The global economic crisis had a profound impact on the Canadian mining industry, resulting in a decline in its overall mineral production value in 2009. Collapsing mineral and metal prices, and uncertainty about the economic outlook, resulted in mine closures, production cutbacks and reduced exploration budgets. Despite these problems, Canada continued to be the world’s primary destination for exploration capital in 2009 and, barring further economic problems, Canadian mineral production is expected to grow, in value and volume.
Using detailed market data from ICD Research’s ‘The Future of Canada’s Mining Industry’, we attempt to predict the future for Canada’s mining industry.
Canada’s mining industry to grow until 2015
The recent global economic downturn resulted in a decline in mineral production and commodity prices, leading to a decline in mineral production value in 2009. Collapsing mineral and metal prices and uncertainty about the economic outlook resulted in mine closures, production cutbacks and slashed exploration budgets.
However, with the revival of the global economy and the expansion of key domestic and foreign end markets such as infrastructure, construction, agriculture, power and jewellery, the growth of Canada’s mining industry is expected to be robust.
In volume terms, non-metallic minerals will continue to dominate Canada’s production, followed by coal and metallic minerals. Coal was Canada’s top valued mineral in 2009, followed by potash, gold, iron ore, copper and nickel.
Canada continues to spend on mineral exploration
Despite a drop in mineral exploration spending in 2009, Canada remains a leader in mineral exploration, representing just over a seventh of global expenditure. The largest proportion of this spend was on exploration for precious metals, followed by coal, uranium and diamonds.
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This consistent exploration spend, combined with the development of modern geological mapping data, will add significantly to Canada’s proven and probable mineral reserves, resulting in the growth of the mining industry.
Canada’s mining equipment market is also expected to grow to reach $4bn in value by 2015. The discovery of more mineral deposits in Canada bodes well for the mining equipment industry, as many new mines are expected to become operational in the years to come.
An encouraging investment climate
Over the past few years, Canadian mining investment indices have outperformed their counterparts in other geographical regions. Foreign mining companies from Europe, Australia, the US, Africa and China have continued to obtain direct listings or public offerings of Canadian holding companies.
The Toronto Stock Exchange (TSX) is home to the world’s largest mining companies and lists over half of public mining companies. The Canadian mining industry has a strong international focus, which is evident from the activities of TSX-listed mining companies, which, globally, had over 9,000 mineral projects in various stages in 2009, of which, just over half were located in Canada.
During the period 2004-08, TSX handled nearly a third of the world’s mining equity, an indication of TSX’s strong appeal to mining operators and one of the principal reasons for Canada’s position as a world leader in the exploration business.
China emerges as an export destination for Canadian coal
Canada’s mineral industry is export oriented, and the US is one of the main destinations for exported Canadian minerals.
Nearly two thirds of Canada’s total metal exports are to the US; primarily iron and steel, aluminium, copper and nickel. In the non-metallic sector, nitrogen and potash are key commodities exported to the US market. The EU is also an important destination for Canadian gold, nickel, iron ore, uranium and diamonds. ICD research suggests, however, that countries such as China and India will emerge as important end markets for Canadian mineral exports, driven by increasing demand in these regions.
Foreign uranium investment restrictions to be liberalised
Existing government policy restricts foreign investors from acquiring a majority interest in uranium mining projects. In March 2010, however, the government announced that it intends to liberalise these regulations to avoid hampering the growth of the sector. The proposal is expected make the government’s policy on foreign ownership in this sector consistent with the recent amendments to the Investment Canada Act.
To purchase the full version of ‘The Canadian Mining Sector – Market Opportunity and Entry Strategy, Analyses and Forecasts to 2015’ click here.
ICD Research is a full-service market research consultancy providing research capabilities online and offline. Its specialities include online research, qualitative and quantitative research, custom approach and actionable insights. The company’s capabilities provide a one-stop research and analysis service with full-spectrum consulting, from problem definition, through conducting fieldwork, to delivery of strategic recommendations, delivering its expertise across a broad range of industry sectors and product lifecycle areas. From product innovation, through brand management, to CRM, ICD Research develops full-service research and analysis offerings that drive loyalty and lifetime value.