Mining sector in Canada

An Expert's View about Mining and Quarrying in Canada

Posted on: 6 Sep 2010

Latest overview of market potential for the mining sector in Canada.

Mining ? Canada Sector Report Mining Sector Canada Produced by: Tracey Grindal, Trade Officer, British Trade Office, Calgary Last revised: July 2009 Note: All currency is Canadian dollars Whereas every effort has been made to ensure that information provided in this document is accurate, these Commercial Departments, UK Trade & Investment, the FCO and BIS accept no liability for any errors, omissions or misleading statements in such information and accept no responsibility as to the standing of any firm, company or individual mentioned Published July 2009 by UK Trade & Investment. Crown Copyright © www.uktradeinvest.gov.uk Mining ? Canada Table of Contents OVERVIEW 3 OPPORTUNITIES 3 CHARACTERISTICS OF MARKET 5 KEY METHODS OF DOING BUSINESS 6 MORE DETAILED SECTOR REPORTS PUBLICATIONS 7 EVENTS 7 CONTACT LISTS 8 www.uktradeinvest.gov.uk Page 2 of 9 Mining ? Canada OVERVIEW 1 The mining industry is important to the Canadian economy, accounting for nearly 3.5% of GDP and nearly 19% in total exports. Canada is one of the world?s largest mining countries, producing over 60 minerals and metals, and the leading exporter of minerals and mineral products. It is the world leader in the production (by volume) of potash and uranium, ranks in the top five countries for the production of cadmium, cobalt, gypsum, magnesium, molybdenum, nickel, platinum group metals, salt, titanium concentrate and zinc. Canada ranks rd 3 in the value of diamond production and is the third largest producer of primary aluminium. Canada is the number one country for exploration investment. In 2008, exploration expenditure totalled $2.8 billion, the fifth straight year of >$1 billion investment. The outlook for 2009 is expected to drop to about $1.5 billion because of industry attempts to reduce costs in reaction to the global slowdown in mining activity. In all about 21% of the world?s exploration spending is in Canada. 2 Canadian mineral production reached $45.3 billion in 2008, up 12% over 2007. The increase was due to significant growth in the production of both nonmetals and coal (up 73%) while the value of metallic mineral production decreased by 20%. Toronto and Vancouver are the world?s top mining centres. Vancouver has the largest concentration of exploration companies and mining professionals and Toronto is the world centre for mining finance. The Toronto Stock Exchange (TSX) lists nearly 60% of the world?s public mining companies. 3 In 2007 , about 180 producing mines (metal, non-metal including peat bogs, and coal) were in operation, over 3,000 stone quarries (sand and gravel pits) and about 50 smelters, refineries and steel mills were operational in Canada. In addition, the federal government indicates an additional 4,000 goods and service companies benefit from the mining sector. OPPORTUNITIES Over 2,300 mining exploration, development and operation companies, and other mining- related head offices are headquartered in Canada, representing a large market of prospective buyers. Also, while Canadian companies are active domestically they are just as active internationally. According to the Toronto Stock Exchange (TSX) about 50% of TSX-listed companies have mineral projects outside Canada ? the top locations being the U.S., South America and Mexico/Central America ? which opens up other markets via Canada. Canada?s vast, undeveloped natural resources combined with anticipated turn-around in commodity prices bode well for the future of Canada?s mining industry. Capital investment spending topped $11 billion in 2008 (preliminary figure) and is expected to reach $9 billion in 2009. While this is a 19% decrease, it is still a healthy figure. Canadian mining operators are known to procure locally, are technologically advanced and can supply most of what is required for successful modern mining. However, the increase of multi- national mining companies operating in Canada has lead to a corresponding increase in global procurement over the past decade. 