Editorial Biting at the base metals

At long last investors and speculators alike are once again turning their attention to the highly cyclical base metals stocks, triggered by improving prices for these commodities in international markets. Fact is the big overhang in supplies of both copper and zinc are rapidly diminishing. The nickel market, too, seems to be tightening.

This shift in investor sentiment was reflected by big gains in virtually all senior base metal producers on the Toronto Stock Exchange this week. Much of the buying is said to be coming from foreign sources.

And there is good news from the mining front itself. Whereas this has been almost completely dominated by the precious metals for quite some time, it is certainly healthy to see some of the base metal mines reopening and new ones being developed.

Especially encouraging is this week’s joint announcement by Hudson Bay Mining and the big Finnish firm of Outokumpu of their decision to proceed to production of their jointly-owned high grade nickel discovery at Namew Lake in northern Manitoba. This calls for the building of a 2,100-ton-per-day concentrator that will turn out 68,000 tons of nickel concentrate and 13,000 tons of copper concentrate annually, together with minor amounts of platinum and palladium. These are smart people who know the metals business from A to Z, so we must think they know what they’re doing.

At almost the same time comes word from Teck Corp. that it is about to reo pen the Newfoundland Zinc mine which it operates jointly with Amax. Nor should we lose sight of the fact that Minnova (formerly Falconbridge Copper) has been quietly proceeding to production at its rich Winston Lake zinc mine in northwestern Ontario. And this same company is going ahead with the deep underground development of the extremely rich Ansil copper deposit in northwestern Quebec.

But the grandaddy of them all is the full-scale development of the huge Red Dog project in Alaska by the Cominco-Teck team — probably the biggest and best zinc mine in the world. Nor should we forget Clifford Frame’s Curragh operation in the Yukon. A gutsy decision if ever there was one, he reopened that big former Cyprus Anvil lead-zinc open pit at just about the lowest point in the metal cycle.

While these developments certainly represent a happy turn of events, it would be wishful thinking to expect this sector of the industry to ever return to those roaring high-profit days that followed World War II when Canada was the mineral king. For there is competition today for our markets (including iron ore) the like of which were never seen in those boom days. This is principally from the Third World and developing countries like Chile, Brazil and Peru. Too, the market for the metals themselves is shrinking with the development of cheaper and lighter substitutes like plastics, fibre optics, lasers, etc.

Nevertheless it is certainly gratifying to see our base metals mines making something of a comeback. This, coupled with the big boom in gold, bodes well for a good all-around period ahead.