Metals
The Iron Ore Company of Canada (IOCC) is one of the largest producers of iron ore in Canada and the largest mineral producer in the Province. IOCC's primary products include acid pellets, fluxed pellets and iron ore concentrate.
Essentially all of IOCC's concentrate sales and the majority of its pellet sales are at prices which are negotiated annually with its customers; the remaining pellet sales are under long-term contracts. Prices are denominated in U.S. dollars. Generally speaking, concentrate prices are about one-half pellet prices. Given the current world prices for iron ore pellets relative to the price for concentrate, IOCC optimizes its production of pellets.
| North American integrated steel producers primarily use pellets in their operations to produce pig iron. Integrated steel producers in Europe and in th Far East have generally used sinter (made from iron ore fines and concentrates) combined with lesser amounts of coarss ore pellets. |
Production at IOCC was up during 1995. Pellet production rose from 10.4 million tonnes to a record level of 10.8 million tonnes and concentrate production rose from 5.5 million tonnes to 5.6 million tonnes. Employment was up slightly to average 1,696 throughout 1995.
IOCC reached a significant milestone this year having produced just over one billion tonnes of iron ore in its 35 years of operation. The future of the mine is solid given that the mine has proven and probable reserves of about 1.2 billion tonnes.
Wabush Mines is the second largest mineral producer in the Province. In 1995, the Company produced 5.4 million tonnes of iron ore concentrate and employed an average of 428 people throughout the year. This compares quite favourably to concentrate production of 4.9 million tonnes in 1994 and average employment of 407.
The third largest producer of minerals in the Province is Royal Oak Mines Inc. which operates the gold mine at Hope Brook on the Southwest coast of the Province. Workers are flown into the remote site by aircraft on a week-on week-off basis. The Company installed a copper recovery plant in 1993 which has helped boost output. Gold and copper production was valued at $42.6 and $2.2 million respectively in 1995 and 288 people were employed. This compares to gold and copper production worth $47.2 and $1.9 million in 1994, and employment of 281 people.
Industrial and Structural
There are a number of smaller producers operating in the Province primarily engaged in the production of industrial and structural minerals. These include producers of dolomite; magnetite; gypsum; peat; pyrophyllite; brick; cement; limestone; aggregates (sand, gravel and crushed stone) for road and building construction; and dimension stone, often used for residential and non-residential decorative purposes (flooring, counter-tops, etc.) and exterior building finishes. On average, these mineral producers account for between $30-$40 million worth of mineral shipments and employ around 450-550 people a year.
Value of Mineral Shipments
Overall, the value of mineral shipments totalled $940 million in 1995, marking the best performance in many years. Employment averaged 3,385, representing an increase of about 10 percent from the previous year.
Voisey's Bay
Notwithstanding the widespread gains made throughout the mining sector and the excellent development opportunities that exist elsewhere, the story which has garnered the most attention and come under the closest scrutiny by the international mining community is the mineral discovery at Voisey's Bay, Labrador.
Initially reported to be a nickel, copper, cobalt discovery of 31.7 million tonnes grading 2.93 percent nickel, 1.68 percent copper and 0.12 percent cobalt, the area has proven to host considerable more mineralization (see special features on both the geology of Labrador and the deposit and immediate surrounding area).
The deposit's richness, and its potential future impact on the world's nickel markets caused two major nickel producers, Inco Ltd. and Falconbridge Ltd., to compete for control over its development. At the time of writing, Diamond Field Resources Inc. had accepted Inco Ltd.'s takeover offer of $4.3 billion (cash and stock). If approved by shareholders at a meeting in May, Inco Ltd. would stand to improve its market position tremendously. The Company supplied 25 percent of world demand in 1995. It is expected that annual nickel production from Voisey's Bay could supply 13 percent of current world needs. The upside potential for nickel is considerable given its use as an alloy in the making of high end consumer products such as stainless steel.
For now, significant attention continues to be focused on the deposit area. Originally estimated to be a deposit of 31.7 million tonnes, the discovery is now reported to be over 100 million tonnes. New areas, in particular the Eastern Deeps, have revealed additional mineralization. Drilling in these areas continues to encounter mineralization and drilling reports reveal that the deposits remain "open". As of April, eleven drill rigs were operating on the Voisey's Bay project, seven were drilling delineation holes in the Eastern Deeps, an area that appears to have considerable potential.
Mineral Exploration
Mineral exploration exploded in the Province during 1995, precipitated by the discovery at Voisey's Bay. Exploration expenditures hit their highest level ever at approximately $71 million. The number of claims staked totalled 248,707, more than 11 times the level recorded in the previous year. At the end of 1995, there were 280,750 claims in good standing. Exploration employment is estimated to have risen to about 425 person years in 1995 compared to only 75 in 1994. In addition to the deposits outlined in the special discussion and the discovery at Voisey's Bay, there are a number of other deposits/prospects which hold considerable potential for the mining industry. For example, the Buchans-Robert's Arm Belt had a long and productive mining history and remains highly prospective for both polymetallic base metal and gold mineralization. High levels of exploration are ongoing in this area. Other deposits located throughout the Province offer potential for development. These include other base mineral deposits in the Buchans area (e.g., Tally Pond/Duck Pond deposit), marble in the Corner Brook and Deer Lake areas, and gypsum in the St. George's area.
Outlook
An early resolution of the current dispute between workers and the Iron Ore Company of Canada would enhance the outlook for the mining industry. Prices for important commodities are expected to be at least as good as, or better than, average prices recorded in 1995. Prices for iron ore concentrate are expected to be higher by approximately four percent while a five percent improvement in pellet prices is anticipated. Investment in plant and equipment by both IOCC and Wabush is expected to increase.
Overall, the value of mineral shipments is expected to exceed $1 billion which would represent the highest value achieved in 15 years. Exploration expenditures are anticipated to be $111 million, fuelled primarily by an expanded exploration program in the Voisey's Bay region. Finally, employment is expected to rise for the third consecutive year mainly because of higher exploration activity and to a lesser extent because of the start-up of new mining operations and expanded production levels at existing mineral operations.