Canada Mining Report

Published 28 April 2015

  • 103 pages
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$1,295.00
Canada Mining Report

BMI View: Canada's mining sector faces significant short-term headwinds that stand to curtail growth in output of key commodities such as gold and iron ore over 2015. At the top of the list is a strengthening US dollar which, combined with other factors, will see prices of several major commodities continue to depreciate over the coming months. Longer term, we expect Canada's diversified metals based and well developed capital markets to ensure it remains a top source of metals and financing, respectively.

Falling global commodity prices will present the main challenge to Canada's mining sector over 2015 with junior miners in particular struggling against narrowing margins. As such, output in many core mining segments, including gold and iron ore, will be sustained increasingly by larger multinationals with greater economies of scale. We expect gold prices in particular to trend lower over 2015 on the back of stronger dollar while iron ore and copper prices will also fall year-on-year in 2015 due to weaker Chinese demand growth and ample global supply. Subdued prices will set a higher threshold for ensuring projects remain economical, thereby limiting available funding for firms. Therefore, we expect mining firms to continue limiting capital expenditure (capex) to existing assets and scaling back exploration and development plans for greenfield projects. Indeed, the country's largest firms have seen capex spending fall in recent quarters, reflecting continued market headwinds.

We also expect to see further developments in M&A activity over the coming months as smaller miners look to combine resources and boost economies of scale amid narrowing margins. Q215 saw the completion of a merger between Alamos Gold and AuRico Gold to create a new gold producer, which will have a combined market capitalisation of about USD1.5bn and key producing projects in Canada and Mexico. The merged firm will own AuRico's El Chanate mine in Mexico and Young-Davidson mine in...

Table of Contents

BMI Industry View
7
SWOT
10
Industry Forecast
12
Gold: Output To Moderate In Wake Of Price Decline
12
Table: Major Gold Projects
14
Despite Growth, Headwinds Remain
16
Table: Gold Production Forecast (Canada 2011-2019)
16
Iron Ore: Further Contraction Before Growth Resumes
16
Table: Current Iron Ore Projects
18
Table: Iron Ore Production Forecast (Canada 2011-2019)
19
Nickel: Multinationals To Drive Growth
19
Table: Select Nickel Projects
22
Potential Upside For Nickel Production
22
Table: Nickel Production Forecast (Canada 2010-2018)
22
Zinc: Growth To Resume But Output To Remain Limited
23
Table: Canada - Zinc Projects
25
Table: Zinc Production Forecast (Canada 2012-2019)
26
Industry Risk Reward Ratings
27
Canada Risk/Reward Index
27
Rewards
27
Industry Rewards
27
Country Rewards
27
Risks
28
Industry Risks
28
Country Risks
29
Table: Mining Industry Forecasts (Canada 2011-2019)
29
Americas Risk Reward Index
30
Regional Risks Increase Modestly
30
Weak Prices To Hurt, While Stronger Dollar A Mixed Blessing
31
Regional Outlook Unchanged Despite Some Reordering
32
Table: Americas - Mining Risk/Reward Index
33
Regulatory Development
34
Increasing Transparency
35
Government Prioritises Local Consultation & Environmental Stewardship
35
Table: Canada - Political Overview
36
Table: Regional Regulatory Index
37
Commodities Forecast
38
Commodity Strategy
38
Commodities Forecast
42
Table: BMI Iron Ore Price Forecast
42
Short-Term Outlook (three-to-six months)
42
Long-Term Outlook
43
Supply: Currency Depreciation To Provide Tailwind
44
Demand: Weak Outlook, But No Collapse
44
Risks To Outlook
44
Table: Global - Iron Ore Production Forecasts
45
Commodities Forecast
45
Table: BMI Zinc Price Forecast
45
Short-Term Outlook (three-to-six months)
45
Long-Term Outlook
46
Market Balance: Multi-Year Deficits
47
Supply: Falling Mine Output To Constrain Refined Production
47
Demand: Modest Outperformance
47
Risks To Price Outlook
48
Table: Zinc Forecasts
48
Commodities Forecast
48
Table: BMI Nickel Price Forecast
48
Short-Term Outlook (three-to-six months)
49
Long-Term Outlook
49
Market Balance: Ample Supply To Dwindle
51
Supply: Slowing Refined Production
52
Demand: Weaker Consumption In Asia
54
Risks To Price Outlook
55
Table: Nickel Forecasts
56
Commodity Strategy
56
Ferrous Metals
56
Iron Ore: Price Weakness To Continue Over Coming Years
56
Steel: Oversupply To Drag Down Prices
58
Non-Ferrous Metals
61
Aluminium: Continued Weakness, But No Sharp Downturn
61
Copper: Recent Relief Rally To Fade
63
Lead: Prices Weakness To Continue
64
Nickel: Subdued Prices Due To Weak Demand Growth
65
Tin: Supply Deficits To Underpin Rally In Tin Prices
66
Zinc: Positive Multi-Year Outlook, But Increasing Risks In Months Ahead
67
Table: Select Commodities - Performance & BMI Forecasts
69
Competitive Landscape
70
Table: Canada - Largest Listed Mining Firms
71
M&A To Improve, But Remain Below Peak
71
Company Profile
73
Goldcorp
73
Latest Results
75
Table: Goldcorp - Key Financial Data
76
Teck Resources
77
Latest Results
79
Table: Teck - Key Financial Data
79
Barrick Gold
80
Company Strategy
81
Latest Results
83
Financial Data
83
Table: Barrick - Key Financial Data
83
Address Details
84
Regional Overview
85
Three Key Themes For Americas Mining
85
Regulatory Changes On Horizon
85
Dollar Strength To Be Mixed Blessing
87
Region To Grow More Dominant As Top Copper Source
88
Global Industry Overview
89
Global Overview
89
Major Challenges Ahead
89
Table: Select Countries - Recent And Planned Tax Increases And Other Government Plans
93
Despite Challenges, Bright Spots Remain
93
Methodology
99
Industry Forecast Methodology
99
Sources
100
Risk/Reward Index Methodology
101
Table: Weighting Of Indicators
102

