THE CANADIAN ECONOMY IN 1992

In 1992, Canada’s Gross Domestic Product (GDP) grew by an estimated 1.2%. This was a very modest gain in light of the reduced economic output that was recorded in each of the two previous years. Throughout the year, merchandise exports were the major source of strength to an otherwise struggling Canadian economy. Increased housing activity also helped to sustain the recovery during 1992.

The rate of recovery could simply be described as weak and agonizingly slow, particularly to the more than 1.5 million Canadians who found themselves unemployed. The economy continued to be held down by weak consumer spending, plant layoffs and closings, high unemployment, depressed levels of investment in non-residential building construction and record numbers of bankruptcies. As the year progressed, however, there was encouraging improvement in some sectors of the economy.

The overall pace of economic improvement was not sufficient to prevent the unemployment rate from increasing over the course of the year, averaging 11.3% compared with 10.3% in 1991. At year-end, total employment in the goods-producing industries was down by 2.0% from the previous year. Capacity utilization rates in the non-farm, goods-producing sector of the economy averaged 77.8% during the first nine months of the year. In the manufacturing sector, capacity utilization averaged only 74.2% during the same period.

Investment in non-residential building construction continued its decline which began in early 1990. Poor profit levels, low capacity utilization rates and weak corporate balance sheets continued to inhibit investment in building construction. Business investment in machinery and equipment, however, maintained an upward trend since the beginning of the year.

THE MINERAL INDUSTRY IN 1992

Although mineral fuels are normally included in reporting the overall value of Canada’s mineral production, the main focus of this review is the non-fuel sector plus coal. The industry is defined to encompass mining and concentrating, smelting and refining, as well as the minerals- and metals-based semi-fabricating and fabricating industries.

Excluding the oil and natural gas industries, the mineral industry accounts for about 3% of total national employment and more than 4% of Canada’s GDP (including the coal sector). Over 16% of Canada’s total domestic exports in 1992 were attributable to non-fuel minerals and coal.

MINERAL PRODUCTION

Preliminary estimates show that the total value of production of all mineral commodities, including mineral fuels, increased from $35.2 billion in 1991 to $35.4 billion in 1992, an increase of 0.6%. In comparison to 1991, the results for individual commodities were mixed, as advances in the value of output of some minerals were offset by losses in others.

The value of production by the four mineral commodity groups (metals, non-metals, structural materials and fuels) is summarized in the table above.

Excluding mineral fuels, the overall value of production declined from $15.3 billion in 1991 to $14.6 billion in 1992, a decrease of 4.4%. In general, commodity prices remained low. Based on value of output, the top non-fuel commodities in 1992 were gold ($2.1 billion), copper ($2.1 billion), zinc ($1.7 billion), nickel ($1.7 billion), iron ore ($1.1 billion) and potash ($1.0 billion). Non-fuel minerals accounted for 41.2% of the total value of Canada’s mineral production in 1992.

NON-FUEL MINERALS AND COAL TRADE

The total value of mineral exports (excluding petroleum and natural gas, but including coal) was estimated at $18.4 billion for the first nine months of 1992, an increase of 3.5% over the corresponding period in 1991. These exports included crude minerals, smelted and refined products, semi-fabricated and fabricated forms. Overall, they represented 16.4% of Canada’s total domestic exports. The United States received 58.8% of Canada’s exports of non-fuel minerals and coal, the European Community 13.3% and Japan 9.9%.

Non-fuel mineral and coal imports for the first nine months of the year were estimated at $10.2 billion, or 9.3% of total Canadian imports. On balance, this resulted in a trade surplus for non-fuel minerals and coal of more than $8.2 billion for the first three quarters of 1992. It is estimated that the surplus for the full year will be approximately $11 billion.

EMPLOYMENT

Initial estimates for 1992 indicated that total employment in the mineral industry was about 338,000, down 3.7% from 351,000 in 1991. This decrease reflected the fragile state of the economy and the continued weakness in labor markets, particularly in the goods-producing sectors. Overall, the industry accounted for 2.8% of total national employment in 1992. All stages of the mineral industry experienced a decline in employment during the year.

