Competitive pressures drive stakeholders: beneath the Saskatchewan Mining Association's (SMA) umbrella are more than 40 mining and exploration companies.

They range in size from small operations to large corporations and each makes their mark on an industry spending more than $2 billion annually on wages, goods and services.

SMA President Norm Beug judges the health of mining in Saskatchewan by its overall competitiveness. His analysis measures tax and royalty structures, input costs, exploration incentives, environmental conditions, labor relations, the safety culture, export costs and a host of relevant criteria.

"My message for the entire mining industry is that we have to work at everything we do to remain competitive," Beug says.

On the economic front, 2002 saw a move by the federal government to reduce the corporate tax rate while the provincial government continued its trend toward leveling the field in terms of royalties and incentives. The Mineral Exploration Incentive Program that was launched by the provincial government last September is stimulating exploration activity and creating new jobs. Overall, mineral exploration is expected to increase to more than $35 million from $28 million in 2002.

"The diamond plays at Fort a la Come and the Star Kimberlite are moving along with more detailed sampling," Beug says, adding gold exploration may prove fruitful with the discovery of a new gold-bearing formation within two kilometres of the existing Seabee gold mine. While the search for gold and diamonds has taken on a high profile, Beug reminds everyone that uranium still accounts for half of all exploration activity in the province.

With the lion's share of mining products destined for the export market, the SMA and its members appreciate that both levels of government recognize the need to keep the industry competitive internationally.

The Canadian dollar's steady climb in comparison to the U.S. dollar and rising input costs are two negative issues on the top of every mining company's list of concerns.

"An erosion of earnings on the strength of the Canadian dollar is one area where I would guess every mining company would take a hit," Beug estimates. "As well, the spike in the cost of natural gas will continue to eat away at the bottom line for many sectors."

Commodity prices either increased or at worst, remained stable virtually across the board for Saskatchewan mineral producers. Gold prices have gone up, uranium prices fluctuated within the expected range and industrial minerals stayed the course; good news for the coal industry where sales of Saskatchewan coal kept up their pace.

Beug anticipates a good year on the horizon for Saskatchewan potash producers. Coming off a year where sales increased to 8.1 million metric tonnes even though the value of sales dipped to $1.7 billion, potash companies expect international demand will be high.

"World grain supplies are low which should stimulate demand for fertilizers such as potash," he says. Saskatchewan has the largest proven reserves of potash and accounts for about a third of global production, yet international competition remains the largest concern for every potash producer.

Every mining company in the province also has their eye on where their competition stands in terms of the Kyoto Protocol. Unfortunately, most of their competitors are not in countries that signed on to Kyoto and the onus will be on Saskatchewan companies to determine the bottom-line costs and how to keep those costs to a minimum.

"So much of this depends to a great degree on what our federal government is going to do, and we don't know yet what that is' Beug says. "The ground rules for Kyoto are being written as we speak and at this point in time there are a lot of caveats to each item in the agreement. There is a great deal of uncertainty at this point in time and uncertainty is perceived negatively by the investment community."

External forces are pushing the industry to remain competitive in the marketplace while forces from within demand action to address the industry's needs. The retirement bubble is a concern yet mining companies aren't sitting on their hands waiting to be bowled over by a wave of baby boom retirees. Training initiatives are in place with the provincial government and mining jobs are still coveted for their high pay and high satisfaction level.

"We've got a very good group of people working in the Saskatchewan mining industry," Beug says, noting the industry has a stable workforce and characterizing current management-labor relations as good.

Competitiveness also carries through to safe workplaces. People are attracted to working in Saskatchewan mines because they know the conditions are excellent and nowhere in the world will you find a mining industry that exceeds Saskatchewan's safety record.

"I'll close by reiterating my personal belief that one accident is too many, Beug says. "In our mining industry we have a core belief that you must continually strive toward the elimination of all injuries."