Engineering & Mining Journal

OCT 2013

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NORDIC MINING 2013 Nordic Mining and Exploration: Facing New Challenges While the Nordic countries have not been immune from the current slowdown in exploration activity, there is still plenty going on as companies continue with project developments. E&MJ; looks at some of the challenges—and the continuing successes. By Simon Walker, European Editor Worldwide, exploration spending has been one of the most prominent casualties of the current wave of economic uncertainty that has been bathing the mining sector. The Nordic countries—Norway, Sweden and Finland, together with Greenland— have been no exception to this trend, with many of the junior companies that were featured in last year's review in E&MJ; (See October 2012, pp. 38-50) now reporting reduced drilling budgets and, more alarmingly, a much tighter funding environment. Again on a global scale, the most recent edition of information provider IntierraRMG's State of the Market snapshot on exploration, it emphasizes that companies have indeed been struggling to find the money they need for their projects. "Falling metals prices, nervous bankers and riskaverse investors contributed to a further slump in funds raised [from the previous quarter], with only $431 million* received for exploration programs in the three months to end-June," the company said. And, with that amount covering the whole world, it is easy to see why spending in the Nordic region has been hit especially hard. No matter that the Nordic countries bask in a wholesome reputation for stability, probity and administrative transparency. No matter that Sweden and Finland in particular have a world-class (and still relatively untapped) geological endowment. No matter that these are renowned as being good places to do business. The money is not there, and the junior exploration companies are cutting their cloth to suit. Another worrying aspect that has emerged since last year's review relates specifically to the iron-ore sector. With the world's steel industry nervous over demand trends, and big producers such as Australia and Brazil still in the middle of vast production capacity expansion projects, some of the world's smaller suppliers have found it tough to keep going for over the past 12 months. Recent data from the World Steel Association suggest that crude steel production for the first six months of 2013 was 789.8 million metric tons (mt), a 2% increase year-on-year with—perhaps unsurprisingly—Asian producers leading the way. However, that can have been of little comfort to the smaller Nordic producers, since Asia is not really their prime marketplace. By contrast, not only was crude output from steelmakers in the European Union 5.1% lower in the first-half of 2013 compared to 2012, but also a whopping 9.8% down on the equivalent period in 2011. Little wonder, then, that some of the emerging iron-ore suppliers have been in trouble, given the double-whammy of rising capex costs for their new operations and lower demand in their backyard markets. The other area where Norway and Iceland in particular offer major advantages over competitor countries is in energy supply. Norway's hydro-electricity resources have long been the foundation for not only its aluminum-smelting sector, but other metallurgical plants as well. Iceland offers similar, if smaller, opportunities, while Sweden and Finland are home to major base-metals smelting operations that draw their feedstocks from both domestic and import sources. Even fertilizer production is big business, again drawing on local resources such as phosphate-bearing rock and hydrocarbons as its raw materials. In an uncertain economic climate, it could be easy to be somewhat gloomy about the state of exploration, mining and metallurgy in the Nordic region. Instead, this edition of E&MJ;'s annual Nordic review focuses on the strengths of the industry in this part of the world, which is continuing to attract international attention as a major mining center. *All currency figures in US dollars unless otherwise indicated. 28 E&MJ; • OCTOBER 2013 The Geological Endowment In simple terms, most of Finland and much of northern Sweden consists of Precambrian basement—the Baltic Shield—while on the other side of the north Atlantic, Greenland is predominantly underlain by a section of the Laurentian Shield that extends across northern Canada. Between the two, on the eastern side of Greenland and through Norway, rocks of the Caledonian fold belt run up against the older basement blocks, with oceanic spreading having separated them into two of what was originally a continuous structure. Historical mining for iron ore, copper, zinc, lead and silver within the more accessible parts of Norway, Sweden and Finland proved that the potential of the Baltic Shield rocks hosting economic deposits was no less than that of shield areas in other parts of the world. Indeed, with the possible exception of far southern Sweden—and, of course, of Denmark, which has never hosted a mining industry of note—virtually the whole of the Nordic region offers attractive exploration potential. Remember as well that the Baltic Shield does not stop at the Finnish border, and that neighboring regions of Russia not only support long-standing mining industries, but also remain substantially underexplored using current technology. Over the past quarter-century, national governments have progressively liberalized exploration and mining, moving away from state control to relying on private-sector investment. A few vestiges of state ownership remain, notably in the form of the Swedish iron-ore company LKAB, although even this has been restructured as a public-limited company so as to give it better access to funding for its long-term development programs. The moves have galvanized the region's industry, with major investment in both exploration and new mine developments. www.e-mj.com

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