Every year, KPMG asks mining executives about the state of their industry, key trends, and their expectations for their organizations. Backed by responses from over 135 executives in 16 countries (including Canada, Australia, Brazil, and the United States), this year’s survey highlighted the top risks and opportunities facing mining companies in 2020.
Canada has long been a dominant mining jurisdiction and Canadian stock exchanges are the global leader in mining financings1. After years of decline, we have seen a steady increase in prices for gold and other metals, and indications that prices are stabilizing. Despite signs of positive economic growth, there remains a sense of cautious optimism and uncertainty around the growth prospects for miners in Canada.
It is not surprising that commodity prices and access to capital are once again top of mind for Canadian mining leaders, as companies navigate a volatile market.
Access to capital rose in ranking of risks for Canadian mining companies relative to prior year, and was ranked higher by Canadian respondents than any other jurisdiction surveyed. Almost 70 percent of Canadian respondents indicated that access to traditional sources of debt and equity capital has fundamentally deteriorated in the last 10 years, and 57 percent of Canadian respondents indicated access to capital is a significant constraint that has required them to alter their strategy going forward.
While recent M&A activity and increasing global competition in the industry have some questioning the future of the mining industry in Canada, Canadian respondents were generally more optimistic than their colleagues in other countries about the outlook and prospects for growth of their companies and the industry as a whole. When asked about the outlook of their company and the industry as a whole, 50 percent of Canadian respondents were "more optimistic" or "significantly optimistic" as compared to the previous year, while less than 40 percent of global respondents shared the same perspective.
That said, like much of the global mining sector, Canadian mining companies continue to face increased regulatory pressures when it comes to mining permits, both in Canada and globally. Permitting risk was ranked third highest by Canadian survey respondents, which speaks to these challenges, but also the importance companies are placing on organic growth and development, which was ranked as the number one growth strategy by Canadian and global leaders.
Overall, we think the results of the survey were clear – many of the traditional risks and challenges are top of mind for Canadian mining leaders, but for investors in Canadian mining companies, the outlook remains positive and mining in Canada will remain an attractive environment for investment and prosperity in 2020 and beyond.
Download the KPMG Global Risks and Opportunities for Mining report.
1 Source: www.tmx.com