EXPLORATION & DISCOVERY: INDUSTRIAL MINERALS

DIAMONDS

By Michel Boucher

Following a discovery by BHP and Dia Met at Point Lake in the Northwest Territories, diamonds have become the focus of the hottest land staking fever in Canada since the Klondike gold rush. This surge, involving major players in the industry, has involved the staking of several million hectares in the Northwest Territories. Exploration for diamonds has also rapidly expanded in Alberta, Saskatchewan, Manitoba, Ontario and Quebec. (See the exploration review by D. Cranstone and G. Bouchard in this issue.)

World production of natural rough diamonds in 1991, the latest year for which statistics are available, was estimated at 105 million carats valued at $5.2 billion or $50/carat. Of this, about 50 million carats consist of low value (50-$5.00/carat) industrial diamonds; 35 million-40 million carats near-gem ($5-$25); and 15 million-20 million carats gem-quality diamonds. In terms of value, gems represented more than 75% of the total value; near-gems close to 20%, and industrial less than 5%.

World production of natural diamonds grew from 55 million carats per year in 1983 to close to 105 million carats in 1991. A good portion of the increase was due to sales to Japan during the 1980s.

Natural diamonds are produced by some 20 countries; however, close to 95% of world production by weight comes from only five countries –Australia (36 million carats), Zaire (20 million), Botswana (18 million), Russia (15 million) and South Africa (8.4 million). Highest value diamonds are found in Namibia, South Africa, Guinea, Sierra Leone, Central African Republic, and Angola. Major markets for diamonds in jewellery are the United States (30%), Japan (30%), and Europe (17%).

In the short term, there should be a surplus of diamonds on world markets. However, by the mid- to late-1990s, consumption of natural diamonds should increase as the Western economies recover and as sales increase in Southeast Asia. After 2000, sales of diamonds are also expected to pick up in eastern Europe. According to Johnson, Marriott & von Saldern, by 2000 the annual production of natural diamonds will be 84 million-136 million carats, with a best estimate of 113 million carats.

ASBESTOS

By Patrick Morel-A-L’huissier

In 1992, Canadian asbestos mines operated at close to 100% capacity and average prices increased up to 8%. Estimated total shipments in l992 were 601,263 tonnes, valued at $235.8 million, compared with 1991 revised figures of 686,008 tonnes, valued at $271.0 million. The decrease in shipments reflects the closure of Cassiar’s McDame underground mine in British Columbia and reduced output by JM Asbestos at its Jeffrey mine in Quebec in order to concentrate on development. Last year also saw the Quebec government sell its stake in the asbestos industry to Mazarin. Employment in asbestos mining and milling in Canada decreased, again reflecting the closure of the McDame mine.

Canadian export volumes for 1992 are estimated to be about 580,000 tonnes, a 15.5% decrease from the previous year. In the January-to-September, 1992, period, they totalled 434,908 tonnes, valued at $253.8 million, compared with 474,289 tonnes, valued at $289.4 million for the same period in the previous year. The 20.2% decrease in value is explained by the fact that the fibres produced by Cassiar had a high unit value in comparison with other Canadian production.

The U.S. Bureau of Mines estimates 1992 Canadian asbestos imports into the United States at about 32,000 tonnes compared with 34,525 tonnes in 1991. The 7% decrease is due to lingering effects of the now overturned 1989 ban rule of the U.S. Environmental Protection Agency (EPA).

The overturn by U.S. courts in 1991 of the 1989 EPA asbestos ban rule has had a positive effect on the Canadian asbestos industry. The negative trend in Canadian exports to the United States has moderated. In another positive development, the benefits and safety of asbestos-cement products are increasingly recognized around the world despite growing competition by substitute fibres and steel. There are also signs of modest recovery in the brake lining aftermarket; 1993 should be a critical year in this area. Asia remains a major market for Canadian fibres; elsewhere, gains are expected in South America.

Canadian production is expected to remain stable in 1993 and 1994. Production should increase again in 1995 when JM Asbestos returns to its original 300,000 tonnes annual capacity upon completion of its Phase D development.

CONSTRUCTION MATERIAL

By Oliver Vagt & Michel Bergeron

Total Canadian producer shipments in 1992 of primary construction materials — including cement, gypsum, stone and mineral aggregates — were an estimated 9% lower than in 1991. The annual value of production is currently about $2.2 billion (1990-92 average), representing about 15% of the non-fuels minerals sector.

