Speaking Notes
by
Honourable Walter Noel, MHA
Minister of Mines and Energy

Baie Verte Annual Mining Conference
June 20 - 21 2003
The Baie Vista Hotel


Introduction

Good evening.

It is wonderful to be here in Baie Verte with a group of people who represent so many good things which are happening in our province�s mining industry.

I wish to thank the Baie Verte and Area Chamber of Commerce for extending this invitation to me.

Brief History of Mining on the Baie Verte Peninsula

This region has made a significant contribution to advancing the province�s mining industry.

The mining history here is a long one � in fact, it is extremely long.

The first evidence of mining on the Baie Verte Peninsula is pre-historic soapstone mining found in Fleur de Lys. Archaeological evidence indicates that the region was first mined 4000 years ago by Maritime Archaic peoples.

1200 to 1800 years ago, the Dorset Palaeo-eskimo moved in. Evidence of scaring on the rock face point to an efficient soapstone mining operation that may have lasted hundreds of years.

In more recent times, the copper mine of Tilt Cove which began in 1864 and experienced several phases of activity.

At times it was one of the world�s largest producers of copper. The mine�s final boom was from 1957 to 1967.

Tilt Cove was also the site for the province�s first industrial smelter � albeit a primitive one � it operated in the late 1800's.

The asbestos mine at Baie Verte, like the copper operation at Tilt Cove, experienced a number of operational phases during its life-span. At its peak, approximately 450 people worked mining asbestos.

These examples just scratch the surface of the history of mining on the Baie Verte Peninsula and the northeast coast.

The history of mining in this area continues to be written � written in gold, copper, zinc, and other minerals � and all indications are that some exciting chapters are yet to be written.

Exploration Activity

There is a tremendous amount of exploration activity occurring in Newfoundland and Labrador. Exploration expenditures could reach $25 million this year.

That�s a little less than last year, however this is attributed to reduced exploration by the Voisey�s Bay Nickel Company (VBNC) because VBNC is now moving to the next phase � development. I�ll speak some more on the Voisey�s Bay Project in a moment.

Further exploration for base metals will take place in the Smallwood Reservoir in Labrador, the Bonavista Peninsula, and the Red Indian Lake areas.

Last year, 27,574 claims were staked on the island which broke the previous 1988 record by almost 2000 claims. It is estimated that an additional 15,000 claims will be staked on the island in 2003 with 5000 estimated for Labrador.

The territory staked last year is now subject to a resurgence in gold exploration. These sites are located throughout the island, but particularly in central, and include activity on the Baie Verte and Springdale Peninsulas and in the White Bay area.

Other areas include: Cape Ray; Victoria Lake; the Bay d�Espoir area; and in the Foxtrap region.

Industry analysts have been referring to our gold discoveries as a "mini gold rush".

The vast majority of exploration this year will occur in an area from Gander Bay to St. Albans and from Badger to Gander � this includes a large amount of activity in the Botwood Basin, and the area of the aptly-named Golden Promise gold discovery.

The Botwood Basin area is generating an incredible amount of speculation in investment circles.

The till samples gathered from sites in the Botwood Basin are showing significant gold values, and naturally this generates a lot of talk in the industry.

This was evident last March when I attended the Prospectors and Developers Association of Canada Conference in Toronto.

When you�re in a room with exploration and development professionals from all over the world and the discussion is about Newfoundland and Labrador, and they are talking "gold rush", it�s pretty impressive.

A Senior Vice President at one of Canada�s largest investment firms, Canaccord Capital � recognized as a leader in the resource sector � said recently in an interview, [quote] "I am going to make a call that the Botwood Basin becomes the next prolific gold rush play in Canada."

It certainly perks my attention to hear positive statements like that coming from the investment sector. Just this statement alone is great publicity � it helps put the province on the industry radar.

Incentive and Incentives

As we continue to promote our resources, we must also be resourceful, to find the balance between development and adequate benefits for our people.

The world is full of mineral, and petroleum, resources. Discoveries occur frequently all over the world. Getting adequate exploration and development is very competitive. We have to offer better opportunities for business success than available elsewhere to get the investment we want. Now, we don�t want it if it is not going to be beneficial for our province. That�s why the Voisey�s Bay negotiation took so long. We would not agree to a deal until it provided fair benefits.

