What does 2016 look like for the mining industry? Where will we see changes? The mining sector in Saskatchewan should be relatively stable in 2016 compared to 2015 when companies were focused on controlling capital and operating costs to stay globally competitive. 2016 may herald in a year of global mergers and acquisitions as companies that were able to maintain strong balance sheets are in a position to acquire companies with good assets, but insufficient capital. All companies will continue to operate as cost-effectively as possible to ride out this low commodity price cycle. In Saskatchewan, mining companies have invested significant capital expenditures in expanding their brownfield quality assets as well as new greenfield sites. As most expansions have, or are in the process of winding down, the industry is moving to a reduced level of maintenance-sustaining capital expenditures. While uranium production will continue to ramp up in 2016, primarily from Cameco’s Cigar Lake uranium mine, potash production will remain fairly stable to 2015 levels, as producers balance supply with demand projections. As we saw in the 4Q 2015, potash production decreases translated into workforce reductions.
What was the largest obstacle the industry faced in 2015 and how did we combat it? The most significant obstacle was the continued slide of all commodity prices. This put pressure on companies to reduce their operational costs and defer capital expenditures.
What commodity saw the highest increase in 2015? Both uranium and gold had solid production increases in 2015, with Claude Resources’ Seabee mine producing over 70,000 oz Au, a record amount for that site. With Cameco’s Cigar Lake mine starting commercial production of uranium in May, and processing of ore at AREVA’s JEB mill, 2015 was also an exceptionally strong year for uranium production in the province.
What commodity saw the largest decrease in 2015? Both potash and coal had lower productions in 2015 – the former a result of low commodity prices and decreased demand, while coal production, used in Saskatchewan’s power generation was offset by hydro and natural gas power generation.
What factor outside the industry will play the largest role in mining this year? There are many diverse factors – from the slowing economic growth in China to the low Canadian/high US dollar and the effect that the climate change policies and the discussion of moving to a low-carbon economy will have on mine site operations. The social license for companies to operate will continue to be an important factor.
What were our largest producing mines in 2015 and how will they fare in 2016? The largest producing potash mines are Mosaic Esterhazy mines and PotashCorp’s Rocanville Mine. At Rocanville, the new Scissors Creek headframe became operational in the 4Q and this will lead to increased, low-cost production from this site as travel times for crews to and from the mining faces is significantly reduced. Continued low natural gas prices should also be a positive factor for production from Mosaic’s Belle Plaine solution mine facility. Cameco’s McArthur River Mine continues to be the world’s largest, high-grade uranium mine, producing roughly 18 M lbs of U308 last year, and is expected to produce similar amounts in 2016. The Cigar Lake Mine, now the world’s second-largest high-grade uranium mine, with ore processed at the JEB mill, is forecast to produce 16 M lbs in 2016. The Eagle Point/Rabbit Lake mine, now in its 40th year of production will likely continue to contribute its consistent 4 M lbs. As the world moves to a low-carbon economy, nuclear energy derived from Saskatchewan uranium will be a significant contributor to lowering GHG emissions and providing a clean energy source. Claude Resources’ Seabee Mine was the only gold-producing mine in Saskatchewan, with record production of over 70,000 oz. Westmoreland Coal Company continues to be the sole provider of lignite coal to SaskPower from its Estevan and Poplar river mines.
Where does Saskatchewan currently stand in the global mining market? Saskatchewan is poised to increase its Canadian and global mining leadership in both potash and uranium production. While commodity prices for both potash and uranium have decreased, these commodities have not been as significantly impacted as other commodities mined in Canada such as thermal and metallurgical coal, copper, zinc nickel and gold. In potash, most of the brownfield capital expansions initiated by current producers PotashCorp, Mosaic and Agrium are close to completion. Additionally, K+S Potash Canada’s Legacy mine will be the first new potash mine in production in 2017. The low potash prices have affected other potash projects schedules, including BHP’s Jansen and Vale’s Kronau projects, although Western Potash continues to move forward with a proposed solution mining pilot project and Yancoal Southey Potash Project continues to progress through regulatory approval stages. With the onset of commercial production from the Cigar Lake uranium mine, Saskatchewan mines will start to recapture some of the share of global uranium production that it lost to the in-situ uranium production from other parts of the world. As all of the coal mined in the province is used domestically to provide thermal power, the reduced coal prices won’t be a factor in Saskatchewan coal production, and although Claude Resources is operating the only gold- producing mine in Saskatchewan, its record production in 2015 bodes well heading into 2016.
Anything else you would like to mention? In developed countries, society has become increasingly removed from recognizing how our current lifestyle was generated, whether it be products derived from mining – or food on the table. Communicating how mining in Saskatchewan benefits the quality of life for all residents in the province and, as we export most of our mined products to the world, will continue to be important in obtaining the social license to operate. To gain this trust, the mining industry must continue to operate in an environmentally-responsible manner with strong safety performance.
Saskatchewan Mining Journal 2016, Issue 1
Written by Cassi Smith
August 12, 2016 | Originally posted in Mining Journal