Demand for food, energy to increase
Despite the postponement of several multibillion-dollar projects, the head of the Saskatchewan Mining Association is confidently holding to his prediction that the industry will invest $50 billion in the province between 2008 and 2028.
“The outlook for the mining market and sector in 2013 remains strong, if mining companies are strategic in their actions,” Steve Fortney, president of the SMA, told a news conference Monday to launch Mining Week in Saskatchewan. “We need to remain aware of the challenges the industry faces, including increased project and operational costs that are not supported by commodity prices, and a tight labour market.”
Fortney, who is senior director of technical projects for PotashCorp in Saskatoon, was referring to recent announcements by mining companies to delay or cancel major capital projects due to softening commodity prices, a weakening global economy and competition for resources.
Earlier this month, Mosaic announced it was delaying, for up to two years, a couple of expansion projects in Saskatchewan, which would have added another two million tonnes of potash production at a cost of $2 billion. Last year, Brazilian mining giant Vale SA announced it was indefinitely postponing plans to build a new $3-billion solution potash mine at Kronau.
BHP Billiton, which is developing what could be the world’s largest potash mine with eight-million-tonnes-per-year capacity at Jansen Lake, also decided last year to defer making a production decision on the $12-billion project. K + S also announced earlier this month it was delaying production from its Legacy mine near Bethune from 2015 to mid2016 and increasing its capital budget from $3.25 billion to $4.1 billion.
But Fortney said global demand for food and energy will continue regardless.
“Out of 55 million tonnes of annual consumption (of potash), even three per cent growth means about 1.6 million tonnes of increase (in potash production capacity) are needed a year. If you’re looking at $2 billion to bring on one million tonnes, you’re looking at $3 billion a year of investments in the potash industry alone,” he said.
“The world is going to need to spend $3 billion a year on potash expansion, and a lot of that will happen in Saskatchewan.”
For the rest of this article, click here: http://www.leaderpost.com/business/Despite+challenges+mining+track+invest/8443919/story.html