Shipments of cement in 1992 were estimated to be 8.5 million tonnes valued at $739 million, a decrease of about 9% by volume and value over the previous year. This decrease mainly reflected weak construction activity in Quebec and Ontario. Demand was up marginally in the Prairie and Atlantic provinces and up an estimated 7% in British Columbia. As cost-cutting measures during the recession, several companies temporarily shut down kilns. Also, the recycling of wastes as fuel has become more important, at the same time reducing dependence on non-renewable fossil fuels.

Shipments of crude gypsum were 6,892,000 tonnes valued at $79.2 million in 1992, compared with 6,727,000 tonnes valued at $71.7 million in 1991. Output from Nova Scotia, mainly dependent on exports to the United States, remained about the same, whereas shipments from Ontario and British Columbia were higher.

Final shipments of dimension stone (mainly granite and limestone) were estimated to be at least 15%-20% lower in 1992, reflecting the current downturn in commercial building. Granite is a case in point. In North America, office building vacancy rates in many centres are currently 15% to 25% and it may take up to five years before a return to historic levels. To counteract the above situation, Canadian granite companies are emphasizing import replacement and penetration of foreign markets other than the United States.

Total shipments of mineral aggregates decreased about 7% to about 280 million tonnes in 1992, the lowest since 1982. Housing starts in Canada increased about 7.5% in 1992. However, weakness in non-residential building construction as well as in engineering construction is expected to delay a recovery in demand for primary construction materials. Recently announced federal and provincial government plans to increase expenditures on selected infrastructure will provide stimulus to the engineering sector.

GRAPHITE

By Michel Boucher

During 1992, graphite was commercially produced by Stratmin in Quebec and Cal Graphite in Ontario. Graphicor remained inactive during the year due to declining markets and low recoveries from its Diotte orebody.

Although world demand for graphite declined due to the recession, Canada’s production and shipments increased substantially. Stratmin produced 17,000 tonnes and Cal Graphite produced 4,500 tonnes. Total estimated shipments for Canada were 21,800 tonnes in 1992 compared with 8,300 tonnes in 1991. Prices continued to decrease due to strong competition and reduced demand. The only company involved in exploration activity for graphite in Canada was Mart Mining and Exploration of Labrador City; its probable reserves indicate 6.0 million tonnes grading 17.3% graphitic carbon.

POTASH

By Michel Prud’homme

World production of potash in 1992 dropped 7% to 24.1 million tonnes in K2O equivalent compared to 26 million tonnes in 1991. Most of the decline occurred in the former Soviet Union (FSU); lower output prevailed there, in Germany, North America, Latin America and the Middle East. Capacity was curtailed in Germany, Belarus and Russia, while some expansions occurred in China, Chile and the United Kingdom.

Several events in 1992 affected curre
nt and future potash supply:

A German plan announced in late December to restructure and rationalize potash mines in the wake of re-unification.

A joint China-Israel potash project to develop a new 800,000 t/y K2O mine in China for completion by 1998.

Major one-year trade agreements concluded between several U.S. potash producers and Potash Corp. of Saskatchewan to export U.S. potash offshore.

And aggressively-priced shipments from the FSU displacing traditional suppliers in key countries such as India and China.

World potash consumption declined significantly in 1992 despite a record year in the United States. The termination of potash subsidies in India dramatically affected world demand. Potash consumption continued to decline in Eastern Europe, the FSU and in Western Europe. Consumption in China, Japan and Indonesia were reported steady. In Latin America, demand for potash improved in Brazil. In the United States, potash fertilizer demand was strong during 1992.

In Canada, potash production decreased 2.8% from 7.4 million tonnes to 7.2 million tonnes K2O. Declines occurred both in Saskatchewan and New Brunswick, with the latter accounting for 15% of total production. During the year, mine shutdowns in Canada amounted to 118 weeks, of which 95% occurred in Saskatchewan. Potash sales declined slightly to 7.0 million tonnes K2O; lower offshore sales were only partially offset by stronger exports to U.S. markets. Inventories rose by about 0.2 million tonnes to 1.78 million tonnes K2O.

