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| The Economy 2004- Newfoundland and Labrador |
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Mining |
| Iron ore currently accounts for 90% of the province's mineral output. Because iron ore is a globally traded commodity, changes in international market conditions can have a significant impact on industry performance. |
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Market Conditions—Iron Ore |
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Steel production is the driving force for almost all iron ore demand. Global demand for iron ore has been strengthening in the past couple of years largely as a result of increased demand for steel in China. Strong demand in China has compensated for weaker demand in the European Union (EU) and North America in recent years. As a result of increased global demand, iron ore prices increased significantly in 2003 (between 7% and 10% depending on the product). Most Canadian iron ore is destined for the United States and the EU. As a result, Canadian iron ore producers have been impacted by the unstable market conditions in these areas. Nonetheless, increased world demand has resulted in benefits for Canadian producers in the form of higher prices and opportunities for developing new markets. |
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Performance |
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After the recent peak in 1997, iron ore shipments declined to relatively low levels in 2001 and 2002 before rising 4.9% to 19.9 million tonnes in 2003. The Iron Ore Company of Canada (IOC) recorded shipment growth of 3.7% while Wabush Mines posted an 8.5% gain. Employment at both sites fell slightly to a combined 1,731 as the mines improved efficiency. IOC has indicated that it will seek to cut costs in 2004 by 18% and raise production by 10%. In addition to the two iron ore companies, there are a number of other mineral producers supplying an array of products, such as gold, slate, dolomite and limestone. The second largest mineral produced in the province is gold, which accounted for 2.4% of shipment value over the past five years. However, the province's only gold producer—Richmont Mines Inc.—located on the Baie Verte Peninsula, is expected to cease production by mid 2004 due to the depletion of reserves. This mine currently employs 85 people. |
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Exploration |
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| Rising mineral prices and prospectors' successes are fueling increased exploration efforts. Exploration expenditures of $31 million are expected in 2004, up from $21 million in 2003. Spending of $16 million is slated for the island portion of the province, with the remaining $15 million for Labrador. Exploration on the Island is primarily for gold and is occurring throughout eastern and central areas. In Labrador, over half of the expenditures are associated with continued exploration activity in and around the Voisey's Bay site. Other spending in Labrador is associated with a substantial IOC exploration program in Western Labrador and several independent smaller scale exploration programs. |
Major components of the project will realize significant progress in 2004. Continued development of the mine/mill site in Labrador will involve the construction of transportation infrastructure (waste haul road, port and landing strip), pre-striping of the open pit mine and construction of the concentrator building. Construction of the mining research and development centre—the Inco Innovation Centre—will continue at Memorial University. Construction relating to the demonstration plant at Argentia will also begin during this year. The demonstration plant is projected to be operational by 2006 and will employ 200 people annually. In 2004, expenditures on the Voisey's Bay project are forecast to be approximately $449 million compared to $260 million in 2003. Employment is projected to peak at approximately 850 people at the Voisey's Bay site this summer. Project schedules and timelines are currently on target. Once Voisey's Bay is in production, it will add about $500 million to mining output each year—equivalent to roughly 5% of total provincial exports.
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Voisey's Bay |
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| Not since the discovery of the iron ore deposits in Labrador in the late 1940s has a mineral discovery changed the face of the mining industry like Voisey's Bay. The discovery and development of the Voisey's Bay nickel, cobalt and copper deposit will cause mining output and employment to rise to levels not seen in many years. At full production, expected in 2006, the open-pit mine and 6,000 tonnes per day mill/concentrator facility in Labrador, is expected to employ 400 people. When mining operations go underground, which is projected to be in 2018, employment at the expanded mining operation will reach 800. When combined with the full scale nickel processing facility in Argentia, total employment is expected to reach 1,200. | ||||||||||||||||||||||||||
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Construction of concentrator building at Voisey's Bay Photo Credit: Voisey's Bay Nickel Company Ltd. |
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| This information was current as of March 16, 2004. | |
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