Spend a Penny, Make a Pound (Of Metal)

To view the tables with complete project descriptions, please click here to download them in PDF format.

You have to spend money to make money. When the going gets rough, as it did in the mining industry from 1997 until mid-2003, capital expenditures are minimized or put on the shelf until better times. We are now living in better times.

CMJ has been tracking the capital spending plans of Canadian miners since 1976, and is pleased to report the results of its latest survey. As with past surveys, this does not represent a complete picture, because we did not hear back from some major companies and even from some sectors. It is useful, however, to follow the story of the companies that did respond, to get an inside track on where they are investing in 2004 and 2005. We can use the data from this year and previous years to look at trends, shown in the two summary tables.

Following the trend of Canadian companies working around the world, for the first time we asked respondents to tell us about their projects in other countries, which you will find in the table at the end of the article.

Clearly companies continue to invest in Canadian properties, to the tune of almost $2 billion (2004-05), but they are also investing in many properties outside of Canada ($1.9 billion), particularly in North and South America. Five years ago we reported $3.5 billion and 11 years ago $1.5 billion in capital spending plans in Canada alone (Canadian dollars not adjusted for inflation).

Newfoundland and Labrador is host to the largest new mine project reported on–Inco‘s Voisey’s Bay nickel-copper-cobalt mine and mill in Labrador and pilot hydromet plant in Argentia, Nfld. The next two in line are Barrick Gold‘s Veladero heap leach gold project in Argentina and its Lagunas Norte open pit development in Peru. The company announced in mid-July that it will be proceeding with the US$1.4- to US$1.5-billion Pascua-Lama gold-silver project near Veladero, for start-up in 2009.

Another large project is Teck Cominco‘s Pogo underground gold mining development in Alaska.

Manitoba stands out as a Canadian region receiving more investment, due largely to the modernization and expansion by Hudson Bay Mining & Smelting in the Flin Flon area, and Inco‘s ongoing expenditures on its integrated nickel operations in Thompson. British Columbia has suffered a great reduction in capital investment. If the oil sands numbers were added to Alberta’s numbers, it would probably be above the $774.3 million reported five years ago, with new spending in coal and diamonds.

Amongst the commodities, the winners are precious metals (mainly gold), base metals and coal.

The diamond industry is investing in both exploration and capital projects, and has become a very meaningful employer in the Northwest Territories. That will also be the case in Nunavut with the opening of Tahera’s Jericho mine in 2006.

I would like to thank each of the 35 companies that responded to the survey, for their time and patience in using our new online survey method.