But such developments mean a lot in jobs and economic activity. Where would we be today without Voisey�s Bay, iron ore production, White Rose, Terra Nova, Hibernia, and the others? We need these developments - if we can get them on satisfactory terms. We would all like to be getting more provincial benefits from all of these projects, and our government is committed to getting as much as possible, and we�re doing better all the time. But you can�t dictate the terms on which people invest. You can only negotiate them. And you have to reach a balance, and make a judgment. There will always be differences of opinion, and people who need jobs and business opportunities should not be satisfied if they are not getting them. While we have more people than ever employed in the province today, there are still too many without jobs. But where would we be without the projects we have? We simply have to make reasonable and justifiable and profitable compromises, and I believe we are doing a pretty good job of accomplishing that.

The current discussion about royalty regime adjustment to get the Hebron/Ben Nevis project going is a typical example of choices we have to make.

Our government will not make any changes which reduce long term benefits simply to get the project started. But it would be very positive for our oil and gas industry if it started soon. Otherwise we risk losing momentum, having companies and skilled workers move away, jeopardising exploration commitments, etc. Development of Hebron/Ben Nevis would enable us to keep building this industry.

While the resource is massive, it is relatively low value heavy oil which is difficult to produce economically. We are pressuring the companies to move forward because it could be a $3 billion development. We are encouraging them to be innovative and flexible, and they are asking us to help.

We are reviewing the situation. If we are convinced that adjustments could be made which would increase long term benefits and help advance the entire industry, we will make them. But only if that is the case.

But, getting back to mining. It is our Government�s approach to work closely with all stakeholders in the industry � and together we have created an environment that investors recognize as "mining-friendly".

The province is recognized as a good place to do business, and the Department of Mines and Energy is seen as a "user-friendly" department.

We have accomplished this by adopting straight-forward policies and procedures. For example, the department�s method of staking mining claims is called map staking � prospectors say it is a particularly easy way to stake a claim.

Getting a project off-the-ground, or in this case, out-of-the ground, is a process that requires money to support the work. Work on the ground is often performed by prospectors and small junior companies with limited resources.

With this in mind, the Mineral Incentive Program was formulated as a $22 million joint initiative with industry to advance activity in mineral exploration.

The program consists of three granting components:

The Prospectors Assistance Program (PAP) from which prospectors can receive grants up to $4000 for "grass roots" exploration, and up to $10,000 for advanced exploration.

The Junior Company Exploration Assistance Program (JCEAP) supports eligible costs to a maximum of $100,000 per project to conduct advanced exploration.

And the Dimension Stone Incentive Program (DSIP) which supports 50% eligible costs to a maximum of 100,000 per project for quarry development, resource assessment and infrastructure.

Government is very pleased by the progress achieved under the Mineral incentive Program, and reviews of the program from industry are also positive.

Since it was implemented in 1999, 377 prospector grants, 93 Junior company, and 21 dimension stone grants have been issued. Total expenditures to date total over $15 million with the province�s contribution of $7.7 million.

The total annual budget for the Mineral Incentive Program is $2.2 million.

Newfoundland and Labrador has a unique geology with a variety of mineral resources. A lot of exploration needs to be done. It is our intention to help accelerate the momentum we�ve built.

The Department of Mines and Energy actively supports the mineral industry with a competitive and accommodating land tenure process.

The department also provides up-to-date resource data, regulatory guidance, and mine engineering assistance.

We have a Geological Survey Division which is recognized as a world-class group by senior and junior mining companies.

The Survey division provides a comprehensive data base of the province�s geology and mineral resources to the public and private sectors. This detailed knowledge base is essential to support mineral exploration and development.

In so far as we can determine, industry feels that our approach is working.

And judging from the fact that approximately 120 mineral exploration companies are active in the province, I can say that we have a solid framework.

Update on Mining Activities

The Government is always conducting a little prospecting of its own. Seeking out ways to improve and encourage exploration and development.

Working in close association with industry, we have accomplished a great deal.

The value of mineral shipments this year is forecast to increase from $792 million [last year], to $826 million � more shipments of iron ore products from Western Labrador will lead the increase. The value of the iron ore operations is $766 million this year.

