the larger of the two operations has the capacity to produce 17.1 million tonnes of concentrate, from which 11.5 million tonnes of pellet can be produced annually. Approximately 16.5 million tonnes of pellets and concentrate were shipped last year, while employment for the year averaged 1,700. IOCC has over $85 million of capital investment initiatives either in the planning stage or in progress. A wet-grinding mill system, designed to reduce dust levels and enhance efficiency, was completed in February of this year. The purchase of new mining equipment and other major investment plans are outlined in the list of Major Capital Projects at the back of this report.

Wabush Mines is the Province's second largest mining operation with an annual capacity to produce 6.1 million tonnes of iron ore concentrate. The Company's 1997 ore shipments are estimated at 5.9 million tonnes and average employment for the year was 435. Ongoing capital expenditures related to cost cutting and productivity enhancing measures continue to reduce unit costs. The Company is presently evaluating the merits of constructing a manganese extraction plant for its Wabush operation.

Gold is the second largest mineral next to iron ore, in terms of shipment value. Despite three mine closures in 1997, gold should maintain its rank in 1998. Last year's closures precipitated a five percent decline in the value of gold shipments. The drop was mitigated by the April start of commercial gold production by Richmont Mines on the Baie Verte Peninsula. Richmont began underground mining at the Nugget Pond site in December 1996, employed 80 people in 1997 and expects to maintain these jobs in 1998. The accompanying table outlines additional prospects for gold and other minerals that are at varying stages of exploration and development.

EXPLORATION AND DEVELOPMENT

The 1994 mineral discovery at Voisey's Bay, Labrador sparked an exponential rise in the Province's exploration sector. The amount spent on exploration peaked in 1996 at $91 million, remained high in1997 at $66 million, and is forecast to be $50 million in 1998–lower, but still quite high in historical terms. There were 13,363 claims staked in 1997, down from 15,299 in 1996. The decline reflects a return to levels of staking activity observed prior to the Voisey's Bay discovery. Exploration generated the equivalent of 425 person years of employment in 1997, compared with 530 in 1996.

The Voisey’s Bay nickel deposit, the fourth largest in the world, contains high-grade nickel reserves estimated in the 150 million tonne range. Once operational, it has the potential to supply 13 percent of the world's nickel demand and create between 1,500 and 2,300 direct jobs when underground mining commences. Output from the operation could potentially double the value of mineral shipments for the Province. Drilling on the main mineralized zones, the Ovoid, Eastern Deeps and Western Extension continues to intersect ore grade material. A timeline of major events associated with the Voisey's Bay project is included on the opposite page.

OUTLOOK

Prospects in 1998 are good for minerals such as iron ore, as well as the wide array of industrial minerals that contribute value and diversity to the industry. Growth in the value of mineral shipments is anticipated in1998 for the fifth consecutive year, pushing the total shipment value to $1,022 million. Employment and exploration expenditures will decrease slightly from the record levels observed in recent years, but remain well above that of the early 1990's. A number of ongoing exploration and development projects will ensure continued expansion for the Province's mining industry in 1998 and beyond.

 


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