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Manitoba Metallic Mining Industrial Report

            Manitoba has a population of about 1,318,100 people and a total area of 649,947 square kilometers. The province also has over 100,000 lakes with a total water surface area of 101,591 square kilometers and a coastline measuring 645 kilometers. These are the features that make it ideal for mineral exploration activities. The mining sector is the largest primary source industry for this economy with a production value of $ 2.5 billion. The metallic mining industry is responsible for 54% of this production ($1.37 billion) as of 2017. This report presents an analysis of the metallic mining industry in Manitoba province.

Description of the industry

            Manitoba Metallic Mining Industrial is characterized by various economic activities such as mining, which entails extraction of metallic minerals from the earth’s surface; Smelting, which involves obtaining a metal either as a compound or an element from its ore through heating beyond its melting point, generally in the presence of oxidizing agents; and refining activities which entails removal of impurities from precious metals, especially those used to make jewelry (Manitoba Growth, Enterprise and Trade, 2017).  The industry also produces various products including Zinc, nickel, copper, gold, and Silver. In 2017, the sector contributed 39.2% of Canada’s zinc; 11.6% of Canada’s silver; 6.6% of Canada’s copper; 10.9% of Canada’s nickel and 2.7% of Canada’s gold among the four operating mines in the province as indicated in Appendix 1.

            Geographically, the metallic mining industry in Manitoba is located in the western and southeastern part of the province. There is a high concentration of metal mines both in the Northern and southeastern parts of Manitoba as evident in appendix 2. For instance, the northern part of the province contains various metal mines such as the 777 Mines, Reed Mines, Lalor Mines, Thomson Mines, Bucko Mines, and Birchtree Mines. The southeastern part of the province is home to True North Gold Mine and Tanco Mines. The metallic mining industry is concentrated in these two geographic locations because of the adequate infrastructure present in these regions. For example, the areas are characterized by a network of highways that facilitates the transportation of products (Manitoba Growth, Enterprise, and Trade, 2017). Again, the regions have a steady power supply and high concentration of lakes making it ideal for metal mining.

Participant in the Industry

Some of the firms that participate in the metallic mining in Manitoba include:

1. Hudbay Minerals Inc: Founded at the Flin Flon orebody, the corporation has engaged in this industry for over 90 years. The company produces zinc and copper as primary products and Gold and Silver as secondary products. Currently, it operates two mines in the province. The company owns the 777 Mines that produces approximately 31,000 tonnes of copper and 59,000 tonnes of Zinc Annually. In addition, the corporation officially opened the Lalor Mines in 2014 and is currently producing about 4,500 tonnes per day.
2. Vale: The Corporation operates in Manitoba metallic mining industry through its subsidiary Vale Canada Limited. The firm produces nickel from Thompson Mines. In 2016, the corporation completed a feasibility study for Thompson footwall project that is intended to increase its operations in the industry.

• RNC Minerals: The firm participates in the industry its acquisition of VMS Ventures Inc. which was another key player in this industry. The company owns 30% of Reed Mines that produces copper and Gold.

2017. Klondex Mines Ltd: This firm owns 100% of True North Mine that produces gold as its main product. It acquired the former Rice Lake complex in 2016 and commenced commercial production in the mine in 2017.

Industrial Economic Data

            The metallic mining industry of Manitoba has a production value of $2.5 billion or 54% of the entire mining sector. This accounts for approximately 2.4% of the province’s real Gross Domestic Product and 1.5% of the total export. The industry employs about 5,200 people annually in the producing mines.  According to Bullion Markets (2018), the selling prices for major precious metals is very competitive in the province with pure gold and silver bars going for $1604 and $18.87 respectively in the local market.

The Market Structure

            Manitoba metallic mineral market is relatively competitive. The competitiveness of this market is evident in the different acquisition of small companies by large corporations intending to increase their market shares. For instance, in 2010, Hudbay acquired 70% of VMS Ventures Inc. to expand its Copper and gold reserves. The metallic mineral market is not highly regulated even though the industry experiences extensive regulations concerning environmental degradation and sustainable mining. The industry depends on both the national and international markets for its exports. In 2017, the Canadian industry’s metal product exports reached $52.65 billion domestically (Natural Resources Canada, 2018).  This shows the potential of the local market for the province.

            According to the Mining Industry Human Resources Council (MiHR) the metallic mining industry in Manitoba employs skilled, diverse labor force consisting of more indigenous people compared to other sectors. However, the number of women in this industry is limited to less than 20%.  The workers are highly paid compared to other industries. The employee compensation also increased in 2017 compared to the previous year to about $71,280 per job annually (Natural Resources Canada, 2018). This was a 1.7 Increase in salaries.

            The Metallic mining industry in Manitoba has close linkage with the mineral and financial service industries within the economy. The link between the industry and mineral industry is caused by the fact that some corporations tend to operate in both sectors by producing both metal and mineral products. Again, both the metal and mineral industries are faced with similar challenges during production such as depletion of natural resources and high levels of investments required to initiate operations in the sectors. Similarly, the metallic mining industry is associated with significant capital requirements thus the sector depends on the financial institutions to provide loans and other financial services to facilitate its operations.  For example, in 2017, Hudbay Minerals Inc. completed a $ 242 million equity financing which was underwritten by several firms from the financial service industry including Scotiabank (HudBay Minerals Inc., 2017). Financial support is the main link between the two sectors.

            One of the primary industrial trends in metallic mining is energy efficiency in Mining. The participants in this industry are automating their operations to improve energy efficiency underground (Natural Resources Canada, 2018). This new trend helps the industrial players to reduce operating expenses and promote sustainability. The upward risk that is likely to affect the economic performance of the industry in the next two years is the depletion of resources while the downward risk is likely to be the competition within the industry.