1 Does not include mining related to the oil sands 2 All currency listed in Canadian dollars 3 www.nrcan-rncan.gc.ca www.uktradeinvest.gov.uk Page 3 of 9 Mining ? Canada Nearly ¾ of mining equipment is imported. In 2008 this totalled close to $8 billion ? a 29% increase from 2005 ($6 billion). The majority of equipment is from the U.S. (about 66%). The value of UK imports was $211 million (number five behind the U.S., Japan, Sweden and 4 Germany) . Each country has specialities. The UK ?stands out? in two equipment areas where it is second only to the U.S. ? sorting, screening and separating machines; and, crushing and grinding machines. However, these two areas do have the largest dollar value ? that is off-highway dumpers but the U.S has the monopoly on this equipment and competition would be unwise. The federal and provincial governments continue to provide tax incentives and identify new programs to secure the health of the mining industry. Exploration activity is expected to remain high for base metals and gold. Projects targeting precious metals, rare earth elements, diamonds, uranium, coal and potash are also expected to continue. Saskatchewan, Ontario, British Columbia and Quebec accounted for about 69% of Canada?s $45.3 billion of mineral production in 2008. Here are some mining facts about each province: Saskatchewan ? Diverse and rich mineral endowment; ? Global leader in potash and uranium ? gold, base metals, diamonds, salt also high; ? Produces ¼ of the world?s uranium and one-third of the world?s potash; ? World leader in mining robotics; ? $4.5 billion in mining capital projects (2008); ? As of February 2009, seven mines in development; and, ? Mineral exploration expenditures in 2008 hit all time record ($430 million). Ontario rd ? Lead Canadian province in non-fuel mineral production ? world?s 3 leading producer of platinum, number 4 in nickel and number 7 in cobalt; ? Home to 10 gold mines, 7 base metal mines and one platinum group mine; ? 2008 exploration spending climbed to $667 million and will still lead the province in 2009 ? about 28% of exploration spending will occur in Ontario; ? High quality infrastructure, diverse and unexplored geology, geoscience information, favourable taxation policies, etc.; ? Primary focus will remain on gold but exploration on platinum group metals and uranium will continue; and, ? Over 363,000 active mine claims and 800 active mining exploration projects active in 2008. British Columbia ? Exploration at an all time high up 13X from $29 million in 2001 to $367 million in 2008; ? Provincial government very pro-mining ? new policies and programs to ensure health; ? Canada?s largest coal producer; ? Leader in the production of copper, gold, silver, lead and zinc; ? Currently home to nine coal, nine metal and 36 industrial mineral mines; ? Over 20 new mine proposals are currently under environmental review or in the permitting process ? estimated potential investment totals $11 billion; ? Over 60 projects in pre-feasibility phase. Quebec ? One of the most favourable mineral exploration investment climates in the world; 4 Statistics Canada www.uktradeinvest.gov.uk Page 4 of 9 Mining ? Canada ? Over 264,000 active mining titles; ? Very diverse ? 30 mineral commodities ? and a significant producer of iron, nickel, gold, copper, zinc; ? Exploration focused on gold, base metals, uranium, ferrous metals and diamonds; ? 15 producing metal mines and 7 non-metallic mines; ? 13 major mining projects in the advanced stage including four gold, four iron, one uranium and one gold; and, ? Several tax incentives ? one of lowest net exploration costs in the world. The Canadian mining outlook is very positive. Several recent announcements appear to reflect this optimism: ? PotashCorp to go-ahead with the expansion to three of its Saskatchewan facilities, investing over $6 billion and increasing capacity to 18 million tonnes by 2012; ? BHP Billiton buys Anglo Potash Ltd., and is studying the possibility of developing a new potash mine in Saskatchewan; ? One of the world?s largest undeveloped iron ore deposits ? 