Canada's $97 Billion Mining Industry Has Room for Improvement, MAC Says
By Mariaan Webb
February 5, 2020 - While the prospects for Canadian investment and the attractiveness for new mine investment are brighter, certain competitiveness metrics remain depressed, highlighting the need for improvements if the country’s mining industry is to reach its full potential.
The Mining Association of Canada (MAC) warns in its ‘Facts and Figures 2019’ report, published on Tuesday, that there are signs that Canada’s leadership position is slipping, potentially jeopardising the country’s ability to seize new opportunities for growth.
For instance, 2019 saw only a modest increase in the value of mining projects planned and under construction from 2010 to 2019. It increased by $8-billion year-on-year, with the total ten-year projected value of $80-billion remaining 50% below the 2014 level of $160-billion.
The report also highlights that from 2007 to 2018, mining direct investment abroad has increased more than threefold – from $25.5-billion to $80-billion – but that mining foreign direct investment into Canada remained stagnant, rising from $23.5-billion to $24.5-billion.
Only five new mining projects were submitted for federal environmental assessment review in 2018, which is “well below” the average levels seen from 2012 to 2014.
The MAC also points out that Australia’s mining supply sector surpassed Canada’s in 2015, leading now by more than 700 firms. Over the last 15 years, several Canadian senior mining companies have been acquired by multinationals.
Further, Canada’s share of global critical minerals and metals production has been eroding. Since 2016, the country has dropped from second to sixth in the global production of nickel, with output falling 38% from 256 000 t to 160 000 t.
Beyond the quantitative metrics, qualitative indicators from MAC member companies suggest that Canada’s competitiveness is declining compared with other jurisdictions, meaning companies are assessing alternative destinations for developing projects.
However, MAC CEO Pierre Gratton said in a media statement accompanying the ‘Facts and Figures 2019' report that the industry was “energised” by a number of commitments pertaining to mining, including Prime Minister Justin Trudeau's most recent mandate letters to his Cabinet, the Canadian Minerals and Metals Plan and the new Canada–US Joint Action Plan on Critical Minerals Collaboration.
“If we seize these opportunities effectively, a new era may well be upon us, one we haven't seen in many years,” he stated.
In 2018, capital spending in the Canadian mining industry is projected to account for 5.1% of Canada’s total at $12.9-billion – up 5% year-on-year. The increase – albeit modest – breaks a five-year downward trend in capital investment in the Canadian mining sector, which peaked in 2012 at $19.5-billion, before falling 43% over ensuing years.
MAC said that the positive trend was forecast to continue, with 2019 investment slated to rise to $13.6-billion.
Canada’s share of global nonferrous exploration investment also increased from 13.7% to 15% in 2018, although it was still well below the peak of 20.8% in 2008.
The industry association pointed out that the mining industry contributed $97-billion, or 5%, to the nation’s total nominal gross domestic product in 2018. One in every 30 jobs in Canada is related to the mining industry, with more than 620 000 people directly and indirectly employed.