Mining's attraction
Published Saturday January 3rd, 2009
Metal Prices will remain low for 2009, but province's mining companies remain optimistic
Christopher Anderson is mad about tungsten.
As the vice-president of business development for Geodex Minerals Ltd. (TSX.V:GXM), Anderson helped host a recent industry meet-and-greet to get investors hyped up about the metal, which he said is essential for the construction of any large building.
"We believe that tungsten is one of these new metals at the forefront," Anderson said in a recent interview.
Geodex has been working a tungsten deposit at its Sisson Brook property near Fredericton, which executives hope will one day be among the largest and least expensive open-pit tungsten mines in the world.
The company took a break from drilling last fall due to lack of credit and hunkered down to complete mineralogical studies.
But Anderson said market factors won't impede Geodex from moving forward.
This, despite the crash in metal prices that led to the idling of two northern New Brunswick lead and zinc mines owned by a subsidiary of Blue Note Mining Inc.(TSX.V:BN) in October, and that credit is still scarce.
"We're cashed up and we've got a great deposit. We're trying to work closely with the New Brunswick government to get this up and running," he said.
Anderson's optimism is not unique among mining executives and industry observers.
Experts predict commodity prices won't inch up much before the end of 2009. The industry, though, is eyeing the province's geology in terms of the long-term prospects, which look promising, according to David Plante, the vice-president of New Brunswick's Canadian Manufacturers and Exporters chapter and manager of the New Brunswick Mining Association.
"The mineral industry is going to be the cornerstone of our economy for the next century," Plante said.
Plante pointed to recent history as evidence of where the province's future mining potential lies.
New Brunswick is mined for 18 out of the 32 mineral commodities in Canada, he said, adding that the province boasts the highest value of minerals extracted per square kilometre.
"The reason for the diversity and richness is due to the complexity of the geology," Plante said, adding that the hard rock in the north and sedimentary rock in the south have attracted mining companies for centuries.
The belief is that there are still geological riches to discover.
As the industry saying goes, "If you're going to find elephants, you have to go where the elephants are," Plante said.
Prospects for the near-term future in mining are not so bad either, even though commodity prices promise to remain weak for awhile.
Plante said the province is lucky to have two big mining companies plowing through tough times on the market to keep operations open.
Xstrata PLC (XTA.S), the Swiss mining giant, is still working the Brunswick mine near Bathurst ahead of the mine's planned 2010 closure.
And Potash Corporation of Saskatchewan Inc. (TSX:POT) continues to extract potash from its Sussex operation with a $1.67 billion expansion in New Brunswick for the Picadilly project, set for 2011.
Plante predicts prices for potash may bounce back earlier this year than other commodities as farmers buy up the fertilizer ingredient before the year's crops need it.
Evidently, a lot of the success in mining will depend on market prices for commodities.
But there is still much the provincial government can do to attract to the province eager mining executives like Anderson and his colleagues, lante said.
Improvements can be made to the corporate tax structure, which includes lowering taxes.
Ensuring royalty regimes are attractive is essential, while making regulatory hurdles for environmental and other approvals quick and easy.
Lastly, the government simply has to promote New Brunswick as a jurisdiction with a future in mining.
"Marketing the province is important," Plante said.
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