Canada’s time to shine
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Buoyed by rising commodity prices and strong M&A activity in 2019, Canada’s mining sector is poised for gains in 2020, providing new opportunities for growth domestically and globally.
The Mining Association of Canada (MAC) says the growing demand for minerals and metals, and Canada’s global leadership in responsible mining practices, means the time is right for the industry to fulfill its potential as a dominant mining nation.
At the recent release of MAC’s latest annual Facts & Figures report, the organization’s president and CEO Pierre Gratton said countries around the world want Canadian investment.
“They want us for how we go about our business, how we work with communities and raise standards,” according to Mr. Gratton. “Canada is one of the safest jurisdictions for mining in the world, and we are recognized for bringing these standards, particularly through our Towards Sustainable Mining initiative, and practices wherever we go.”
He believes the mining sector has an opportunity to work with government decision-makers from all parties to ensure mining is prioritized.
“The prospects for Canadian investment, and for making a tangible difference in Canada’s attractiveness for new mine investment, have become a lot better,” he added. “We feel energized by a number of recent commitments pertaining to mining, including in Prime Minister Trudeau’s most recent Mandate Letters to his Cabinet, the Canadian Minerals and Metals Plan, and the new Canada-U.S. Joint Action Plan on Critical Minerals Collaboration, all of which bode well for our industry. If we seize these opportunities effectively, a new era may well be upon us; one we haven’t seen in many years.”
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The prospects for Canadian investment, and for making a tangible difference in Canada’s attractiveness for new mine investment, have become a lot better.””
Mr. Gratton’s optimism is reflected in EY Canada’s latest Canadian Mining Eye index, which increased by 11 percentage points in Q4 2019 compared to a decline of three percentage points in Q3.
EY says the price of gold is expected to maintain its positive momentum in the near term due to the U.S. Federal Reserve’s stance and negative interest rate policy adopted by jurisdictions such as Japan, Europe and Switzerland.
Copper prices are expected to rise in the medium term, underpinned by limited production capacity and increasing demand from electric vehicles and green energy projects, and nickel prices are likely to maintain elevated levels as the current supply deficit is expected to continue in 2020.
EY points out that a report by S&P Global Market Intelligence notes that the global copper exploration budget increased by 12 per cent to US$2.32-billion in 2019 due to increased exploration in Australia, Chile and the U.S. In 2020, exploration spending is expected to be supported by higher demand from China.
Toronto-based mining advisory firm Red Cloud Securities says 2020 should continue to favour the precious metals sector and remains bullish on the medium-term outlook for base metals.
Red Cloud CEO Bruce Tatters says the gold bull is back and key factors are lining up for a big move.
“With expansionary monetary policies expected from the U.S. Federal Reserve in 2020 and the threat of debt monetization as a potential stimulus, we see a weakening U.S. dollar and a negative yielding debt environment making gold one of the most attractive asset classes in 2020,” he says.
Mr. Tatters says platinum group metals (PGM) are expected to stay hot in 2020, pointing out that the price of palladium and platinum were up 61 per cent and 17 per cent respectively in 2019.
“We believe the increased demand from tighter emission standards, along with limited new supply coming online, should continue to be favourable for PGM prices in 2020,” he adds.
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