In addition, the mineral industry creates good paying jobs which further contribute to our economic health. Direct employment in the industry is forecasted to rise from 2600 last year, to 2700 this year � activity on the Voisey�s Bay Project will account for most of that.

Richmont Mines continues to mine the Hammerdown gold deposit near King�s Point and to process the ore at the Nugget Pond milling facility.

Richmont plans to conduct exploration on a number of potential gold sites in this area to find more resource in an effort to maintain production at the Nugget Pond Mill.

Beaver Brook Resources Limited purchased the antimony mining and milling assets at Beaver Brook in 2002. The company is currently exploring options to reactivate operations later this year. The drill-indicated resource is sufficient to sustain production for approximately 15 to 20 years.

Aur Resources with its acquisition of Duck Pond is setting up camp at Millertown and expects to mine 32 million pounds of copper, 60 million pounds of zinc, 400,000 ounces of silver, and 2100 ounces of gold annually, for approximately 10 years.

Voisey�s Bay

The Voisey�s Bay Project is now moving to its development phase. There is certainly no shortage of media coverage and public inquiry on this one.

But that�s to be expected with a project of this magnitude. There are reserves to be mined, and milled, and processed right here in the province.

Government intends to keep the whole project as transparent as possible. However, we have to work within the parameters of signed legal agreements.

It is important for everyone to acknowledge and respect the right of private companies to conduct business.

Having said that, I can assure you that Government is monitoring its progress, to make certain that Inco and the Voisey�s Bay Nickel Company deliver on their commitments.

And we are confident they will, including on the adjacency provisions. After all, it was a company decision to apply an adjacency principle that would give those nearest the resource fair and equal opportunity for jobs.

The Industrial Benefits Agreement which Government signed with Inco is further assurance for local businesses that they will have the opportunity to participate.

The Voisey�s Bay Project will certainly provide opportunities for entrepreneurs, in both direct and spin-off business.

Since last June, Inco has invested approximately $55 million in its sites at Voisey�s Bay, Argentia, and St. John�s, and employed approximately 250 people.

Construction work for this year will include upgraded and expanded infrastructure at the construction camp; a communications system will be installed; land will be cleared at the site of the mill/concentrator; more roadways will be built, and a permanent airstrip is scheduled to be completed.

This construction season, the Voisey�s Bay Nickel Company expects to have peak employment of 400 to 500 people at the site.

Meanwhile at Argentia, office and warehousing space is scheduled to be completed in July, and additional environmental and engineering studies related to road and utilities infrastructure will be carried out this season.

Work on the Inco Innovation Centre will commence soon with the start of renovations to the former Thomson Student Centre building at Memorial University.

All of this work and investment will be an enormous economic boon to our province. The impact on the provincial Gross Domestic Product over the 30-year project period is expected to be $11 billion.

With further exploration and development it is highly anticipated that we�ll be mining nickel in Labrador for more than the publicized 30-year period.

In fact, VBNC will undertake an extensive program in an effort to expand the life of the project. It is estimated that an additional 100 million tonnes of nickel resource lies in underground deposits.

Mine Site Rehabilitation Activity

The reality of mining unrenewable resources is that eventually the resource is depleted. An important final step is rehabilitation of the mine site.

We continue to work with new and existing leaseholders regarding requirements under the Mining Act. One of the requirements is financial assurance for mine site rehabilitation. We want to ensure that funding exists to provide for site rehabilitation at the end of a mine�s life.

The Department�s abandoned mine site rehabilitation program will continue this year � work is scheduled for ten sites.

As well, Department officials are assisting industry with the rehabilitation of properties still held under lease.

Conclusion

This conference provides a good chance for business, government, prospectors, investors, and all stakeholders to meet and talk about the mining industry in Newfoundland and Labrador.

It�s an excellent opportunity to exchange information and to socialize.

This is an exciting time to be involved in the mining industry.

Thank you for giving me this opportunity to speak with you this evening.

Back to News Release

2003 06 20

 


SearchHomeBack to GovernmentContact Us


All material copyright the Government of Newfoundland and Labrador. No unauthorized copying or redeployment permitted. The Government assumes no responsibility for the accuracy of any material deployed on an unauthorized server.
Disclaimer/Copyright/Privacy Statement