EY Canadian Mining Eye index sees continued positive trends in second quarter

“As commodity prices continue to benefit from changing market conditions, mining and metals companies should aggressively re-evaluate how to strategically position their existing assets to balance growth with long-term sustainability” says Jeff Swinoga, EY Canada Mining & Metals Co-Leader. — Photo courtesy Canadian Mining Eye

The EY Canadian Mining Eye index saw continued quarter-over-quarter growth in Q2 2019, up three percentage points from Q1 2019.

“Gold captured attention in Q2 2019 with continued talk of consolidation and significant investment from Central Banks in Russia and China,” says Jay Patel, EY Canada Mining & Metals Transactions Leader. “Gold prices were up 9% and, despite the US-China trade negotiations, they are expected to continue trending upward.”

Base metals price momentum stalled in the second quarter of the year with nickel, copper and zinc prices declining 2%, 8% and 14% after a positive first quarter. Nickel prices face tight supply market conditions, however slowing global manufacturing activities may impact nickel prices negatively in the coming year.

Zinc and copper prices are likely to benefit in the near-term from declining inventories and an increased demand for copper in renewable energy and electric vehicles. Looking ahead, tight supply market conditions are expected to lessen with several upcoming projects in the pipeline containing zinc as a primary or secondary commodity.

“As commodity prices continue to benefit from changing market conditions, mining and metals companies should aggressively re-evaluate how to strategically position their existing assets to balance growth with long-term sustainability” says Jeff Swinoga, EY Canada Mining & Metals Co-Leader. “Strategic transactions and a focus on organic investments should continue to be top of mind as companies aim to replenish their resource pipeline and attract much needed growth capital.”

Portfolio growth isn’t the only consideration for mining and metals companies in the upcoming year. Insight from the EY electrification in mining survey — conducted by the University of British Columbia and University of Queensland — suggests that companies become more agile by looking at options to electrify their mines to cut costs, boost license to operate and contribute to a more sustainable sector. Adopting new innovative processes will help miners stay competitive, while also reducing operational risks and improving productivity in the future.

The EY Canadian Mining Eye Q2 2019 features an interview with Theo Yameogo, newly appointed EY Canada Mining and Metals Co-leader, who shares insights from his real-world experiences in the industry, particularity around digital and innovation strategies and execution.

Yameogo tells EY: “In my experience, the bulk of digital transformation comes from factors that are external to the sector like new ways of doing business or managing our lives. If you don’t have proper data governance and data strategy, it’s quite challenging to embrace digital. Innovation, on the other hand, is changing core business practices or adopting new business models. Innovation can be a lift-and-shift affair: mining companies can take ideas from other businesses and other sectors and put them into practice in a completely differentiated reality.”

To access the complete interview and the Canadian Mining Eye Q2 2019, visit ey.com/ca/miningeye.