US territories produce diamonds

North America's mining industry in focus

1 Introduction

2 The mining industry in Canada

2.1 Overview

Canada is the world's largest producer of potash salt and is one of the five most important countries in the world for the extraction of aluminum (Fig. 1), diamonds, gold, cobalt, nickel, platinum group metals and uranium. In 2017, the largest mining sales were achieved with gold (8.7 billion Can $), coal (6.2 billion Can $), copper (4.7 billion Can $), potash salt (4.6 billion Can $) , Iron ore (Can $ 3.8 billion), nickel (Can $ 2.7 billion) and diamonds (Can $ 2.6 billion). There are a total of 1200 companies in the mining industry with over 400,000 direct employees, 65 of them in metal mining and 1,136 in non-metal mining. In 2017, the value of GDP added value was around Can $ 72 billion. Another important factor in Canada is the extraction of energy sources from oil sands. In 2018, 2.854 million barrels / day (MMb / d) were extracted from this, after 2.675 MMb / d in 2017. A production volume of 4.192 MMb / d is planned for 2035. This requires further high investments [2].

2.2 Investments by the mining industry

In Canada, the mining industry's investments are analyzed by the Department of National Resources (NRCan). Figure 2 shows the development of exploration expenditures from 2014 to 2018 with updated figures for 2018, shown by type of mining company. You can see the collapse in exploration budgets to 1.629 billion Can $ in 2016 and the rapid increase in 2017 and 2018 to 2.360 billion Can $. The growing number of so-called junior miners in recent years is also striking. Junior miners are those mining companies that focus on exploration and exploration, but not on the actual extraction of the metals. A striking number of such companies only deal with one metal, such as gold, and only have a small portfolio of exploration projects.

Figure 5 shows the breakdown of the mining companies' budgets by provinces for 2018. The 5 provinces of Quebec, Ontario, British Columbia, Saskatchewan and Nunavut account for more than 80%. Quebec leads with a sum of 3.57 billion Can $ or 24% ahead of Ontario with 3.23 billion Can $ or 22%. Of the remaining 6 provinces Newfoundland and Labrador, Nova Scotia, New Brunswick, Manitoba, Alberta, Yukon and the Northwest Territories alone, Newfoundland / Labrador accounts for more than 34%, Yukon and the Northwest Territories make up another 28%, which is the importance of northern, arctic provinces [3].

2.3 Main raw materials in Canada

Gold, copper, nickel and diamonds are of paramount importance to Canada's mining industry. At the beginning of 2018, the gold price reached its high of last year at US $ 1,359.88 per troy ounce. Currently (April 04, 2019) the price for the precious metal is US $ 1291.81. The US bank Goldman Sachs is confident that the price of gold will reach the magic mark of US $ 1,350 per troy ounce in 2019. With increasing political uncertainty and concerns about a further escalation of trade disputes, especially between the United States and China, the gold price could benefit. In contrast to investors, a price of over US $ 1,100 with cash costs of sometimes under US $ 600 per troy ounce is already very adequate for gold producers. This explains the current rally for new gold mining projects.

Almost 50 gold mining companies are listed on the Toronto Stock Exchange. In 2017 Canada produced 176.2 tons of gold, an 80% increase 10 years ago. Ontario with 76.2 t, Quebec with 57.4 t and British Colombia with 19.7 t had the largest production volumes. Canada is currently in 5th place in the world ranking behind China (426.1 t), Australia (295.0 t), Russia (271.0 t) and the USA (230.0 t). In 2017, gold generated export revenues of Can $ 18.6 billion. The Wood Mackenzie analysts assume that Canada will rise to 2nd place in the international ranking with a production volume of around 300 t in the next 5 years. This is a result of the many new mining projects in nearly all areas of Canada.

Goldcorp, with its 3 mines Porcupine, Musselwhite (Fig. 9) and Red Lake in Ontario and Éléonore in Quebec, is currently the second largest gold producer in Canada. In 2017, 1.022 MOz were produced there. The target for 2018 was 1.1 MOz, which the company is unlikely to achieve. Goldcorp plans to expand its global production volumes from 2.5 MOz in 2017 to 3.0 MOz in 2021, with Canada playing an important role. In 3rd place in the ranking is currently Yamama Gold with a production volume of 0.316 MOz from its 50% stake in the Canadian Malartic Mine. Yamama is closely followed by Kirkland Lake Gold, which produced 0.312 MOz gold in 2017 from their 3 mines Macassa, Holt and Taylor Mine. Barrick Gold with the Hemlo Mine follows with 0.171 MOz.

In 2017 Canada produced 604,000 t of copper. This means that you only take 12th place in the global ranking. The ranking is led by Chile with 5500 t, Peru with 2445 t and China with 1706 t. Leading producers in Canada include Vale Canada and Teck. Vale owns 5 copper mines in Ontario and 2 in Manitoba. In 2017, a total of 136 700 t of copper was extracted there. In 2017, Teck achieved a quantity of 93,000 tons of copper. For nickel, Canada had a production volume of 211,900 t in 2017, which means fifth place in the international ranking behind the Philippines (366 kt), Kazakhstan (345 kt), New Caledonia (215 kt) and Russia (212 kt). With its 3 mines in Sudbury, Voisey’s Bay and Thompson, Vale has a total of 134,000 t or 63% of Canada's production volume.

