Ontario Lowlands Set For Mineral Boom

Significant Mineral Development In Ontario's Ring of Fire

The provincial government of Ontario has announced plans to develop the James Bay Lowlands in the north of the province.

More than 20 mining companies are hoping to cash in on an area believed to contain high-grade deposits of nickel, copper, zinc, gold, chromite and palladium.

The government plans to build a railway, roads and processing facilities in an area known locally as the Ring of Fire.

James Bay Lowlands is an extremely wet area on the edge of Canada’s boreal forest, some 300-400km from any existing permanent infrastructure; however investors are concentrating on a 12 km area with the Lowlands region. Currently, access to the general area is by float plane and helicopter.

Significant preparatory work, such as environmental assessments and feasibility studies will be needed before the real work can begin. Whatever infrastructure is built will depend on the nature of the mineral projects, however it is thought that winter roads on ice and snow would probably suffice for most projects, which can be adapted to seasonal production. However, there are plans for a 320km rail line which will link Nakina, north of Lake Superior, to chromite mines in the Ring Of Fire. This is because, unlike some other mineral projects in the area, chromite mining is expected to be a year-round activity.

Canada Chrome has staked mining claims along one possible route in order to secure a right-of-way. “We’re in the early process of evaluating the project,” says Nels Ojard, the firm’s group manager for special projects. Mr Ojard added that the project is probably five to seven years from becoming a reality.

Frank Smeenk, president of Canada Chrome’s parent company, KWG Resources, said it is too early to tell whether processing facilities such as smelters and concentrators will be built at the Ring of Fire or elsewhere. This depends largely on the consistency of an electricity supply.

“In the fullness of time there will probably be a (power) line along the railroad,” Mr Smeenk said. “With the economic downturn in Ontario the demand for electricity has fallen out a bit, so there’s lots of power in Ontario. The problem with it is the price is very high.”

Norilsk Expects To Report Profits Of $2 Billion

Vladimir Strzhalkovsky, chief executive of Russia’s Norilsk Nickel, said on Friday that the company expects to report net profit of about $2 billion in 2009, which has allowed it to pay down debts of $1.25 billion.

According to the transcript of a meeting between Mr Strzhalkovsky and Russian Prime Minister Vladimir Putin, Norilsk will invest $2 billion into its Russian plants although no timescale has been given. Norilsk increased salaries for its employees by 10 percent from 1 January.

In a separate development Norilsk has forecast increased nickel production of as much as 9 percent with output estimated at between 299,000 and 309,000 metric tonnes compared with 282,900 in 2009.

Copper output in 2010 is expected to fall to 393,000 to 398,000 metric tonnes, down from 402,000 tonnes last year.

Palladium output will be little changed at 2.73 to 2.805 million ounces, and platinum will fall 5 percent to 690,000 to 695,000 ounces.

Norilsk is the world's biggest nickel and palladium producer.

South Africa May Miss Out In Commodities Rebound

Commodity prices are expected to rebound strongly this year and pull the global mining industry out of the doldrums, despite uncertainty about the pace of world economic recovery, according to research and consulting firm Frost & Sullivan.

However, this comes amid lingering concern that challenges particular to the South African industry — such as a strong rand, higher production costs and labour wage demands — may put a damper on local prospects.

Last year, mining companies were forced to retrench and restructure their cost bases in response to plummeting demand as a result of the global recession. However, towards the end of the year some — particularly ferrochrome miners — began increasing production as demand slowly started to improve, led by Chinese buyers.

Mining and metals analyst Wonder Nyanjowa said this week that the global mining industry was likely to be buoyed by growing physical demand for commodities, the strong possibility of speculative buying and rising prices.

“This is likely to encourage miners to expand production capacity,” Nyanjowa said.

Metals such as gold, diamonds, platinum and palladium have already started to show signs of a strong rebound. Nyanjowa warned that SA may not reap the full benefits of this price recovery because of several problems.

“Many of the local challenges that adversely affected production last year, such as electricity supply shortages, a lack of skills and safety concerns, are likely to continue affecting the performance of the mining industry this year.

“In addition, the prospect of higher commodity prices, particularly in the gold, platinum and coal sectors, is likely to lead to tough wage demands from unions.”

Nyanjowa said he believed that growing concern about inflation in the developed world, a volatile dollar, threats of another recession from expansionary fiscal and monetary policies and negative real interest rates pointed towards strengthening investment demand for gold as a buffer.

“A price range of 1300- 1500/oz this year looks likely, supported by gold demand and supply fundamentals,” he said. “Investors are likely to continue turning to gold as a hedge against uncertainties in the global economy.”

However, SA’s gold production was likely to slip further this year, to about 200 tons, which should see the country drop to fourth place among the world’s gold producers, behind China, the US and Australia. Last year SA fell in the production stakes from second spot to third, behind China and Australia.

While platinum was one of the biggest casualties of the global recession, Nyanjowa expected better prospects this year, with the industry expected to recover as a result of stronger recovery in the global automotive sector, particularly in China and India.

Local coal miners, which escaped from the global slowdown with relatively minor bruises, should also remain robust.

“The bulk of the country’s coal production is consumed in the electricity generation and synthetic fuel manufacturing industries, with only a third being exported to Europe and Asia,” Nyanjowa said.

“The domestic demand for coal is set to continue growing in 2010, following expansion programmes at Eskom and Sasol that will require an additional 75- million tons of coal.”

However, SA’s production was likely to remain stagnant at about 240-million tons this year as the industry waited for new coal fields to be opened in the Waterberg basin in Limpopo.

Source: Business Day