TORONTO, ON-The global economic slowdown has cast a pall
over the mining industry with the vast majority of mining
executives saying they expect a severe pull back in exploration
activity and at least 30 per cent of exploration companies
going out of business, according to the
Survey of Mining Companies 2008/2009, released today by independent research organization the Fraser Institute.
"Survey responses indicate this year that the mining sector
expects dramatically decreased investment plans along with a
large number of companies either reducing activity or going out
of business all together," said Fred McMahon, coordinator of
the survey and the Institute's Director of Trade and
The survey found that more than four out of five mining
executives believe that at least 30 per cent of exploration
companies will be forced out of business in the current
economic downturn. Of that total, two out of five respondents
believe 30 per cent of the world's exploration companies will
be forced out of business, with another two out of five stating
that 50 per cent or more of exploration companies will be
forced out of business.
More than 90 per cent of respondents believe the exploration
and development activities of exploration companies will be
curtailed, with 57 per cent saying the activity will decline "a
great deal." Nearly 85 per cent of respondents say that the
activities of production companies will be curtailed, though
only 31 per cent believe that the activity of production
companies will decline a great deal. This comes after years of
soaring exploration and development activities, as demand for
commodities and their prices rose. Almost 70 per cent of survey
respondents indicated that they had increased exploration and
development activity over the past five years.
"All this is bad news for an economy looking forward to
recovery. With large numbers of exploration companies expected
to go out of business and a vast majority of companies planning
to curtail exploration and development investment in 2009, the
world may face a shortage of raw materials and skyrocketing
commodity prices as the world economy moves past the recession
and into renewed growth," McMahon said.
The Fraser Institute's
Survey of Mining Companies: 2008/2009
represents the opinions of 658 mining executives and managers
worldwide on the policy and mineral endowment of 71
jurisdictions on all continents except Antarctica. Companies
participating in the survey reported exploration spending of
US$3.4 billion in 2008 and of US$3.02 billion in 2007.
Despite the overall gloom, industry executives give many of
Canada's provinces top marks for policies that encourage
mineral exploration and development.
For the second year in a row, Quebec is ranked number one
overall in the annual survey. Wyoming earns the number two
spot, moving up from number eight spot last year, with
perennial favourite Nevada dropping one spot to number three.
Alberta is the second highest ranked Canadian province at
number four overall.
The Canadian picture
Overall, seven Canadian provinces were ranked among the top
10 best jurisdictions in the world for mining policy: Quebec
(1st overall), Alberta (4th overall), Newfoundland &
Labrador (5th overall), New Brunswick (6th overall), Manitoba
(8th overall), Saskatchewan (9th overall), and Ontario (10th
Rankings for other provinces are: Nova Scotia in 12th, Yukon
Territory in 15th, British Columbia in 24th, North West
Territories in 40th, and Nunavut in 43rd.
"The survey represents the views of the mining industry
about individual provinces and territories at a given point in
time. While the rankings for some provinces have gone up or
down, most of the changes are relatively small and are in line
with the year to year variability of a survey," McMahon
Significant international developments
Chile joins Wyoming and Nevada as the only other
non-Canadian jurisdiction to crack the top 10, ranking in
seventh place. Chile is also the highest rated Latin American
nation, followed by Mexico in 28th spot and Peru in 30th.
Among Australian states, South Australia has the highest
ranking at 16th, followed by the Northern Territories in 20th
and Western Australia in 21st.
Botswana is the highest ranked African nation (18th),
followed by Mali and Namibia in 33rd and 34th spots,
The bottom 10 scores belong to Venezuela, Ecuador,
Guatemala, Honduras, India, Bolivia, Zimbabwe, Kyrgyzstan,
Democratic Republic of the Congo, and Indonesia.
"Unfortunately, these are all developing nations which most
need the new jobs and the increased prosperity that mining can
produce," McMahon said.
"Mining is a fully international business and the survey
results once again demonstrate that jurisdictions must be
prepared to compete on an international basis to attract mining
investment. Jurisdictions that fail to recognize rule of law or
respect negotiated contracts and property rights will not be
successful at attracting mining investment."