Mexico’s proposed higher mining royalties could block nearly $7bn in investments
The Mexican government proposed raising mining royalties under the argument that metal prices have risen in recent years.
1. Tailings rules tightened
B.C.’s Ministry of Energy and Mines marked the two-year anniversary of the Mount Polley tailings dam breach by announcing updates to the province’s mining code, including new criteria for the operation of tailings ponds. In all, the government’s mining code revisions addressed 20 of the 26 recommendations outlined in the reports of the independent expert panel and the chief inspector of mines’ that investigated the spill.
2. Coal rally
Metallurgical coal has seen its price more than quadruple over the past year due to supply disruptions, and China’s push to curb domestic production. Met coal’s price tag topped US$300 a tonne for the first time since 2011, and for the first quarter of 2017, Vancouver-based Teck Resources Ltd. (TSX: TCK.B) set its met-coal benchmark price 43% above its fourth-quarter benchmark price. Thermal coal, too, has more than doubled its start-of-year price.
3. TSX mining action up
Mining stocks on the Toronto Stock Exchange (TSX) led all industries in trading volume in the first eight months of the year. Activity was almost twice as high as that of the No. 2-ranked oil and gas sector, according to PwC. Overall, the market capitalization of the 230 miners listed on the exchange increased 44% year-over-year by August 31. Of those companies, 60% are exposed to gold.
4. Commodity prices up
Metals made notable price gains over where they left off last year. The prices of gold, silver, copper and zinc all made recoveries from historic lows in 2015. But price valuations for both gold and silver slid in the later part of 2016.
5. Capitalization caution
Despite activity, the top 25 listings on the TSX by market capitalization spent 19% less net cash on investment activities in the 12 months leading up to June 30, 2016, than in the year leading up to June 30, 2015. According to PwC, mining management focused on core properties and restricted capital expenditures to projects with proven returns.
6. King Coal’s days numbered
The federal government revealed its plan to eliminate the use of traditional coal-fired electricity in Canada by 2030. Around 90% of the country’s coal reserves are in Western Canada, and while coal is British Columbia’s largest single export commodity, most coal produced in B.C. is for steelmaking, and most thermal coal is destined for exports.
7. Junior brokerages gone
Boutique brokerage firms specializing in the high-risk junior resources exploration space have all but disappeared in Canada. Diminished equity financing due to a prolonged weakness in commodity prices, coupled with deregulatory measures that have allowed big banks to get in on the brokerage business, have reduced the number of small brokerage firms in Canada to five, from 34 in 1996.
8. Miner tech time
From Barrick Gold Corp.’s (TSX: ABX) deal with Cisco Systems Inc. (Nasdaq:CSCO), to Goldcorp Inc.’s (TSX:G) push to create the first electrified mine in North America, the Canadian mining industry is increasingly looking to innovate, automate and digitize. Through Toronto-based Barrick’s partnership, the company will receive real-time operational data from its mines around the world, among other valuable data-based information.
Written by Hayley Woodin.
