Ontario’s miners on a roll

After surviving a tough period of low commodity prices around the turn of the millennium, Ontario’s mining industry is back in a big way and now in its second year of a major boom.

The good times are being driven by a beautiful combination of higher prices for almost all mineral products, the province’s rich mineral wealth, and the high level of expertise found in the province’s mining community.

The total value of Ontario’s mineral production last year was $7.3 billion ($4.8 billion from metals and $2.4 billion from non-metals), up substantially from the $5.7 billion reported in 2003.

Much of that increase in value was due to rocketing prices for nickel. The rise most benefited Toronto-based Inco and Falconbridge, the two big nickel producers in the Sudbury Basin, which, even after a century of mining, still holds about 10% of the world’s nickel.

The construction boom in southern Ontario has also been a major contributor to buoyant markets for mined aggregates, which quietly represent a large portion of the province’s mining output.

For example, in 2003, Ontario’s top ten mined commodities by value were: gold at $1.2 billion; nickel at $1.2 billion; cement at $614 million; stone at $506 million; sand and gravel at $410 million; copper at $393 million; salt at $267 million; platinum group metals at $232 million; clay products at $193 million; and zinc at $85 million.

Ontario is also Canada’s only producer of phosphate, nepheline syenite, serpentine and tremolite, and the province is a significant producer of cobalt, which is a byproduct of nickel mining.

In a few short years, Ontario will add another high-profile and high-value commodity — diamonds — to the mix with the opening of De Beers’ Attawapiskat mine in the Hudson Bay Lowlands.

In its history, Ontario has consistently been one of the world’s leading producers of metallic minerals. Over the past century, Ontario has produced 166 million ounces of gold, 1 billion ounces of silver, 10.8 million tons of nickel, 13.8 million tons of copper, and 10.2 million tons of zinc.

Most of this colossal output has been exported to the U.S., Western Europe and the Far East.

While grassroots exploration for platinum group metals kept food on the table for many an Ontario prospector and junior exploration company during the lean times of the late 1990s, today’s mineral explorers have once again widened their range of targets to include gold, silver, diamonds, copper, nickel, zinc, uranium and some industrial minerals.

Exploration for these targets approached all-time highs last year, driven by high commodity prices and provincial-government-sponsored tax credits.

This year, mineral exploration spending in Ontario is expected to reach a new record of $315 million.

Preliminary figures from the provincial government suggest that a combined $570 million was spent on mineral exploration and mine development in Ontario last year, a 32% increase from 2003. Of that $570 million, $239 million was spent on exploration, $57 million was for deposit-appraisal work, and $273 million went toward mine development.

While the province’s capital, Toronto, is far from the mines that dot the province’s north, the city hosts the headquarters of many mining companies with a global reach, and remains the world’s number-one centre for mine finance.

Toronto’s downtown core boasts North America’s third-largest equity capital market, the TSX Group, which hosts, on its main TSX exchange, some 220 major mining companies with a combined market capitalization of more than $163 billion.

The TSX Group’s junior exchange, the TSX Venture Exchange, hosts a thousand small mineral exploration companies that are active around the world and represent a combined market cap of $12 billion.

In all, about half the world’s publicly listed mining companies are traded on one of these two exchanges.

An average of $2.5 billion in new equity capital is raised annually for mining projects by the banks, brokerage houses and securities dealers that have set up shop in Toronto’s financial district.

Last year, a record US$4.2 billion in equity capital was raised through the TSX Group for mining projects around the world, representing 47% of the global total and an astonishing 85% of the mining deals carried out worldwide.

Feeding the whole system is a provincial network of geology and mining engineering programs at universities and colleges, though most in the industry predict acute staffing shortages as a large percentage of the community retire in the not-too-distant future.

In our boom-and-bust industry, these are definitely the good times, and the stars are all aligned for Ontario’s mining community to reap the benefits.