The total number of employees in Stage I (metal mining, non-metal mining, quarrying and coal mining) was estimated at 64,000, down from 69,000 in 1991. In addition, there were approximately 8,600 people employed in diamond drilling and other services incidental to mining operations. Employment in Stage II (non-ferrous smelting and refining and the primary steel industries) was estimated at 58,000, down from 64,000 in 1991.

Employment in Stages III and IV (semi-fabricating and fabricating mineral industries) fell from 218,000 in 1991 to 216,000 in 1992. Total employment in Stages I and II fell by 8.3% compared with 0.9% for Stages III and IV combined. The semi-fabricating and fabricating industries, however, had recorded a 13% decline in the previous year compared with 7.3% for the mining, smelting and refining industries overall.

ECONOMIC OUTLOOK FOR 1993

According to most forecasts for 1993, growth in the Canadian economy was expected to be in the range of 3% to 4%, about half of the historical rate of recovery from previous recessions. Exports were seen to continue as one of the leaders in the economy, spurred by an improving U.S. economy and a low Canadian dollar. The pace of recovery was not expected to have much impact on the unemployment rate, which was forecast to remain in double digits. With lingering weakness in the major economies of the world and weak demand for goods, there will continue to be downward pressure on commodity prices. There were recent indications, however, that international economies would show signs of improvement by mid-1993. n

For more information on the products and services of the Mineral Policy Sector and a listing of its publications, contact: Mineral Policy Sector, Energy, Mines & Resources Canada, 460 O’Connor St., Ottawa, Ont., K1A 0E4, telephone (613) 996-1611, facsimile (613) 992-8581. For commodity specialists, see telephone listing on page 27.

Value of Canadian Mineral Production

1991 1992p Change

($ millions) ($ millions) (%)

Metals

10,473.1 10,209.2 -2.5

Non-metals

2,381.7 2,199.4 -7.7

Structurals

2,405.1 2,184.1 -9.2

Total Non-fuels

15,259.9 14,592.6 -4.4

Total Fuels

19,945.3 20,819.9 4.4

Total

35,205.2 35,411.5 0.6

Note: Due to rounding, items may not add to totals shown. p = preliminary data.

Exports of mineral commodities by commodity as defined by the Harmonized System, 1990-92

HS Description 1990 1991 19922

($ 000) ($ 000) ($ 000)

25 Salts; sulphur, earths or stone; 1,462,317 1,358,391 843,213

plastering materials, lime and cement

26 Ores, slag and ash 3,095,432 2,465,670 1,815,182

27 Mineral fuels, oils and products of 15,184,214 15,639,733

12,238,108

their distillation; bituminous substances; minerals waxes3

28 Inorganic chemicals; compounds of 1,611,206 1,507,086 1,247,257

precious metals; radioactive elements, etc.

31 Fertilizers 1,662,113 1,554,148 1,205,728

68 Articles of stone, plaster, cement, 333,069 336,630 261,444

asbestos, mica or similar materials

69 Ceramic products 57,643 44,017 37,227

70 Glass and glassware 377,047 355,848 311,023

71 Natural or cultured pearls, precious 2,684,561 2,649,702 2,217,550

stones and metals, coins, etc.

72 Iron an
d steel 2,117,778 2,167,208 1,806,119

73 Articles of iron and steel 1,669,706 1,644,903 1,241,263

74 Copper and articles thereof 1,413,026 1,431,646 1,109,351

75 Nickel and articles thereof 1,467,691 1,416,985 1,237,571

76 Aluminum and articles thereof 3,495,786 3,333,900 2,639,505

78 Lead and articles thereof 118,902 86,856 91,240

79 Zinc and articles thereof 892,206 759,130 621,357

80 Tin and articles thereof 8,952 8,310 7,350

81 Other base metals; cermets; 193,851 212,910 161,166

and articles thereof

Total mineral exports 37,845,500 36,973,073 29,091,654

Total domestic exports 141,720,127 138,079,020 112,619,282

Percentage mineral to domestic 26.7 26.8 25.8

1. HS Chapter refers to a group of commodities covered in a specified chapter of the “Harmonized Commodity Description and Coding System” as of Jan. 1, 1988. Canadian external trade statistics are classified according to this system. 2. First nine months of year. 3. The value of coal exports included in Chapter 27 was $2,276 million in 1990, $2,235 million in 1991, and $1,577 million in 1992.