E&B DATA’s Canada Mining Watch
October 12, 2012
Canada’s portfolio of blue-chip minerals could be a good bet during the next market correction
Even though mineral exploration in Canada has slowed due to the financing difficulties experienced by junior exploration firms, no major capital-investment project has been put on hold. Even if some projects were to be put on hold, though, Canada’s diversified mix of minerals would prevent a domino effect.
Of the 70 or so announced major capital projects (valued at $500 million or more) in Canada’s mining sector, approximately 50% involve base metals (including iron, copper, nickel, zinc), 20% involve agricultural minerals (potash), 15% involve precious metals and minerals (e.g. gold, silver, diamonds), 8% involve strategic minerals such as rare earths and 7% involve energy minerals (uranium, coal). This diversification should help the large pool of Canadian mining suppliers remain busy even if the prices for some minerals continue to decline.
A blue-chip portfolio
Overall, prices for Canada’s mineral resources are higher than various commodity indices. Two elements help explain this performance:
The resilience of Canada’s mining sector also springs from other factors, such as a favourable environment for energy development (competitive prices, diversified and abundant sources, positive trade balance), as well as exceptional economic and political stability.