365 million tonnes of proven and probable reserves ? confirmed in Nunavut; ? Ontario companies expected to spend about $2 billion annually as preparation continues for the opening of five mines that could begin producing in the next couple of years. RELATED INFORMATION Canada is also home to the largest oil sand deposits in the world. About 20% of the oil sands are mined using the truck and shovel method. Oil sands mining is another opportunity for material handling suppliers. Please see the Oil & Gas Sector Report for Canada (for more details. UKTI publishes international business opportunities gathered by our network of British Embassies, High Commissions and Consulates worldwide. These opportunities appear in the Opportunities portlet on the relevant sector and country pages on the UKTI website. By setting up a profile you can be alerted by email when relevant new opportunities are published. New or updated alert profiles can be set in My Account on the website. CHARACTERISTICS OF MARKET Canada has a mature mining sector and Canada?s mining suppliers cater to a highly advanced demanding clientele. The country is a world leader in research and development R&D. In 2007 over $0.5 billion was spent on R&D in mining and mineral processing industries. About 69% of mineral production is centred in Ontario, Saskatchewan, British Columbia but mining has a presence in every province. The sector is technologically advanced, for example, 85% of the Saskatchewan mining workforce uses advanced technology. The province is also a world leader in mining robotics and home to the only North American company manufacturing robotic equipment for the copper smelting and refining industry. Junior companies have grown in importance and are currently leading the exploration effort, being responsible for over 63% of exploration and deposit appraisal expenditures in 2008. Exploration investment by juniors increased from $183 million in 1999 to $1.8 billion in 2008. The biggest issue facing the industry is access to capital for continued exploration and mine development. Other issues include: www.uktradeinvest.gov.uk Page 5 of 9 Mining ? Canada ? Exploration life cycle is getting longer ? average of 10-20 years from initial discovery to production; ? Rising exploration and production costs; ? Lengthening equipment delivery times; and, ? Labour shortage (approximately 92,000 mining industry workers will be needed over the next decade). Major operators in the Canadian mining sector include PotashCorp, Cameco, AREVA Resources, BHP-Billiton, Teck, Vale Inco, Goldcorp, Rio Tinto Alcan, De Beers Canada, Barrick Gold Corporation, and Xstrata to name a few. KEY METHODS OF DOING BUSINESS In Canada there are two traditional distribution channels: direct sales and/or distributor/agent. Direct sales are usually for large, heavy machinery with high initial costs or equipment that is very niche oriented. Direct sales can be made either to the mining operator or the Engineering, Procurement, Construction (EPC) company contracted by the operator. Manufacturers of smaller, less expensive equipment are more likely to choose a distributor or independent sales agent. In either case relationships with both parties are essential. British companies should be aware that in order to do effective business in the Canadian market some form of presence is required either through an agent, distributor or opening a local office. Opportunities exist in niche areas, for example, specialized alloy equipment for use in nitrogen plants, soft rock mining boring machines, electric conveyors/belts that don?t support combustion and other technologically advanced equipment that will increase production while reducing environmental impacts. There is no specific ministry for mining, but the country has a Ministry of Natural Resources. Each province also has their own Ministry responsible for mining usually found as part of the Department of Energy and / or Resources. It is important to understand the relationship between provincial and federal legislative boundaries. Other background information on doing business in Canada can be found on UKTI?s website. Simply go to the Canada country page where you will find information on: ? Economic background and geography ? Customs & regulations ? Selling & communications ? Contacts & setting up ? Visiting and social hints and tips MORE DETAILED SECTOR REPORTS Research is critical when considering new markets. UKTI provides market research services which can help UK companies doing business overseas including: ? Overseas Market Introduction Service (OMIS). Bespoke research into potential markets, and support during your visits overseas ? Export Marketing Research Scheme. In-depth and subsidised service administered by the British chambers of Commerce on behalf of UKTI Contact your local International Trade Advisor if you are interested in accessing these services, or for general advice