On a global scale, mining lays the foundation for a robust economy. No government is alive to this fact more than the government of Canada. In early March, the Mines Minister of the country unveiled the Canadian Minerals and Metals Plan (CMMP) to demonstrate the commitment to the sustainable success of the industry.
Sustainability and responsibility in mineral development
The CMMP is a strategy plan which seeks to put Canada on the path for sustainable developing of natural resources. In particular, the plan identified technology as the key driver of the strategy. In addition, the plan seeks to identify opportunities which the mining industry can exploit. As such, the primary objective is to place the country at the head of the global mineral development sector.
While outlining the aspirations of the plan, Amarjeet Sohi, Canada Minister of Natural Resources, emphasized that mining plays a pivotal role in the economy. But, he added, the sector must be able to adapt to the changing dynamics in the mining landscape as well as changes in demand.
“In a world increasingly looking for sustainably and responsibly sourced mineral products, Canada is unmatched. As global demand for sustainably developed resources grows, Canada must continue to capitalize on its natural and human advantage to ensure our competitiveness in global markets,” Sohi said.
Severe economic problems
However, the plan faced dissent from two provinces, Ontario and Saskatchewan. In a joint statement to media houses, the Energy Ministers of Ontario and Saskatchewan acknowledged the effort by the federal government to envision progress for the miners. Also, the lauded the fact that the government has a vision to position the country’s mining sector in front of competition globally.
Nonetheless, the Ministers called out the insufficient will by the government to show real support for the industry. In particular, the statement cited the ongoing economic hardships befallen to the mineral sector as a hurdle to full optimization of production. Also, the statement asked the federal government to address competitiveness challenges like the skyrocketing costs of energy.
These economic problems are manifested by major Canadian mining companies which are struggling to find capital to boost operations. Major firms like Barrick Gold Corp. (NYSE: GOLD) had to merge businesses to solidify their position in terms of assets and liquidity. In early 2019, Barrick combined businesses with Randgold in what analysts believe is a strategy to survive in a bearish market.
Business in an increasingly belligerent global trade environment
The ongoing US-China trade war is also affecting the Canadian mining industry. In particular, China is looking to weaponize its dominance in rare metals trade which are critical in making smartphones, EV batteries and other military equipment. This threat of weaponization has resulted in unlikely winners, including Canada-based companies.
Avalon Advanced Materials Inc. (TSX:AVL) saw its stock rally 33% in the wake of the reports. Notably, the company is looking to begin rare earth mining activities in the Northern Territories. Another unlikely winner in the US-China trade war is Niocorp Developments Ltd (TSX:NB). The company’s stock jumped 5% as it ramped up development of the rare earths.
Clearly, the mining sector in Canada is mixed but the CMMP should go a long way in helping the companies to turn up more revenue. Also, the dissent by the two provinces addresses vital issues which, if solved, the sector will continue to soar higher.
