Gold prices increased by 2% in Q4 2017 – following 3% gains in Q3 – and by 13% year-over-year in 2017 due primarily to growing geopolitical risks. Base metal prices also saw increases due to favourable demand and supply market conditions. Nickel rose by 22%, copper by 12% and zinc by 4% in the fourth quarter. Year-over-year, copper, nickel and zinc prices grew by 30%, 28% and 30% respectively.
The increase in Canadian Mining Eye index performance suggests confidence in pursuing growth is returning to the sector after an extended period of volatility. The value of transactions in Canada increased by 26.5% year-over-year in 2017 compared to 15% growth globally.
“Market indicators suggest we’re entering a new phase of growth in the Canadian mining and metals sector,” says Jim MacLean, EY Canadian Mining & Metals Leader. “Resource depletion is a top of mind issue for the sector and gold miners, in particular, face greater urgency to build up reserves. Those that delayed exploration spend during the height of commodity price volatility are turning their attention back to growth. We’re starting to see that play out in the form of increased transaction activity.”
Looking ahead, the report suggests gold prices will continue to rise in 2018 with the possibility if three rate hikes and the expectation for continued geopolitical volatility. Similarly, the outlook for base metals – particularly copper – remains optimistic.
“We’re entering an interesting period of new resource demand,” says Jay Patel, EY Canadian Mining & Metals Transactions Leader. “The rise of battery technology and electric vehicle adoption are just two influencers of a new commodity market taking shape. Companies must carefully consider their portfolios and have the flexibility to change track when new opportunities inevitably emerge.”
Special section – Q&A with Scott Perry, CEO of Centerra Gold
The EY Canadian Mining Eye Q4 2017 also features an interview with Scott Perry, CEO of Centerra Gold, on the outlook for gold and copper, digital solutions, talent retention and geopolitical risk.
Perry tells EY: “We’re confident that supply and demand fundamentals will maintain a positive bias in the next five years, with demand increasing year-over-year from penetration by electric vehicles and other copper-heavy market requirements.”
To access the complete interview and the Canadian Mining Eye Q4 2017, click here.
The EY Canada Mining & Metals team is available to offer insight into the report’s findings. To reach a spokesperson, or for more info, please contact:
About the report
The Canadian Mining Eye tracks Canadian mining sector performance of 100 TSX and TSXV mid-tier and junior companies with market capitalizations at the end, broadly falling between CDN$3.5b and CDN$149m. These companies trade on the TSX and TSXV, though some of them are headquartered outside Canada. Movements and analysis of the index are reported quarterly. Visit ey.com/ca/miningeye for more information.
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