Euphoria pretty well summarizes the state of the mining industry in 2008 and the mood in the Ontario mining cluster of Sudbury, Timmins and North Bay. Our cover story this issue provides an overview of the capital investments, the spending on exploration and the impact of all this activity on the region’s mining suppliers. It’s a head-spinning story, but anyone who has ever been on a roller coaster ride or has been in the mining industry for more than five years knows that life and commodity prices don’t always follow an upward trajectory.
Our story on Page 42 about a recent pilgrimage by Vale procurement executives to Toronto and Sudbury offers a global perspective of the mining industry’s optimism. The Brazilian mining giant plans to spend $59 billion over the next five years on 40 capital projects around the globe and came calling on Ontario suppliers to help them pull it off.
Of course, just as prices for nickel, copper, gold and other metals rise to stratospheric levels, so too do input costs such as energy, capital equipment and tires. And, as mines go deeper, it costs more to develop and operate them.
These are heady times, but let’s not fool ourselves. Just as the tech bubble burst and the housing bubble burst, so too will commodity prices descend from their heights.
The challenge for the mining industry and the supplier community will be to focus unremittingly on productivity improvements that make it easier and more cost efficient to find orebodies, develop them, mine the ore and process it.
You don’t have to be a genius to make money mining nickel at $20 a pound. The real heroes are those who will find ways to continue turning a profit when the law of gravity reasserts itself.