International Minerals & Chemical Corp. (Canada) experienced an increase in its water inflows in the K2 mine in late December. IMC Canada received environmental approval from the Saskatchewan government for the development of a 4.2 million tonnes KCl replacement mine project. A decision to proceed with the project is expected in the near future.

Total world demand for potash in 1993 is projected at 23.7 million tonnes K2O, a 1.9% decrease over last year with potash for industrial consumption accounting for 4.6% of the total. Fertilizer potash demand is forecast to be less than 22 million tonnes K2O. Marginal growth is anticipated in Africa and Oceania. Declines are forecast in North America, Europe and the FSU. Consumption in Latin America is expected to increase, with Brazil remaining stable. In China, potash consumption is forecast to increase 4%, while in India a 17% drop is anticipated. In North America, potash consumption is set to decrease as lower planted acreage for soybean and corn is projected. This will result in a 2% decline in potash consumption, to 4.8 million tonnes K2O for 1993.

SALT

By Patrick Morel-A-L’huissier and Paul Andrews

In 1992, Canadian salt production was an estimated 11.15 million tonnes, compared to 11.99 million tonnes in 1991, a 7% decrease. The decrease was mainly due to the recession coupled with relatively mild winter conditions. Estimated Canadian shipments in 1992 of all types of salt were 11.1 million tonnes, a 6.5% decrease from 1991. Ontario continued to account for 60% of the total.

The 1992 average unit value of salt shipments was estimated at $22.86/t, a 4.7% increase over 1991. Average prices remained flat. De-icing rock salt in bulk shipment varied between $25 and $94/t. Fine evaporated salt prices were $79-$120/t, while water conditioning-grade salt was sold at $5-$10 per 40-kg bag.

Apparent consumption of salt in Canada averages 11 million-11.5 million t/y. Chemical and de-icing uses account for 90%-95% of Canadian consumption. Demand in 1993 is expected to remain at its 1992 level in the de-icing sector mainly because of a relatively mild 1992-93 winter. The closure of the large Dow Chemical chloralkali complex in Sarnia, Ont., will result in a 15% reduction in the production of brines in Canada this year.

SULPHUR

By Michel Prud’homme

The previously balanced sulphur market entered into a medium-to-long-term oversupply period in 1992. World production of elemental sulphur in 1992 was estimated at 35.6 million tonnes, a 2% decline over the previous year. Major declines occurred in Mexico, Poland and the former Soviet Union (FSU), while increases were reported in Iraq, Canada, Western Europe and Japan. Production was stable in the United States.

World demand for sulphur in fertilizers decreased by 2%-2.5%. with lower consumption in Western Europe, Eastern Europe, Latin America, and the FSU. Sales remained relatively stable in Oceania. Growth in consumption was reported in Africa (notably in Morocco) and in the United States. In Asia, sulphur consumption rose in China and Taiwan, while it remained stable in Japan.

In Canada, sulphur production in 1992 was estimated at 6.4 million tonnes, an increase of 275,000 tonnes over 1991. Shipments of elemental sulphur dropped 15% to 5.9 million tonnes; almost all this decline came from offshore exports, which decreased 3.7 million tonnes. Sales to the United States rose slightly, and domestic sales were reported stable. Stocks at year-end rose to 3.3 million tonnes.

In Alberta, Shell Canada’s Caroline project was on schedule for initial start-up by early 1993 with a 1.4 million t/y sulphur capacity. In July, Shell terminated the 224 t/d sulphur demonstration project at its super-sour gas pilot plant at Bearberry. The tie-ins of Obed sour gas fields to the Kaybob III plant was delayed for one year. In August, Husky commissioned its new heavy oil upgrader at Lloydminster; the plant has a sulphur recovery capacity estimated at 90,000 t/y.

In 1993, Canadian sulphur production is projected to reach to 7.4 million tonnes, a 1.0-million-tonne increase. World sulphur production is also expected to increase significantly, mostly due to gas-related developments in Canada, Abu Dhabi, and Qatar. Reductions in Frasch sulphur production are projected in Mexico, the United States, Poland and Turkmenistan. World sulphur demand for 1993 will face uncertainties in phosphate fertilizers consumption in both India and China. A significant reduction in fertilizer consumption would likely impact on imports of finished and semi-finished phosphate products from the United States and North African countries.