The Canada Mining Report has been researched at source and features Business Monitor International (BMI)'s mining and commodity forecasts for metals, minerals and gems, covering all major indicators including reserves, production, exports and values. The report also analyses trends and prospects, national and multinational companies and changes in the regulatory environment.

BMI's Canada Mining Report provides industry strategists, service companies, company analysts and consultants, government departments, trade associations and regulatory bodies with BMI's independent forecasts and competitive intelligence on the mining industry in Canada.

Key Benefits

  • Use BMI's independent industry forecasts on Canada to test other views - a key input for successful budgeting and planning in this mining market.
  • Target business opportunities and risks in Canada's mining sector through our reviews of latest mining industry trends, regulatory changes and major deals, projects and investments in Canada.
  • Assess the activities, strategy and market position of your competitors, partners and clients via our Company Profiles (inc. KPIs and latest activity), Key Projects Tables and Competitive Landscape Tables.

Coverage

BMI Industry View

Summary of BMI’s key forecasts and industry analysis, covering mining reserves, supply, demand and prices, plus analysis of landmark company developments and key changes in the regulatory environment.

Industry SWOT analysis

Analysis of the major Strengths, Weaknesses, Opportunities and Threats within the mining sector and within the broader political, economic and business environment.

BMI Industry Forecasts

Historic data series (2009-2013) and forecasts to end-2019 for key industry and economic indicators, supported by explicit assumptions, plus analysis of key risks to the main forecasts. Indicators include:

  • Mining industry: Industry size (USDmn), real growth (%), % of GDP, employment (‘000), workforce as % of total workforce, average wage (USD).
  • Output: Production volumes (‘000 tonnes, carats etc.) for all major metals, minerals, ores and gems mined in each state, including bauxite, copper, gold, coal, lead, silver, tin, titanium, uranium, zinc etc.
  • Exports: Value of exports (USDmn) for all major metals, minerals, ores and gems mined in each state.
  • Commodity markets: Global demand, supply, stocks and benchmark prices (USD) for aluminium, copper, lead, nickel, tin, zinc, gold and steel.

BMI’s Mining Risk Reward Index

BMI’s Risk Reward Indices provide investors (mining companies and support service providers) looking for opportunities in the region with a clear country-comparative assessment of a market’s risks and potential rewards. Each of the country markets are scored using a sophisticated model that includes more than 40 industry, economic and demographic data points to provide indices of highest to lowest appeal to investors, with each position explained.

Competitive Landscape Tables & Analysis

Comparative company analyses and tables detailing USD sales, % share of total sales, number of employees, year established, market cap/NAV, ownership structure, production and % market share.

Key Projects

Details and analysis of all current and planned developments (new ventures, capacity expansion and other investments) across the sector broken down by metal/ore.

Company Profiles*

Examines the competitive positioning and short- to medium-term business strategies of key industry players. Strategy is examined within the context of BMI’s industry forecasts, our macroeconomic views and our understanding of the wider competitive landscape. The latest financial and operating statistics and key company developments are also incorporated within the company profiles, enabling a full evaluation of recent company performance and future growth prospects.

Sources

The Mining reports are based on an extensive network of primary sources, such as multilateral organisations (UN, WB, IMF), national chambers of commerce and industry, national statistical offices, government ministries and central banks, and multinational companies.

*Company profiles are not available for every country. Those reports instead contain information on the current activities of prominent companies operating in the market.

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Testimonials

'An essential, multi-faceted research tool. BMI’s thorough understanding of the major market players enables an informed – and informative – review of the sector’s actual performance, together with useful insights into current industry issues, which are topped-off with detailed and invaluable forecasts of industry and macroeconomic trends.’

Senior Research Analyst, ABC International Bank plc