In terms of diamond production, Canada ranks second in the global ranking in 2017 with 23.234 million carats (MMC) or 15.4% of mine production, behind Russia with 28.2%. In terms of the value of diamond production, Canada ranks third in the world with US $ 2.06 billion and with 14.6%, behind Russia with 29.1% and Botswana with 23.6%. The largest diamond mining company is the Dominion Diamond Corporation. It owns the Ekati Mine, where a total of 5.2 MMC were mined in 2017. In addition, the company has a 40% stake in the Diavik mine (Fig. 10). 60% of the Diavik Mine is owned by Rio Tinto, who also operate the mine and produced 7,263 MMC in 2018. Rio Rinto's stake is 4,358 MMC.

3 The mining industry in the United States

3.1 Overview

3.2 The coal industry

The coal industry in the USA was able to stabilize in 2017, even if it no longer has the dominant role it had in previous decades. Figure 12 shows the output of hard coal. These have fallen from 907 million annual tonnes (Mta) in 2014 to 661 Mta in 2016. With the support of the Trump administration, production rose to 703 Mta in 2017. Further slight increases are expected for 2018, particularly as a result of growing exports. With electricity generation remaining almost the same, the share of hard coal in electricity generation has fallen continuously, also in 2017 (Fig. 13). After a previous share of 56.7% (1985) and 51.7% (2000), the share of coal-fired power generation is still 30.1%. From 2018 to 2020, a further 3,422 MW of coal-fired power plants will be shut down or converted to gas.

3.3 Other important raw materials

Gold mine production rose from 230 t in 2013 to 245 t in 2017. This puts the USA in 4th place in the global ranking behind China, Australia and Russia. The largest gold producers in the United States include Barrick Gold, Newmont Mining, and Kinross Gold. Barrick Gold owns 3 mines in Nevada with Cortez, Goldstrike and Turquoise Ridge (Fig. 17), as well as a mine in Montana with Golden Sunlight. In 2017, the company extracted 2.4 MOz gold in the US mines. Newmont Mining owns the 5 gold mines Carlin, Phoenix, Twin Creeks, Long Canyon and Cripple Creek & Victor in the USA and also has a 25% stake in Barrick Gold's Turquoise Ridge mine. In 2017 Newmont Mining produced 2.211 MOz gold in the USA, after 2.024 MOz in 2016 and 1.643 MOz in 2015. Kinross Gold has around 1 in its 3 mines Fort Knox (Fig. 18) in Alaska and Rand Mountain and Bald Mountain in Nevada in 2018 .51 MOz gold produced.

Lead is produced in 5 mines in Missouri and another 5 mines in Alaska and Idaho. In 2017 the quantities were still 0.313 Mta after 0.370 Mta in 2015. Platinum group metals were produced by the Sibanye Stillwater Mining Company in an amount of 0.0169 t in 2017 in 2 mines in Montana. In the USA, molybdenum is extracted as a primary metal in 2 mines in Colorado, while the metal is produced as a by-product in 7 other copper mines, including 4 in Arizona. In 2017 the production amounts were 0.0446 Mta, after 0.0682 Mta in 2014. Zinc is produced in 14 mines in 5 states. The last production volume was 0.73 Mta after 0.824 Mta in 2015.

4. Outlook

At the beginning of 2019, two acquisitions in the gold industry attracted attention. The American Newmont Mining will take over the smaller Canadian rival Goldcorp for a price of around US $ 10 billion. The takeover will create the world's largest gold producer in North America. The new company, Newmont Goldcorp, has a market value of US $ 28 billion and will produce approximately 7.8 MOz gold in 2019. Newmont Goldcorp will replace Barrick Gold from Canada as the largest company in the industry. Barrick Gold announced in September 2018 that it would buy the London-listed Randgold Resources for US $ 6 billion. On January 2, 2019, the combined company went public on the NYSE and TMX stock exchanges with a market capitalization of $ 22 billion.

Analysts assume that these two mega-deals in the gold industry are not the end yet. Consolidation in other sectors such as iron ore, copper and nickel is already further advanced. The companies involved, such as Newmont Mining and Barrick Gold, report that the acquired companies have potential for increased productivity and synergies. They believe they are better positioned for the future and, in particular, want to benefit from a larger expansion portfolio. The satellite-based exploration of mineral resources should also help here.

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Author:

Dr.-Ing. Joachim Harder

OneStone Consulting Ltd.

Varna / Bulgaria

www.onestone.consulting

 

Joachim Harder studied process engineering at the TU Braunschweig and did his doctorate there. After more than 10 years of industrial activity in various management functions, he founded the consulting company OneStone Consulting in 1997. Dr. Harder is a recognized expert in international marketing with a focus on market analysis for business field strategies. He is the author of various publications and a sought-after speaker at international conferences.

Literature • Literature

[1] Murphy, K .; Ferguson, M .: Global Exploration Budget Trends 2018, S&P Global Market Intelligence, October 18, 2018, New York / USA

[2] The Mining Association of Canada: Towards Sustainable Mining - Progress Report 2018. The Mining Association of Canada, 2018, Ottawa, Ontario / Canada

[3] Harder, J .: Canada's mining industry experiencing an upswing, AT MINERAL PROCESSING 10, 2011 pp. 54-65

[4] Harder, J .: Leading Investments - Is the US mining industry going to move abroad? AT MINERAL PROCESSING 12, 2011 pp. 38-49