http://www.canadianbusiness.com/
David Garofalo is the President and CEO of HudBay Minerals Inc.
The recent conflicts at mines in developing nations—the violence erupting in South Africa, Guatemala, Panama and elsewhere this summer—are unsettling and deplorable. Yet they illustrate the new context for mining companies around the world, which often goes unexplored in mainstream coverage.
The new reality of the global mining industry is that most of the large, high-grade mine operations located in favourable jurisdictions are getting long in the tooth. As production at these mines inevitably declines with time, mining companies are forced to look farther afield for new supply. Since all of the near surface high-grade deposits have been discovered, companies are now looking at more geologically challenging deposits, usually with lower-grade ore. Often, this means considering development opportunities in areas that are not only more complex geologically, but also carry more social and political risks.
Among other things, this explains the chronic deficit in copper supply the world has experienced over the past four years. Average copper production grades have fallen dramatically over the past decade. Simply to maintain output, companies have to process much higher tonnages in order to sustain consistent production. Increased demand from developing economies has created a supply crisis—the term is not too strong.