VANCOUVER (miningweekly.com) – The EY Canadian Mining Eye index gained 2% during the third quarter, following a 7% decline in the prior period. The gain was driven by increases across the board in precious and base metals.
"As commodity prices continue to increase, appetite for investment in existing projects is expected to grow. In an effort to improve balance sheets, companies are looking for lower-risk havens for investment, and that means investing in proven assets,” advised EY Canadian mining and metals leader Jim MacLean.
According to EY, zinc led the price rally with a 16% gain in the three months ended September, followed by nickel with its 11% gain, and copper seeing a 9% increase in quarterly prices. Gold gained 3% over the prior quarter.
The recently published ‘EY Business risks facing mining and metals 2017-2018’ report identifies current challenges in the investment landscape. Regulatory risk and social licence to operate appear as two of the top ten business risks facing the sector.
From higher taxes and royalties to increased government share of ownership, governments around the world – including Tanzania and the Democratic Republic of Congo – are changing various mining laws and contributing to an uncertain investment climate for producers.
"Growth ambitions will continue to be influenced by commodity price volatility. Improving Chinese economic sentiment and tight inventories suggest zinc prices will maintain their upward trajectory,” EY Canadian mining and metals transactions leader Jay Patel advised.
He added that nickel prices are expected to remain volatile due to global oversupply countered by sustained high demand for stainless steel in China. “Copper is expected to continue its climb thanks to declining supply, a weakening US dollar and Chinese industrial growth."