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Canadian mining sector is suffering, but there is still hope - PDAC president

Kitco News

The Canadian resource sector has been hit with a slew of negative news recently and it can still get worse, according to one mining sector executive.

First, Teck Resources pulled the plug on its $20 billion Frontier oil sands project; A few days later, Canadian-think tank the Fraser Institute said that for the first time in a decade no Canadian province made the top ten best jurisdictions in the world, according to its annual mining survey. And just last week, Warren Buffett’s Berkshire Hathaway decided against investing roughly $3 billion in a proposed liquefied natural gas (LNG) export terminal near Quebec.

Felix Lee, president of the Prospectors and Developers Association of Canada, said in an interview with Kitco News on the sidelines of the PDAC 2020 mining conference, that the Canadian mining sector remains at a critical crossroads.

He added that he is hoping government support for new infrastructure will help to breathe new life in the sector.

Although he hasn’t read the last report from the Fraser Institute, Lee said that he is not surprised Canadian miners have struggled in the face of rising costs.

“For some companies, exploration and development costs are two to three times higher compared to other countries,” he said. “There are 200 know mineral deposits in Canada’s Northern Territories that are stranded because there is no way to access them properly.”

Lee added that if Canada can resolve its infrastructure, then it might be easier for Canadian exploration companies to attract much-needed capital.

Looking at the health of mining finance, even with higher gold prices, Lee said that the sector continues to struggle.

“2018 saw a drastic decrease in financial activity within the mining sector. By all indications, 2019 is also going to be worse,” he said.

Although the Canadian resource sector is seeing some dismal days, Lee said that he does have hope that interest and activity will eventually pick up.

“Canada has a long history of mining and innovation,” he said. “We have a habit of remaking ourselves when times are tough.” Lee said that the mining sector, through the PDAC, is committed with working with the Canada Government to resolves the issues that it faces. He added that by all accounts, it sounds like the government is listening.

Lee added that the sector’s commitment to developing Environmental Social Governance (ESG) policies and work with First Nations is also expected to help improve sentiment and attract new interest.

As for investment opportunities, Lee said that he expects capital to flow back into the sector as merger and acquisition activity continues to grow.

“M&A is here to stay in the mining sector for a while,” he said. “There are a lot of good deals in the marketplace and this action will bring investors back.”

Disclaimer: The views expressed in this article are those of the author and may not reflect those of Kitco Metals Inc. The author has made every effort to ensure accuracy of information provided; however, neither Kitco Metals Inc. nor the author can guarantee such accuracy. This article is strictly for informational purposes only. It is not a solicitation to make any exchange in commodities, securities or other financial instruments. Kitco Metals Inc. and the author of this article do not accept culpability for losses and/ or damages arising from the use of this publication.