Metallurgical coal and base metals provide the greatest opportunities for Canadian firms, says PricewaterhouseCoopers (PwC) Canadian mining leader John Gravelle.

He tells Mining Weekly that in terms of geographic opportunities for Canadian firms, Asia will require substantial supplies of base metals. Also, with increased population growth across the globe comes greater use of energy, while the use of more electricity over the long term will drive demand for coal and uranium.

Other opportunistic areas for Canadian firms include Peru, Colombia, Canada itself (especially Quebec, British Columbia, the Northern Ontario Ring of Fire and Saskatchewan) and Africa.

“Some of the economic factors impacting Canadian mining firms include the European debit crisis and the US unemployment rate. Both of these factors are impacting markets and companies’ ability to raise capital, which impacts gold prices,” says Gravelle.

“Looking ahead in the Canadian mining industry, there will be a strong demand for base metals in the long term owing to Asian development, while central banks are acquiring more gold to diversify their foreign reserves, although we expect this transition to be gradual as companies work toward their desired target percentage of gold versus US dollars.”

He reports that some of the trends in the Canadian mining and exploration sectors include a cooling down of the initial public offering market and junior mining companies having difficulty raising money on the markets.

Gravelle adds that there is an observed disconnect between profitability and stock prices. Also, dividend payments are rising, especially with gold miners.
The deal market is expected to heat up by the third quarter.

Other factors worth noting are the com- petition among mining companies and within the energy sector for skilled labour, as well as the lack of guidance on the Investment Canada Act, which is causing hesitation in foreign takeovers.

He adds that the miners are showing growing interest in the Arctic and that there is the possibility of new trade routes through the North West Passage and to Europe with ice breakers decreasing shipping time to Asia.

Overall, he says the challenges faced by exploration firms, project developers and mine operators include: the time frames to bring projects into development; avail- ability of people; decreasing grades; escalating costs; financing; availability of equipment and parts, as well as engineering firms to build projects; corporate social responsibility issues and resource nationalism.

During the 2012 Prospectors and Developers Association of Canada convention, Gravelle and two PwC colleagues will deliver a presentation on mining in the Americas.