March 22, 2000
(Mines and Energy)

Budget reflects government�s continuing commitment to 
energy mineral and petroleum resource development

Mines and Energy Minister Paul Dicks says the 2000-2001 budget for Mines and Energy, which is set at $18,194,600 reflects government�s continued commitment to the development of the province�s energy, mineral and petroleum resources in the overall best interests of the citizens of Newfoundland and Labrador.

"Government fully understands that exploration is an essential component in the development of energy, mineral and petroleum resources," said Mr. Dicks. "It has been proven that exploration leads to the discovery of new resources and, in turn, results in the generation of new wealth through new investment, employment and business opportunities."

Mr. Dicks said that royalties and taxes are important benefits from all aspects of energy, mineral and petroleum resource development. "Some of the more visible benefits from the general public�s perspective are the significant direct and indirect benefits generated as these resources are assessed, explored and managed. Mineral and energy sector related business growth and job creation have positive economic and social impacts on communities in both the urban and rural areas of the province."

The minister said the mining, energy and petroleum industries contribute significantly to the provincial economy. "It is essential for government to support mining, energy and petroleum industries that optimize provincial revenues. However, in doing so we must ensure that our policies are also fair to the private sector investors and, in particular, encourage continued high levels of petroleum and mineral exploration and development."

"As a government, we must never lose sight of the fact that we have an obligation to optimize full and fair benefits for the province�s citizens while balancing the private sector�s needs for a fair return on their resource investments." Mr. Dicks said.

The minister said these are exciting times for mining, energy and petroleum industries and these sectors represent important and increasing proportions of total outputs from the province�s economy.

For example, the total value of output from the mining and energy sectors is currently $1.353 billion for a total contribution of provincial Gross Domestic Product (GDP) of approximately 13 per cent - i.e. 8.2 per cent from mining and oil and 4.8 per cent from electricity.

In addition, total employment in these sectors currently represent approximately 6,500 annual person years of direct employment (4,400 in mining and oil; 2,100 in electricity). Associated spin-off employment is estimated to represent a further 6,600 person years for total employment of approximately 13,100 person years.

In the near term, the province can look forward to an explosion in the value of outputs from the mining, electricity and petroleum sectors. Over a dozen mineral commodities including gold, copper, slate, limestone, dolomite, gypsum and more than 55 per cent of Canada�s iron ore products are being produced in this province.

In addition to the announced Hammerdown gold mine, three other mines will likely begin final feasibility and preparations for development and production this fiscal year, including the Duck Pond/Boundary Project, a copper and zinc deposit located southeast of Buchans; the Shabogamo Mining Project, a silica development at Labrador City, and the Blue Beach/Tarefare Deposits, a fluorspar development at St. Lawrence.

"Energy projects will also continue to make significant economic contributions to the provincial economy in the near term. Hibernia, a discovery of global significance, continues to set Canadian production records; Terra Nova is set for production in 2001 with White Rose, Hebron and other fields to follow," Mr. Dicks said.

Based on projected levels of production for Hibernia, Terra Nova and other fields, offshore oil production could reach 500,000 barrels of oil per day, approaching 40 per cent of Canada�s total conventional light oil production by 2004.

"As well, a $65 million expansion is under way at the transhipment facility at Whiffen Head and the North American Refinery Limited continues to produce some of the world�s highest quality petroleum products which it sells in 13 countries throughout the world," said Mr. Dicks.

In addition to these mineral and petroleum developments, there is the proposed development of the Labrador Hydro Project. Through co-ownership with Hydro Quebec, this Lower Churchill River basin project will generate significant investments and outputs.

By 2005, the activities of the energy, mineral and petroleum industries combined could produce additional new provincial treasury revenues of approximately $450 million per year or approximately 24 per cent of existing, provincial sources, current account revenue.

Mr. Dicks said: "These developments, and ongoing operations, require sustained, private sector capital investment and will continue to offer significant employment opportunities to rural Newfoundland and Labrador."

Within five years, 2,100 to 3,000 new direct mining and petroleum sector jobs could increase the total direct employment associated with the mining and energy sectors to between 8,600 and 9,500 person years of direct employment, between a 30 per cent and 40 per cent increase over current levels. Associated net spin-off employment could result in a doubling of existing total employment levels in the sector.

"The mining and energy sectors are growing and the department will continue to take steps to ensure the province receives optimum value from its mineral and energy resources," said Mr. Dicks. "We will also take the appropriate steps to ensure that the citizens of Newfoundland and Labrador receive full and fair benefits from both of these important sectors."

Minister Dicks said he is optimistic that the province�s continued budget support to the department will further support and encourage private sector investment in the province�s energy mineral and petroleum resources.

Media contact: Gary Callahan, Communications, (709) 729-4890.

2000 03 22