in developing your export strategy. www.uktradeinvest.gov.uk Page 6 of 9 Mining ? Canada When considering doing business in Canada, it is essential to obtain legal, financial and taxation advice. For further details, please contact: Tracey Grindal Trade Officer British Trade Office th 205 5 Avenue SW, Suite 700 Calgary, Alberta T2P 2V7 Tel: 001 403 539 2246 Fax: 001 403 538 0121 Email: tracey@btoalberta.com Web: www.ukincanada.fco.gov.uk PUBLICATIONS Canadian Mining Journal www.canadianminingjournal.com Canadian Mining Sourcebook http://www.businessinformationgroup.ca/ Elements www.elementsmagazine.org Geoscience Canada www.gac.ca/publications/geoscience_canada.php Mining Markets Magazine http://www.businessinformationgroup.ca/ Northern Miner www.northernminer.com EVENTS Prospectors & Developers Association of Canada (PDAC) International Convention, Trade Show & Investors Exchange 7 ? 10 March 2010 Tel: 001 416 362 1969 Email: info@pdac.ca www.pdac.ca Canadian Institute of Mining, Metallurgy and Petroleum (CIM) Conference and Exhibition 9 ? 12 May 2010 Tel: 001 514 939 2710 x1309 Email: cmurphy@cim.org www.cim.org UK Trade & Investment?s Tradeshow Access Programme (TAP) can help eligible UK businesses take part in overseas exhibitions. Attendance at TAP events offers significant benefits: ? possibilities for business opportunities both at the show and in the future www.uktradeinvest.gov.uk Page 7 of 9 Mining ? Canada ? a chance to assess new markets and develop useful contacts ? grants are available if you meet the criteria ? UKTI staff overseas will be available to assist delegates Find out if you are eligible to apply to attend this event, and more about the support UKTI can offer. Details of TAP events can be found in the Events portlet on the Canada page. Other Market Visit Support may be available via your local International Trade Advisor. CONTACT LISTS Association of Canadian Engineering Companies (ACEC) Tel: 001 613 236 0569 Email: info@acec.ca www.acec.ca Canadian Association of Mining Equipment and Services for Export (CAMESE) Tel: 001 905 513 0046 Email: minesupply@camese.org www.camese.org Engineers Canada Tel: 001 613 232 2474 Email: info@engineerscanada.ca www.engineerscanada.ca Canadian Institute of Mining, Metallurgy and Petroleum (CIM) Tel: 001 514 939 2710 Email: cim@cim.org www.cim.org Canadian Mining Industry Research Organization (CAMIRO) Tel: 001 705 673 6595 Email: info@camiro.org www.camiro.org Canadian Mining News www.canadianminingnews.com Canadian Society for Exploration Geophysicists Tel: 001 403 262 0015 Email: cseg.office@shaw.ca www.cseg.ca Centre for Mining Technology (CMT) Tel: 001 705 675 1151 x5074 Email: cmt@mirarco.org www.mirarco.org Coal Association of Canada Tel: 001 403 262 1544 Email: info@coal.ca www.uktradeinvest.gov.uk Page 8 of 9 Mining ? Canada www.coal.ca Geological Association of Canada Tel: 001 709 737 7660 Email: gac@esd.mun.ca www.gac.ca Geological Survey of Canada Tel: 001 613 996 3919 www.nrcan.g.ca/gsc/ Mineralogical Association of Canada Tel: 001 418 653 0333 Email: office@mineralogicalassociation.ca www.mineralogicalassociation.ca Mining Industry Human Resources Council (MiHR) Tel: 001 613 270 9696 Email: info@mihr.ca www.mitac.ca Mining Industry Technology Council of Canada Tel: 001 613 233 9835 Natural Resources Canada www.nrcan-rncan.gc.ca Prospectors & Developers Association of Canada (PDAC) Tel: 001 416 362 1969 Email: info@pdac.ca www.pdac.ca The Mining Association of Canada Tel: 001 613 233 9391 www.mining.ca UKTI?s International Trade Advisers can provide you with essential and impartial advice on all aspects of international trade. Every UK region also has dedicated sector specialists who can provide advice tailored to your industry. You can trace your nearest advisor by entering your postcode into the Local Office Database on the homepage of our website. For new and inexperienced exporters, our Passport to Export process will take you through the mechanics of exporting. An International Trade Adviser will provide professional advice on a range of services, including financial subsidies, export documentation, contacts in overseas markets, overseas visits, translating marketing material, e-commerce, subsidised export training and market research. www.uktradeinvest.gov.uk Page 9 of 9
Posted: 06 September 2010

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