By Nick Stewart
With numerous mining-related research and development initiatives, Greater Sudbury is on a journey that a Scotiabank economist says is necessary for global base metal success.
Small mining centres must develop a similar degree of preparedness for large-scale markets should they wish to fully capitalize on the strength of global nickel prices, says Patricia Mohr, vice-president of Economics.
“It’s important that they work to develop new applications for stainless steel and nickel,” says Mohr. “It’s always nice for these types of places to anticipate and keep up with future demand.”
Speaking to a crowd of up to 70 academics, mining representatives and economic developers at a Greater Sudbury Chamber of Commerce meeting, Mohr outlined how the recent spike in base metal prices such as zinc, copper and nickel, is likely to level out within the next year. However, despite the inevitable drop, which follows the many months of peaks, the outlook for many of these metals is still incredibly positive, especially for nickel, she says. The usual cycle of highs and lows associated with commodities may even be extended for this particular metal into a sort of “supercycle.”
“Within the next decade, the number of nickel deposits are going to be rather limited,” she says, adding it will likely remain above the nine-dollar-a-pound range for at least another year. “The average price of nickel is going to stay relatively high.”
Long-term supply shortages and subsequent high prices, continued mergers and acquisitions within the base metal mining industry may possibly continue past the next few years, she says.
Recent activity such as the merger between Xstrata and Falconbridge, as well as the impending takeover over Inco Ltd., is likely to be a trend that will continue within the foreseeable future, she says.
“As nickel prices hold, interest in related assets is going to remain exceptionally strong,” says Mohr. “If you look past the next couple of years, the outlook for new mining development becomes very fuzzy, so I think this interest is going to remain quite high.”
As China’s appetite for metals and mining resources continues to grow at an incredible rate, they have taken to consuming nearly a quarter of the globally available annual supply of base metals such as zinc, copper and nickel.
With additional demand coming from major stainless steel industries growing in developing countries, and a lack of significant development throughout the 1990s, current global supply will remain small enough to keep prices at an elevated level.
Mohr projects this level of high nickel prices is likely to continue into the next decade as the number of nickel deposits and the role of Northern mining centres is likely to remain secure.
“Sudbury is going to continue to be a big player on the international market for quite some time,” she says. “The long-term outlook is definitely good.”
