‘Looking far into the future’
Saskatchewan is a diamond in the rough — literally. The province has long been a global player in uranium and potash mining. And diamond mining might someday be added to the list.
In fact, the province has experienced a bit of a ‘diamond rush’ in the northeast thanks to a promising find near La Ronge, called the Pikoo Diamond Project.
“The samples are some of the best ever found in Canada; even better than the Point Lake discovery that launched the country’s diamond mining industry,” says Nick Thomas, with North Arrow Minerals, an exploration firm with the largest stake in the area.
“The Achilles heel is the size of the discovery — it’s smaller than others in Canada, but we’re still learning about it, and it did add a lot of excitement at a bleak time in the exploration sector.”
Already many very junior exploration firms are staking claims around North Arrow’s find, hoping to discover more deposits.
The heightened diamond activity comes at a time when exploration spending across Canada is down significantly from previous years. In 2011, according to data released by Natural Resources Canada (NRC), firms spent $4.2 billion in Canada on exploration. This year, it estimates spending will be about $1.8 billion, says Gary Delaney, chief geologist with the Government of Saskatchewan.
“Most of the activity nowadays in Saskatchewan is focused on potash, uranium and the resurgence in diamond activity,” he says, adding firms often prefer exploring for minerals already known to be abundant in the province.
“That’s because exploration is always a high-risk and sometimes a high-reward business.”
Yet those able to forge ahead when the appetite for investment in exploration is low are likely going to be at an advantage in the future because mining is by nature a very long game.
And the bigger the head start the better off a company will be in the long run.
As an example, the Pikoo diamond find still has many hurdles to overcome before it proves itself worthy of being mined, Thomas says.
“We’re still probably a decade away or more because we’re still trying to establish we’ve made the discovery with the tonnage to make it economically viable to move forward.”
Yet the future of Saskatchewan’s mining industry holds a great deal of promise if only because it’s built on an already strong foundation.
“We are the world’s largest potash producer and the world’s second-largest producer of uranium,” says Delaney.
“We have roughly 45 per cent of the world’s potash reserves, and that sector that, which has been around for decades, is undergoing a period of significant growth.”
“PEOPLE THOUGHT ALL THE SHALLOW DEPOSITS WERE GONE AND THAT ALL THE URANIUM IN THE WESTERN BASIN WAS MINED, BUT WE HAVE MADE ONE OF THE MOST SIGNIFICANT DISCOVERIES IN 30 YEARS.”
DEV RANDHAWA, CHAIRMAN AND CEO, FISSION URANIUM CORPORATION
The province is also responsible for about 16 per cent of the world’s uranium production, with ample reserves considered to be the highest quality in the world.
With demand expected to grow from rapidly growing emerging economies such as India and China, mining companies are looking far into the future — particularly those in the exploration sector.
Among the junior firms that have managed to weather the difficult financing conditions over the past few years is Fission Uranium Corporation. It is at the forefront of a new wave of exploration in the western portion of the Athabasca Basin near the Alberta border.
“People thought all the shallow deposits were gone and that all the uranium in the western basin was mined, but we have made one of the most significant discoveries in 30 years,” says Dev Randhawa, chairman and CEO of Fission.
Although it’s still mapping out the size of the discovery, Fission estimates the deposit contains billions of dollars worth of uranium ore.
Like many exploration firms, Fission’s aim is to prove the deposit’s economic value and then sell it to, or enter into partnership with, a major producer.
Yet it’s not just exploration companies shaping the future of the industry.
Major players from around the globe — Anglo-Australian giant BHP Billiton, Brazil’s Vale, Rio Tinto headquartered in the United Kingdom and France’s Areva — are increasing their presence in Saskatchewan. As well, homegrown giants such as Cameco, Mosaic and PotashCorp are also growing their economic footprints.
“These are all the big boys in the mining patch,” Delaney says.
“They just don’t look over the next hill. They’re looking far into the future.”
Both the uranium and potash sectors are already experiencing tremendous growth.
PotashCorp did record sales last year while K+S Group — a major German potash producer — is building a mine near Saskatoon. And Cameco recently signed a major deal with India to supply uranium.
“More reactors are being built today, even after the Fukushima disaster, than at any point since the 1970s,” Randhawa says, adding China is leading the way with more than 20 under construction.
The province’s industry looks poised for growth as prices for uranium and other commodities rise with the demand over the next several decades, driven by China and India’s expanding middle classes.
While the province’s abundant natural resources are certainly the main drivers for the mining industry, Randhawa says Saskatchewan’s business-friendly climate is also a big attraction.
Unlike many other jurisdictions around the globe, it already has ample infrastructure and, more importantly, good governance — two important considerations for mining firms making multibilliondollar investments.
“We can’t say enough about Saskatchewan and how a good a place it is to mine.”