Province has tools to succeed despite challenges
While there are definite challenges, Saskatchewan has a lot going for it post-pandemic
The COVID-19 pandemic has infected many sectors of the global economy, and mining has been no exception.
Despite resource extraction being an essential service that provides the critical materials for a variety of products — including food production — a number of mines shut down in the early days of the pandemic due to the health risks and economic shock waves associated with the highly contagious and potentially deadly new coronavirus.
Certainly, Saskatchewan’s industry has felt the impact.
And the timing could not have been worse for the key sector of the provincial economy that directly employs more than 12,000 people.
“The industry was already struggling and then this pandemic comes along, which surely is a kick in the gut because there is just less demand overall,” says Dr. Lee Swanson, associate professor at Edwards School of Business at the University of Saskatchewan.
Indeed, Saskatchewan’s north — rich in uranium and increasingly recognized for its potential for gold and diamonds — has been among the regions most negatively affected by a cool market and pandemic uncertainties.
Ken Coates, Canada Research Chair in Regional Innovation, says the Saskatchewan mining industry’s near-term future remains uncertain not only due to the pandemic, but also pre-existing challenges that affect potash and uranium.
“We really don’t know what the world will look like by 2021 and beyond,” says Coates, a professor with the Johnson- Shoyama Graduate School of Public Policy at the University of Saskatchewan.
Even before the pandemic, it had been a tough year for the industry.
The industry was already struggling and then this pandemic comes along, which surely is a kick in the gut because there is just less demand overall.
For example, “going into January and February, the uranium industry was going into a slowdown,” he says.
Challenges aside, the sector remains “a huge part of the economy,” Swanson says. “It creates jobs and not just in the mining sector, but in the services businesses that support it.”
Government data from 2017 show that for every direct job in mining, two indirect jobs are created.
Even two years ago, the industry faced demand headwinds. Prices for uranium and potash were generally far below the historic highs hit in the mid-2000s and early 2010s. As such, major potash producers announced cutbacks prior to the pandemic. Among them was Saskatoon-based Nutrien, the world’s largest producer of potash, which idled some of its projects last fall.
The pandemic, in some cases, created a compounding effect.
Cameco — the largest publicly traded uranium company in the world, and headquartered in Saskatoon — announced March 23 its Cigar Lake operation would be placed in safe care and maintenance mode. That followed the 2018 shutdown of its Mcarthur River/key Lake operation due to prolonged market weakness.
Swanson says the recent closures are particularly impactful on northern communities.
“The Cigar Lake operation workforce, including contractors, consisted of more than 500 people, and that’s down to something like 75 people now,” he says about the major mine 900 kilometres north of Saskatoon.
He notes that nearby Indigenous communities are likely feeling the deepest economic impact, given that one in five mine workers in Saskatchewan are Indigenous.
Additionally, SSR Mining’s Seabee gold mine — also in the northern part of the province — was put into temporary care and
maintenance mode in early April due to the challenges arising from the pandemic, even though global demand for the precious metal was strong.
But the challenges of fighting a pandemic have in some cases outweighed the economic case for mining, especially in remote parts of the province, Swanson says.
“You’re talking about workers travelling to these places in airplanes, in close proximity to each other, and then sometimes working in close quarters.”
Consequently, many northern Indigenous communities are reluctant to see an influx of workers who could bring disease, Coates says.
“So the question becomes, what does that mean for the exploration and development season?”
Coates notes this segment of the industry is a key economic generator for many communities. Current
conditions do not bode well for exploration, and that could have a knock-on effect for the industry’s future growth.
“My concern is we’re looking at a two- to three-year slowdown before things race back into play.”
At the same time, the industry is going through a digital transformation that will undoubtedly make Saskatchewan operations more competitive, Swanson adds.
“I would suspect companies are looking at training and moving forward with technological advances when they can,” he says about innovations such as robotics, autonomous vehicles, big data analytics and artificial intelligence.
More and more jobs in mining involve less of the traditional onsite work as they become technologically focused, requiring skills such as coding, Swanson says.
“As always in Saskatchewan, we must be sure we can compete price-wise, so these innovation efforts are key to remaining competitive today and in the future.”
In the long term, Saskatchewan has all the ingredients to continue as a mining powerhouse, Coates adds.
It has the resources, know-how, people and reputation as one of the most “mining-friendly jurisdictions in Canada,” he says. “So there’s a lot of potential in the long run.”