Canadian Mining and China

Posted by david on Jan 23, 2013 in Blog | 0 comments

The Canadian mining industry contributes nearly $40 billion to the national economy and China is one of Canada’s biggest export markets and investors, according to the Mining Association of Canada (MAC).  MAC’s annual Facts and Figures 2012 report this week said the industry accounted for nearly 30% of Canadian exports in 2011 and hosted 18% of global investment in exploration, some $3.9 billion.

Canadian mining exported a record $101.9 billion worth of metals, non-metals and coal in 2011.  Since Q3 2009, China’s demand along with other emergent countries has remained fairly strong and given China’s growth projections, especially her recovery after a temporary slowdown, “demand for minerals and metals is likely to remain strong over the medium to long term”, the report forecast. 

Speaking to the Vancouver Board of Trade last fall, Pierre Gratton, President and CEO of MAC declared the mining “super cycle” generated by the combination of globalization and Chinese growth is far from over as some bears have been warning.  “China will continue to drive demand for metals well into the future, and is being followed by a number of emerging nations such as India and Brazil…If we keep doing the right things with our wealth of resources here in Canada, Canadians will continue to thrive not just through the development and production of new mines but the numerous spinoff economic and social benefits…”

In part due to rising mineral prices, production in Canada went up 21% in 2011 to a record $50.3 billion with four provinces leading the way – Ontario ($10.6 billion), Saskatchewan ($9.2 billion), BC ($8.5 billion), and Quebec ($7.7 billion).  MAC estimates about $140 billion will be invested in Canadian mining over the next decade with the main beneficiaries being BC, Alberta, and Saskatchewan, along with Ontario, Quebec, Newfoundland and Labrador, Nunavut, and the Northwest Territories.

Chinese mining ventures in Canada have witnessed a checkered history.  Back in 2005, Chinese metals giant, China MinMetals Corp., failed in its $4.7 billion bid to takeover Canada’s Noranda Inc. due in some part to the unrelated debate over China’s human rights record.  Since then, MMG Minerals, a subsidiary of MinMetals is experiencing more success pursuing the multi-billion dollar development of the Izok Lake Corridor zinc and copper deposits in Nunavut that are among the world’s biggest.  And even this project could face regulatory obstacles and/or social opposition.  

Izok Lake, in Nunavut’s Kitikmeot region. (PHOTO COURTESY OF MMG)

Izok Lake is located about 260 km southeast of Kugluktuk, western Nunavut.  The project involves 5 separate underground and open-pit mines to produce lead, zinc, and copper. There will also be three other mines at High Lake, 300 km to the northeast. MMG completed a pre-feasibility study during H2 of 2011 and started a $50 million feasibility study on the mine complex last year that will take 18-24 months to complete, reported the Nunavut news portal nunatsiaqonline.ca.    

The mine would include a 2 million tonne a year concentrator that would also process ore from the High Lake mines.  Izok Lake and three smaller lakes at High Lake would be drained, and the water dammed and diverted and Grays Bay would be filled in to a considerably extent.  The port would be able to handle 650,000 tonnes of concentrate a year shipped east and westward through the Northwest Passage.  The mines would eventually produce 180,000 tonnes of zinc and 50,000 tonnes of copper a year, employing about 1100 workers during construction and providing 710 permanent jobs.

In addition to the mines, ports and other facilities, MMG plans to build tank farms for 35 million liters of diesel, two permanent camps totaling 1000 beds, airstrips, and a 350 km all-weather road with 70 bridges stretching from Izok lake to Grays Bay on the central Arctic coast, the Canadian Press reported. 

Last December, the Nunavut Impact Review Board called on Northern Development Minister John Duncan to hold public hearings on environmental and other impacts of the project.  More than 400 individuals, organizations, First Nations groups and governments have issued complaints about the project.

Minister Duncan along with his colleagues in Transport, Natural Resources, and Fisheries and Oceans can either ask MMG to make changes to its current plans, let the Nunavut Board convene hearings itself, or decide whether the project’s impact is significant enough to warrant the involvement of other governments in hearings.

In a news release last fall, Michael Nossal, MMG’s executive general manager for business development stated: “With global zinc supply expected to decline by up to 1.8 million tonnes over the next five years, the Izok Corridor project represents an opportunity to met medium to long term requirements for zinc based products…(The project) is expected to provide a number of economic benefits to Nunavut, including the creation of employment, business opportunities, skills development, and the payment of taxes to the federal, territorial and Inuit government.”