Gold continued to increase following growth witnessed in Q4 2017 – up 2% in Q1 2018. Price improvements were due to rising geopolitical risks and dollar weakness, offset partially by the recent US Federal Reserve rate hike of 0.25%.
“Gold prices continue to grow, but production declines may be looming in the near future,” says Jim MacLean, EY Canada Mining & Metals Leader. “Reducing grades, mine closures and suspensions are all factors expected to lower average gold production in the near to medium term. Despite the decline, companies appear optimistic of gold prices going forward.”
Nickel prices continued to increase, up 4% since Q4 2017, whereas zinc and copper prices decreased by 2% and 7% respectively. This follows a 12% gain in copper prices last quarter that was largely driven by supply disruption concerns.
The EY Mergers, acquisitions and capital raising in mining and metals – 2018 outlook indicates that the buzz around new world critical minerals and battery technology, will put deals in lithium, copper and cobalt high on the agenda of management teams across the industry.
“The long-term outlook for copper and nickel remains positive, with prices slated to benefit from the growing adoption of electric vehicles and battery technology,” says Jay Patel, EY Canada Mining & Metals Transactions Leader. “But it is likely that significant price increases won’t come into play in the immediate future, as both markets currently face surplus conditions. In the meantime, companies should be actively reviewing their portfolios – keeping a keen eye on minerals and new technologies fit for future growth.”
Special section – Q&A with Stephen Letwin, President and CEO of IAMGOLD
The EY Canadian Mining Eye Q1 2018 also features an interview with Stephen Letwin, President and CEO of IAMGOLD, discussing what the future holds for the gold sector and how to drive digital mining success.
Letwin tells EY: “Success in building and operating digital mines isn’t about just adopting the latest technologies; it’s about making the investment where it makes sense. It’s important to embed digital thinking in your strategies and culture, and to customize and implement in phases.”
To access the complete interview and the Canadian Mining Eye Q1 2018, visit ey.com/ca/miningeye.
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