Toronto — The slump in world mineral prices has left Canadian mining companies with staggering losses and Canadian miners with little to live on but unemployment insurance.
Canada's largest mining company, Inco Ltd. (formerly International Nickel), has lost $674 million in the past two years. The entire town of Schefferville in Labrador has been closed down because it isn't worth it to mine iron ore there. The Yukon Territory, the place Robert Service made famous with his poetry, has lost an estimated 25 percent of its population because of mine closings there.
It is a bleak picture, but one that should improve with the expected upturn in the North American economy. When the United States and the rest of the world are not buying cars and kitchen sinks, there is little need for Canada's nickel and copper.
Canada's largest copper producer pulls the stuff out of the ground at a place called Coppercliff, in northern Ontario. The company is Inco, and Coppercliff is a city just a few miles away from Sudbury, home of the largest nickel deposit in the world, created when a meteorite smashed into the earth here millions of years ago.
Coppercliff and Sudbury are surrounded by barren rocky landscape and miles of black slag heaps, which are always being loaded and put through sifters to extract that last bit of value. The huge Inco smokestacks belch out sulfur, creating some of the acid rain Canadians love to blame Americans for. The landscape is so bleak that when American astronauts wanted a spot to test-drive their moon vehicle, they came to Sudbury basin.
As a major copper producer, Inco pulls out a ton of copper for every ton of nickel, but it was paid $2.71 a pound for nickel in 1982 and 71 cents a pound for copper. In '81, nickel prices had been $3.10 a pound, while copper went for 82 cents a pound. Those numbers contributed to Inco's $204.2 million loss last year.
Its operations in Sudbury and Coppercliff have been shut down since last summer. This month, however, 11,000 miners will return to work. The company says there has been some increase in demand for its metals. It also needs to rebuild the stockpiles of some of the metal it produces. In addition to copper and nickel, Inco produces cobalt, gold, platinum, and silver at Sudbury.
Canada produces a little more than 9 percent of the world production of copper. The recession that hit the biggest copper producer has also struck the other producers. Bell Copper in British Columbia has shut for good. There is some doubt about whether producers such as Granduc in British Columbia and Gaspe Copper in Quebec will reopen.
The producers that do survive will be in a stronger position, according to Robert Buchan, executive vice-president and mining analyst at the Toronto firm of Brown Baldwin Nisker. ''The producers who have survived this, who have been able to improve their operating costs per pound, will likely get into a profitable position at a lower price than might have been expected a year or so ago.''
One of the main problems faced by Canada's mining industry over the recession was that it had to deal with mounting interest charges, especially in paying for recent acquisitions. An example is Noranda, the largest copper producer after Inco. It bought MacMillan Bloedel in 1981 for $62 a share, and the pulp and paper company has been losing money ever since. MacMillan Bloedel shares are selling at around $26. Other mining companies made similar mistakes. ''Once they step outside the mining business they usually stub their toes,'' Mr. Buchan says.
The major mining companies have substantially reduced their debt-to-equity ratios, however, by floating new equity issues. Inco, Falconbridge, and Placer raised money in this way, and Cominco is preparing an equity issue at the moment.
Gold is the bright spot in Canadian mining. A major new gold discovery at Hemlo, in northern Ontario, is expected to be in production within two years. By the end of this decade gold output in Canada could rise from 1.8 million ounces a year to about 3 million ounces per year. Canada is already the world's third-largest gold producer, after South Africa and the Soviet Union.
Along with those two countries, the United States, and Australia, Canada is one of the five superpowers in the world of minerals. Having a long list of superlatives in mining, Canada is No. 1 in nickel and zinc, No. 2 in uranium, No. 3 in silver as well as gold, No. 4 in lead, and No. 5 in copper.
But those statistics are meaningless as long as depressed world prices keep Canadian mines and smelters on standby, waiting for the upsurge in both prices and demand.