The flood of new data in the past month about Canadian mining and mineral exploration shows an industry getting back on its feet after five tough years, notwithstanding continued difficulties in the potash and uranium subsectors.
The Mining Association of Canada’s (MAC) newest Facts and Figures report on Canadian mining released in February has a subtext that “cautious optimism is returning to the global mining industry” — which was also frequently expressed by speakers and delegates at the Prospectors & Developers Association of Canada convention in Toronto in March.
Canada still ranks among the top-five countries for producing quite a few mineral commodities: first in potash; second in uranium, nickel and niobium; third in cobalt, aluminum and platinum; fourth in salt, sulphur and tungsten; and fifth in diamonds, graphite and gold.
Mining is responsible for direct and indirect wages and employment of 563,000 people across Canada (of which 373,000 are direct), and wages are the highest of any significant industrial group.
MAC notes that historically, the value of minerals and metals to Canada’s economy has ranged between 2.7% and 4.5% of gross domestic product, and that in 2015, the number stayed in this range at 3.4%.
Mining, oil and gas extraction contributed $120.4 billion, or 7.3%, to Canada’s gross domestic product in 2015, making the extractive industry the fourth largest of Canada’s 18 industries, surpassed only by the services, real estate and manufacturing sectors, which rank first, second and third. (On a per-barrel basis, 46% of Canadian oilsands extraction was by mining in 2015.)
The output of the four stages of mining in 2015 totalled $55.6 billion in 2015: extraction, $24.6 billion; primary metal manufacturing including smelting and refining, $12.8 billion; non-metallic mineral product manufacturing (e.g., cement, glass and ceramics), $5.4 billion; and fabricated metal product manufacturing (e.g., forging and heat-treating), $12.7 billion.
But MAC points out that in 2015, mineral production values were down in eight of Canada’s 13 provinces and territories compared to 2014, with Quebec and B.C. posting the largest drops in absolute value, exceeding $1 billion each. Saskatchewan had the single largest absolute gain in production value year-over-year, rising from $7.1 billion to $8.5 billion, while Nunavut posted the largest percentage gain, increasing 32% to $567 million. Total production value was down 4.2%, or just under $2 billion. But none of these figures take into account sustained recovery in metal and mineral prices throughout 2016 and into 2017 — most pronounced in copper, zinc, iron ore and metallurgical coal, which are fundamental to Canadian mining.
MAC is concerned that several indicators suggest Canada is not as competitive as it once was, in particular with foreign direct investment into Canada’s mining sector dropping by more than 50% year-over-year in 2015. MAC notes this is disproportionate to Canadian mining direct investment abroad, which only experienced a 6% decline.
With respect to mineral exploration expenses in Canada, Natural Resources Canada has found in its latest national survey that companies expect to spend $1.8 billion on mineral exploration and deposit appraisal expenses in Canada this year, up 18% from $1.6 billion in 2016, and the same as 2015 levels. (About $1.1 billion of the total each year is exploration, while the rest is deposit appraisal.)
Ontario and Quebec both see the biggest increases in planned exploration and deposit appraisal expenses in 2017, with Ontario at $486 million ($371 million in 2016) and Quebec at $457 million ($280 million in 2016). British Columbia and Saskatchewan take third and fourth place for planned expenses in 2017, at $237 million and $193 million — roughly the same as in 2016.
The number of companies active in exploration and deposit appraisal in Canada is relatively unchanged in 2017, with 447 junior companies and 134 seniors. Some 45 companies are carrying out exploration and deposit appraisal programs in Canada this year, with budgets exceeding $10 million, up from 38 companies in 2016.
Canada lost its spot as the single-largest share of total global mineral exploration spending to Australia in 2015, in part due to government policies such as anti-uranium stances, slow permitting timelines and uncertainty over aboriginal claims.