Investment needed to sustain mine production

“Expenditures on exploration have been in the limelight since 1983,” says EMR analyst Andrey Lemieux. “But even at the record level of $1.3 billion spent in 1987, this still amounts to only one quarter of all investments made by mining and exploration companies combined.”

During 1987, the most recent year for which all statistics are available, mining and exploration companies invested nearly $5 billion in Canada. This covers all metals, and nonmetals, but excludes oil and gas.

According to Lemieux, of the $3.6-billion production-sustaining investments at Canadian mines in 1987, 43% went into repairs of existing structures, machinery and equipment, while an estimated 31% went into outlining and preparing ore for production. Metal producers accounted for more than 60% of the total investments, with gold producers alone accounting for more th an 20%.

While mine site investments for gold have risen more than 3-fold, from $260 million in 1981 to more than $800 million in 1987, comparable investment to sustain base metal production has been flat over the same period.

“In the next few years, and possibly as early as 1989, mine site investment to sustain gold production may surpass mine site investment to sustain base metal production, something that probably last occurred in the 1930s, during the heyday of gold mining in Canada” says Lemieux.

On the question of declining copper, zinc and lead reserves in Canada, he says it has been a result of both meager exploration finds and of a slow-down in ore development at mine sites.

“The lack of growth in total mine site investments for base metals from 1983 to 1987 illustrates even more dramatically the new investment needed in base metals to sustain their production in Canada,” he says.

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