For the second time in six years, the Cantung tungsten mine is closing its doors.
The NWT-based mine is set to shut down October 15, leaving more than 200 workers unemployed, including 75 Yukoners.
Only three months ago, North American Tungsten CEO Stephen Leahy assured investors that the mine would stay open until at least 2013.
“We anticipate the Cantung mine being in operation up until the Mactung project comes into play, which will be about four years,” said Leahy in April to an online investor website.
Mactung, a tungsten-rich site straddling the Yukon-NWT border, still needs $400 million to get off the ground.
Last June, the project’s only investors—a Chinese resource firm—pulled out.
The company hoped to get the project online using revenue from Cantung.
“That never worked out, obviously—the place didn’t generate enough money to do it,” said a representative with Mactung.
Regardless, company officials plan to have Mactung open by 2012.
The mine closure is “surprising,” but given Cantung’s high operating costs, the mine was likely done in by the latest 15 per cent drop in tungsten prices, wrote hard-rock analyst Eric Coffin in an e-mail to the News.
Tungsten prices have been dropping consistently since last July.
In mid-2008, tungsten was selling for $260 per metric tonne unit.
Now, the metal brings in less than $190 per unit.
“I think it’s just a weak market, generally, and that steel production, including specialty items that tungsten gets used in, is still down,” wrote Coffin.
The mine should be back in action once markets “have significantly firmed,” said Leahy in a June 29 release.
The company will continue to sell off excess tungsten reserves.
Exploration will continue at both Cantung and Mactung over the summer.
The mine opened in 1962, but low tungsten prices shut it down in 1986.
In 1997, only weeks after the Bre-X gold scandal, the dormant mine was purchased by the newly formed North American Tungsten.
With the help of two European investors, the company set the mine back on its feet in 2002.
A year later, the Europeans pulled out after North American Tungsten missed a loan payment by a single day.
North American Tungsten was plunged into bankruptcy proceedings.
In September 2005, thanks to Asian demand, the mine opened its doors for a third time.
“We get so excited when a mine opens, but most of us that have been around for a long time know that most mines are very short-lived nowadays,” said NDP Leader Todd Hardy, a former mine worker.
“To place too much emphasis on any kind of longevity around a mine is extremely silly,” said Hardy.
Since 2002, the Yukon government has provided robust support to North American Tungsten—a prominent Yukon Party campaign contributor.
Last July, the Yukon government announced a $31-million upgrade to the Robert Campbell Highway, an access road used almost solely by the Cantung mine.
As it is, the road sometimes sees less than one car an hour.
Minister of Economic Development Jim Kenyon touted his trade missions to China as a “major” reason for the Chinese investment.
China’s dominance of the global tungsten trade was what first drew North American Tungsten into the business.
“I saw the geopolitical attributes of tungsten,” Leahy told the Vancouver Sun in 2007.
Most of the world’s tungsten comes from China.
“I’ve never seen anything like it, where one country owns 85 per cent of a strategic resource—something the West definitely needs, and for which in some cases there is no substitute for its use,” he said.
“If you knew production of a key strategic resource … was controlled by someone else, wouldn’t you be worried?” said Leahy in a video ad for North American Tungsten.
“Let’s not rely on foreign resources for the tungsten we need,” he said.
When open, Cantung remains North America’s only producer of tungsten.
Leahy did not return phone calls.
Contact Tristin Hopper at firstname.lastname@example.org