EDITORIAL PAGE — The overseas look

More than a few words come to mind when trying to describe the past year, but two in particular — cutbacks and globalization — seem appropriate in trying to capture the flavor of 1992.

At first glance, use of the two words in the same sentence may seem contradictory. Corporate cutbacks indicate a pulling back; globalization suggests a reaching out. While the former has been mandated by economic conditions, the latter has been motivated by a “shrinking world.” Forced to draw in their horns today, businessmen are looking ahead to newer and broader markets in which to sell their goods.

The economy is a major concern, but there are other considerations. Some Canadian mining companies that have been content to make our frontier lands (and regions in the U.S.) their stomping grounds have taken their exploration acts elsewhere. Increased labor costs, tighter regulatory requirements and longer waits for environmental permits must weigh heavily on the minds of managers.

A favored locale is Latin America. In particular, Mexico and a half-dozen countries in Central and South America appear to be the major recipients of Canadian mining exploration expertise. A cursory check of recent issues of The Northern Miner, however, would reveal a host of other worldwide exploration areas: Africa, Czechoslovakia, Greenland, the Philippines, Indonesia, the Commonwealth of Independent States, Turkey, Poland, Spain, Thailand and Australia.

And don’t fool yourself that the companies aren’t earnest in their efforts to secure new projects abroad. An announcement last month by Cameco of Saskatoon regarding an agreement on the Kumtor gold deposit in Kirghizstan may not be a done deal, or at least so says Brush Creek Mining of California. Brush Creek reports that it and a partner, through an affiliated company, have the right of first refusal on the potentially lucrative deposit.

On the production side, enlisting the aid of your provincial government in a bid to boost sales overseas can’t hurt. Not so long ago, the Asbestos Institute in Montreal took Quebec’s mines minister along on a trip to the Far East in hopes of finding new markets for the province’s asbestos industry. And British Columbia’s mines minister recently took part in a 6-day trade mission to Japan and Korea to promote her province’s coal, mineral and energy sales in the Pacific Rim.

While Quebec’s asbestos industry appears to have rebounded from hard financial times, British Columbia’s coal industry has lost money the past four years. During the 1988-91 period, British Columbia’s total metallurgical coal shipments averaged 21 million tonnes; the Japanese steel industry purchased about 60% of that total, while Korea increased its volumes to 18% from 14%.

The economy may or may not be set to improve in 1993. The rate of inflation seems to have stabilized at a fairly low level, but corporate debt levels, despite much paring, remain high and interest rates continue to vacillate. The Canadian resource sector in particular has been hit hard by world recession, falling commodity prices, the debt loads mentioned above and (until last year) an overvalued dollar.

Corporate retrenchment policies may well carry on into 1993 and plans to make a splash on the global stage may have to proceed at a slower pace. The news from abroad, in most part, seems to be accompanied by a welcome sign, reason enough for mining companies to dream of an international success or two.