Gravelle says downturn temporary
Ontario's embattled Northerners shouldn't lose hope for prosperity amid shutdowns and layoffs in their once-mighty mining industry because there are signs the downturn is temporary, says the minister responsible for the region and its mines.

There's no question that the global financial crisis has had an impact on the mining sector," Michael Gravelle said.

There have been a number of companies that have suspended operations, but in each of those cases, they've been very, very clear about the fact that they remain confident in their operations in the province and are going to move forward."

When he was appointed minister of Northern Development and Mines in 2007, Gravelle said the North's untapped mining potential was the key to turning the struggling region's fortunes around.

But 2008 brought with it a global financial crisis, and base-metal miners were hit particularly hard as credit markets tightened, global demand slumped and prices for everything from zinc and copper to iron ore and aluminum plummeted.

Some analysts even predicted some of Canada's big mining companies will go bankrupt before conditions start to improve.

In North Bay, Redpath Group, Boart Longyear, Atlas Copco and Motion Canada have laid off workers since the fall.

Still, Gravelle said, the fact miners haven't scaled back exploration is a good sign the current pain is temporary.

Once commodities prices turn around, the mines have given every indication they will be back up and running, Gravelle said.

Mining is a huge industry in Ontario; in 2008 year alone, mineral production generated $10 billion and exploration activities amounted to a $600-million industry.

Ian Nakamoto, director of research at independent investment firm MacDougall, MacDougall and MacTier, said demand will return eventually.

A lot of (the boom) was speculative demand," Nakamoto said. Hedge funds were in there buying these commodities and it became the soupe du jour.

It's going to be a while before that interest comes into existence again."

Nickel has been hit particularly hard, but there is no commodity that I'm aware of that has been spared this," he added.

Sudbury Mayor John Rodriguez, whose city is home to two of the country's biggest nickel deposits, said the city has weathered the current storm much better than had been expected.

I've seen this movie before, but it seems in this downturn, at this point, we're not as badly affected as we were back in the early '80s and '90s," Rodriguez said.

The mining companies haven't taken the drastic steps that they had taken back in the old days -- they haven't laid off thousands of workers and they haven't closed their doors."

Most companies have closed high-cost mines and redistributed workers to other facilities.

They also have the benefit of having racked up record profits during the last three years as metal prices boomed.

Mining companies fought long and hard to get qualified workers, and they want to keep them because when the price comes back, they've got the workers ready to take advantage," he said.

Rodriguez noted the city has tried to protect itself after previous downturns by becoming a health care and education centre.

As mayor I'm concerned, but I'm confident at the same time," he said.

NDP Leader Howard Hampton doesn't share that optimism.

The mining industry that the McGuinty Liberals were boasting about only six or seven months ago is almost collapsing," Hampton said.

Maybe in gold mining there may be some development, but even there it's going to be pretty low-key."