Press release

29 Jul 2020 Toronto, CA

EY Canadian Mining Eye index sees dramatic 72% increase in Q2 2020

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Dina Elshurafa

EY Canada Coordinator, Public Relations

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Related topics Mining and metals

Sources available to discuss quarterly mining and metals industry performance and outlook

  • EY Canadian Mining Eye index growth comes following a 30% decline in Q1 2020
  • Rise in gold prices continues with liquidity measures by global central banks
  • Base metal prices rally on the back of foreign stimulus package

The EY Canadian Mining Eye index rebounded a significant 72 percentage points in Q2 2020 following a 30% decline in the prior quarter.

Index comparisons Q2 2020 Q1 2020
Canadian Mining Eye index 72% -30%
S&P/TSX Composite Metals and Mining index 16% -22%
Major index 44% -13%

“Increased demand from China, along with the government’s infrastructure stimulus package, are helping to stabilize commodity prices and drive transaction activity,” says Jay Patel, EY Canada Mining & Metals Transactions Leader. “The good news is that Canada remains an attractive destination for foreign capital. Recent transactions show a trend toward zero premium deals to obtain cost, operation and corporate synergies — plus offer an opportunity to gain more diversified portfolios. This activity is expected to continue as buyers remain cautious and focus on minimizing costs and maximizing shareholder returns.”

Gold prices increased by 11% in Q2 2020 after a 6% gain in the previous quarter and are likely to continue their upward trajectory, underpinned by weakness in the US dollar, government stimulus, geopolitical tensions and low interest rates. Similarly, base metals also saw an uptick with copper, nickel and zinc increasing by 22%, 12% and 7% respectively. Copper is likely to continue rising while nickel and zinc are due to experience downward pressure in the near term.

“The mining and metals industry has fared quite well despite the challenging landscape brought on by the pandemic,” says Jeff Swinoga, EY Canada Mining & Metals Co-Leader. “This isn’t the first time this sector has had to face adversity. Having the right tools and strategies in place has helped them to weather through. Now, with the easing of lockdowns, stimulus packages and liquidity measures by global central banks, organizations can start to switch gears towards growth and transformation.”

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