By James Neeley
Expect a cool season for the regions mining supply and service sector now that Vale Inco has announced plans to shut down for possibly three months.
"The (expected) May shutdown will be the usual amount of work to be done," said Dick DeStefano, executive director of the Sudbury Area Mining Supply and Service Association (SAMSSA).
"But in the following two months we're sure the volume will be cut dramatically, which will definitely have some impact on the supply industry," he said.
"But there is no way to measure it until we see how much work is done during May."
Vale Inco has allocated dollars for maintenance, clean up and upgrade work, DeStefano said.
"But by the time June and July are finished that may depleted and (that will) have an impact.”
It's causing the members to look for other markets.
"You can be optimistic. It's all going to turn around, but it won't be this summer."
DeStefano said the supply sector is sustainable.
"They are still employing about 8,500 people in the Sudbury area, double the amount employed in mining," he said, explaining there are close to 500 companies in Northern Ontario.
Many of these suppliers have been operating for more than 40 years and have been through down cycles before, DeStefano explained.
"They manage and expect things ... and they have expanded their economic base by going global."
SAMSSA members are branching out, and also receiving requests from operations as close as Manitoba to as far as Nevada, Peru, Mexico and China.
A venture into supplying the potash industry, a move that was expected to pay huge dividends, has been crippled by the economic downturn, DeStefano said.
In August 2008 members of SAMSSA made their pitch to procurement executives from the Saskatoon-based PotashCorp.
There was a high expectations, with about 14 companies having made contact, DeStefano said.
"But potash production has significantly dropped in the past six weeks, by 50 per cent and now potash is in the same boat as everyone else," he said.
SAMSSA saw the opportunity coming and made the jump.
"It looked really good, and it probably will be good in the future," he said, explaining fertilizer is a mainstay.
"It will come back."
There are other opportunities out there, like gold and uranium, DeStefano said.
"There are going to be 100 nuclear plants built in the world in the next 10 years, so our members are chasing down the uranium mines and gold is still very powerful commodity," he said.
Mining exploration is still active in British Columbia, and the gold and copper operations in Northern Ontario are looking stable.
"It all fluctuates, and the key is being flexible, adept and being able to take your products and services to other places," he said.
"There are no bankruptcies in our association, but there are layoffs."
www.samssa.ca
