Editorial: Loonie plunges as oil prices slide

Canada’s loonie seems to dip and dive just like any other petrodollar these days, if the week ended Oct. 25, the 43rd trading week of 2008, is anything to go by.

• Driven down by fears of a global recession, oil prices continued their autumn freefall in late October, with WTI crude dropping below US$64 per barrel at presstime, down from the US$100 mark in late September and off from its all-time record above US$147 per barrel on July 11.

The Canadian dollar’s plunge against the greenback has been just as dramatic. After reaching parity last year for the first time in 31 years and hitting an all-time high of US$1.103 on Nov. 7, 2007, the loonie is all of a sudden trading at US77.1 at presstime, after having spent the first half of 2008 pretty much at parity. It’s still well above its all-time low of US61.79 on Jan. 21, 2002.

A newly weak loonie has its obvious disadvantages for travellers and household consumers, but it’s probably been a huge job saver, for now, in Canada’s resource, tourism and auto sectors.

This fall’s plummeting metal prices have put great strain on Canada’s mine managers, with many suddenly being faced with unprofitable operations. It’s hard to quantify at the moment, but the falling loonie has undoubtedly softened the blow and given these managers some extra time to fully evaluate their mine’s new realities. However, if metal prices stay at present levels, we’ll see a whole new — and much bigger — wave of mine closures coming as budgets are drawn up for 2009.

• Canada’s tiny, dying and near-forgotten asbestos mining industry made the pages of the national dailies this week owing to a scorching editorial in the Canadian Medical Association Journal that excoriated the federal government for opposing the addition of the long-fibred variety of asbestos, chrysotile, from governance under the Rotterdam Convention — an international treaty governing trade in harmful substances.

There are three central issues: chrysotile’s actual ability to cause cancer and mesothelioma versus shorter-fibred varieties; the level of contamination of chrysotile by smaller varieties; and whether Canadian government policies are unethical in promoting a double standard for asbestos use in Canada versus the poor countries that import our asbestos production. We’ll run the entire CMAJ editorial next week and you can decide for yourself whether the CMAJ is alarmist or rightfully sounding the alarm.

• Maybe we can all just get along: the hotly anticipated showdown between the old-school Noront Resources board and dissident shareholder Rosseau Asset Management was diffused a day before the company’s annual meeting via the creation of a compromise board. The meeting turned into a rather civil affair, highlighted by a teary send off for long-time Noront president and CEO Richard Nemis, who stepped aside to assume the symbolic role of “chairman emeritus.”

These are positive developments for Noront shareholders, who should see better handling of the junior’s intriguing polymetallic assets in northern Ontario’s Ring of Fire camp.

• In Toronto, the Royal Ontario Museum opened its The Nature of Diamonds exhibit in the basement of the museum’s new wing.

Billed as the “most wide-ranging exhibition ever developed on the allure of diamonds,” the show actually lives up to the hype with a superb collection of kimberlites from around the world, rare cultural artifacts and exquisite modern jewelry. And it’s all tied together with a well-thought-out narrative in print and video that includes plenty of Canadian content. There are about 500 brilliant objects in the show, including the world’s third-largest cut diamond, which tips the scales at 407 carats.

The exhibit has been organized by the American Museum of Natural History in collaboration with the ROM. It’s being sponsored by De Beers Canada to coincide with the opening of De Beers’ first diamond mines outside Africa — Snap Lake in the Northwest Territories and Victor in Ontario.

The show runs in Toronto until March 22 before moving on to Chicago and Houston, so out-of-towners could take it in while attending the Prospectors and Developers Association of Canada convention in Toronto three weeks earlier.

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