EY Canadian Mining Eye index faces headwinds in third quarter

Sources available to discuss mining and metals challenges in Q3 2019

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  • EY Canadian Mining Eye index declines 3% in Q3 2019
  • Rebound in gold prices is expected to boost merger prospects
  • Nickel prices up 36% on the possibility of Indonesia’s unprocessed metal ban

(Toronto, November 14, 2019) The EY Canadian Mining Eye index faced some headwinds in Q3 2019, declining by 3% compared to a 3% gain in the previous quarter. 

Index comparisons Q3 2019 Q2 2019
Canadian Mining Eye index -3% 3%
UK Mining Eye 0% -7%
S&P/TSX Composite Metals and Mining index 2% 2%
Major index 3% 5%

“Although a drop, there is some good news — gold prices continue to increase, partially driven by the recent US Federal Reserve rate cut, which is expected to aid prices in the near term,” says Jay Patel, EY Canada Mining & Metals Transactions Leader. “Gold’s recent rebound should boost merger prospects in the industry as companies look to make use of excess cash, but caution remains as buyers look for stock deals over cash given gold price volatility.”

Nickel also increased, up 36% underpinned by Indonesia’s proposed ban on unprocessed mineral exports. Other base metals didn’t fare as well, with copper and zinc prices down 5%.

“Growing concerns over slowing global growth and trade negotiations continue to impact base metal prices, with copper most affected,” says Jeff Swinoga, EY Canada Mining & Metals Co-Leader. “However, the future looks brighter as underlying demand for copper remains strong on the back of tight supply market conditions, and supply deficits should positively impact zinc in the near term.” 

Beyond slowing global growth, mining and metals companies have identified a number of other business risks and opportunities — including license to operate, future of workforce and digital optimization — that are facing the sector among ongoing disruption. 

The EY Canada Mining & Metals team is available to offer insight into the report’s findings. To reach a spokesperson, or for more information, please contact: 

Victoria McQueen
victoria.mcqueen@ca.ey.com
416 943 3141

Dina Elshurafa
dina.elshurafa@ca.ey.com
416 941 1818

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