Optimistic outlook buoys supply forum
Speaking at a mid- April gathering of suppliers to the Saskatchewan mining industry, Bill Boyd, Minister of the Economy, predicted a bright future ahead and hinted a major announcement was in the offing.
With nearly 1,000 people swelling the aisles of the annual Mining Supply Chain Forum on April 15, he couldn’t have found a more receptive audience for his message of optimism.
The $350-million uranium supply deal with India announced later that day was a timely reminder of the importance of mining to the province.
Saskatoon’s Prairieland Park was packed with representatives from the industries that keep the mining industry moving. The displays spoke to the variety and scope of mining operations in the province.
Featured products included everything from cables the width of grown man’s thigh, to sophisticated electronic management systems and relatively low-tech, but absolutely essential, infrastructure components such as piping and rebar. Companies representing security services, air transport and personnel training were also on hand.
“We’re seeing a tremendous amount of opportunity here in Saskatchewan with respect to mining operations, and as the supply chain, all of you play a very key role,” Boyd told the crowd.
He noted that mineral sales in Saskatchewan totalled about $7.3 billion in 2014, and that the economic think-tank the Fraser Institute, after surveying companies across Canada, rated Saskatchewan as the No. 1 jurisdiction for mining in the country.
“And we are just behind Finland in the entire world, so we are very pleased with that,” the minister said.
The provincial government is committed to putting forward policies that attract investment, said Boyd, pointing to the $1.7-billion expansion of the Mosaic K3 mine in Esterhazy and construction of a solution mine by K+S Potash Canada at their Legacy Project site near Bethune.
Saskatchewan has 25 mines producing potash, uranium, gold, coal, diamonds, kaolin, salt, sodium sulphate, clay, copper and zinc. More than 30,000 people are employed directly and indirectly by the mining sector.
The Mining Supply Chain Forum is a joint effort of the Saskatchewan Mining Association, the Ministry of the Economy and their new partner, the Saskatchewan Industry and Mining Supply Association (SIMSA).
“The objectives of this forum are true to when we started,” said Pamela Schwann, SMA executive director. “They are to increase awareness of the current mining projects in Saskatchewan, and the related supply chain opportunities for mining equipment manufacturers and suppliers. And, importantly, to provide a venue for representatives of these companies to meet and make contacts with each other.”
Schwann said a diverse and vibrant mining supply chain is important to the members in the Saskatchewan Mining Association as ultimately it increases their efficiency and competitiveness.
“Going forward, the SMA, the Ministry of the Economy and SIMSA will be undertaking a study to quantify the supply chain,” she said.
The positive outlook for mining evident in the room was brought into focus by Neil McMillan, SMA president and chairman of Cameco Corporation.
In presenting his talk on the Global Mining Outlook, McMillan noted there are always cyclical corrections in the mining sector with regard to the price of commodities and the resulting impact on exploration, investment and the supply chain.
But looking long-term at China and India, the drivers of the world economy, he said Saskatchewan is very fortunate to boast some of the largest mineral deposits in the world.
“We are certainly unrivalled in potash and almost unrivalled in uranium, both of which represent food and energy — the last two things upon which people quit spending their money.”
Western economies, including the U.S. and Canada, are expected to grow their economies by about two per cent annually for the foreseeable future, while China and India, in weak economic circumstances, are forecast to grow by more than seven per cent this year, McMillan said.
This is driven by growth in the overall population, but also a growth in the middle class, which will cause a substantial shift in consumption patterns both in food and in energy, he added.
“In the face of that, if I was in the potash business I would have a hugely positive outlook in the long-term for fertilizer consumption and potash sales.”
On the energy front, McMillan said he expects to see a three per cent electrical consumption increase going into the future.
“Hydrocarbons are challenged to be a significant part of that. Uranium, on the other hand, is growing steadily.
“There are 437 reactors in the world generating power, and 137 new reactors under construction in places like Saudi Arabia, Jordan and the UAE (United Arab Emirates). China alone has more than 20 reactors under construction, and is forecast to build 70 more by 2050.
“If they just finish the 20 under construction by 2029 it will take nuclear electrical production up to just 4.8 per cent of their total electrical production.
“So the math for our food and energy industries in Saskatchewan — potash and uranium and to some degree coal — is awfully good,” McMillan said.