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How Canada’s Mining Sector Impacts the Economy

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Canada is a mining nation.

From the Rockies to the Canadian Shield, and from the Plains and to the North, the variety of geology that exists in the country is immense – and this has created a large and unique opportunity for groundbreaking mineral discoveries.

As a result, Canada is one of the world’s largest exporters of minerals and metals, supplying approximately 60 different mineral commodities to over 100 countries.

An Intro to Canadian Mining

Today’s infographic comes to us from Canadian Minerals and Metals Plan and it highlights an industry that has given Canada a competitive advantage in the global economy.

How Canada's Mining Sector Impacts the Economy

The mineral sector brings jobs, investment, and business to Canada.

This impact stems from the whole lifecycle of mining, including exploration, extraction, primary processing, design, and manufacturing processes.

Economic Impact

Last year, the minerals sector contributed $72 billion to Canada’s GDP.

Here are the major minerals produced in Canada in 2017, along with their dollar value:

RankMineralValue (2017)Production (2017)
#1Gold$8,700,000,000164,313 kg
#2Coal$6,200,000,00059,893,000 tonnes
#3Copper$4,700,000,000584,000 tonnes
#4Potash$4,600,000,00012,214,000 tonnes
#5Iron Ore$3,800,000,00049,009,000 tonnes
#6Nickel$2,700,000,000201,000 tonnes
#7Diamonds$2,600,000,00022,724,000 karats

According to S&P Global Market Intelligence, more non-ferrous mineral exploration dollars come to Canada than to any other country. In 2017, roughly $1.1 billion – or about 14% of global exploration spending – was allocated to Canada, which edged out Australia for the top spot globally.

Mining and Communities

From mining in remote communities to the legal and financial activities in urban centers such as Vancouver or Toronto, mining touches all Canadian communities.

According to a study commissioned by the Ontario Mining Association, the economic impact of one new gold mine in Ontario can create ~4,000 jobs during construction and production, and can contribute $38 to $43 million to the economy once operating.

Further, more than 16,500 Indigenous peoples were employed in the mineral sector in 2016, accounting for 11.6% of the mining industry labor force, making it the second largest private sector employee.

Innovation Drives Canadian Mining

Canada has an established network of academic thinkers, business associations, financial capital, and government programs that support and promote new technologies that can help set a standard for mining worldwide.

Here are a few examples of innovation at work:

  1. CanmetMINING is currently researching the implementation of hydrogen power to replace the use of diesel fuel in operating underground mines. Once this technology adopted, it could reduce the GHG emission footprint of underground mines by 25% and improve the health of workers in mines by reducing their exposure to diesel exhaust.
  2. New technology is turning what was once mine waste into a potential source for minerals. In the past three decades, six billion tonnes of mine tailings have accumulated with a potential value of US$10 billion. Reprocessing this waste can produce significant recoveries of rare earth elements, gold, nickel, cobalt and other valuable minerals.
  3. Artificial intelligence and new remote-control technology can be deployed to operate mining equipment and find new discoveries.

All these innovations are going to change the nature of working in mines, while creating high-paid jobs and demand for an educated labor force.

Opportunity for Future Generations

A large number of Canadian miners are expected to retire over the next decade. In fact, Canada’s Mining Industry Human Resources Council (MiHR) forecasts 87,830 workers at a minimum will have to be hired over the next ten years.

With game-changing technologies on the horizon, there will be plenty of opportunities for a new generation of high-tech miners. The future bodes well for Canadian mining.

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Energy

The Periodic Table of Commodity Returns

Which individual commodities were the best performers in 2019, and how do those numbers compare to the past decade of data?

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The Periodic Table of Commodity Returns 2019

In 2019, every major asset class finished in the black.

And although the broad commodity market finished up 17.6% on the year, the performances of individual commodities were all over the map. For those familiar with the sector, that’s pretty much par for the course.

That said, the lack of an obvious correlation in commodity markets also makes for a thought-provoking and humbling exercise: comparing the annual returns of commodities against the data from the past decade.

A Decade of Commodities (2010-2019)

Today’s visualization comes to us from U.S. Global Investors, and it compares individual commodity returns between 2010 and 2019.

You can use the interactive tool on their website to toggle between various settings for the table of commodity returns, such as breaking them down by category (i.e. energy, precious metals, etc.), by best and worst performers, or by volatility over the time period.

Let’s dive into the data to see what trends we can uncover.

Palladium: The Best Commodity, Three Years Straight

In 2019, palladium finished as the best performing commodity for the third straight year — this time, with a 54.2% return.

Palladium top performing commodity

You could have bought the precious metal for about $400/oz in early 2010, when it was a fraction of the price of either gold or platinum.

Nowadays, thanks to the metal’s ability to reduce harmful car emissions and an uncertain supply situation, palladium trades for above $2,000/oz — making it more expensive per ounce than both gold and platinum.

Oil and Gas: Opposite Ends of the Spectrum

As key energy commodities, oil and natural gas have an inherent connection to one another.

However, in 2019, the two commodities had completely diverging performances:

Palladium top performing commodity

Crude oil prices gained 34.5% on the year, making it one of the best commodities for investors — meanwhile, natural gas went the opposite direction, dropping 25.5% on the year. This actually cements gas as the worst performing major commodity of the decade.

“That’s Gold, Jerry!”

Finally, it’s worth mentioning that gold and silver had a bounceback year.

Gold gained 18.3% to finish with the best return the yellow metal has seen in a decade. Silver followed suit with a similar story, rallying 15.2% over the calendar year.

Gold and silver performance

Precious metals now sit at multi-year highs against an interesting economic and geopolitical backdrop to start 2020.

Where do you see the above commodities ending up on next year’s edition of the rankings?

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Energy

Breaking the Ice: Mapping a Changing Arctic

As the Arctic becomes more accessible due to reduced ice cover, countries with polar real estate increasingly viewing the region through an economic lens.

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A Changing Arctic

Breaking the Ice: Mapping a Changing Arctic

The Arctic is changing. As retreating ice cover makes this region more accessible, nations with Arctic real estate are thinking of developing these subzero landscapes and the resources below.

As the Arctic evolves, a vast amount of resources will become more accessible and longer shipping seasons will improve Arctic logistics. But with a changing climate and increased public pressure to limit resource development in environmentally sensitive regions, the future of northern economic activity is far from certain.

This week’s Chart of the Week shows the location of major oil and gas fields in the Arctic and the possible new trade routes through this frontier.

A Final Frontier for Undiscovered Resources?

Underneath the Arctic Circle lies massive oil and natural gas formations. The United States Geological Survey estimates that the Arctic contains approximately 13% of the world’s undiscovered oil resources and about 30% of its undiscovered natural gas resources.

So far, most exploration in the Arctic has occurred on land. This work produced the Prudhoe Bay Oil Field in Alaska, the Tazovskoye Field in Russia, and hundreds of smaller fields, many of which are on Alaska’s North Slope, an area now under environmental protection.

Land accounts for about 1/3 of the Arctic’s area and is thought to hold about 16% of the Arctic’s remaining undiscovered oil and gas resources. A further 1/3 of the Arctic area is comprised of offshore continental shelves, which are thought to contain enormous amounts of resources but remain largely unexplored by geologists.

The remaining 1/3 of the Arctic is deep ocean waters measuring thousands of feet in depth.

The Arctic circle is about the same geographic size as the African continent─about 6% of Earth’s surface area─yet it holds an estimated 22% of Earth’s oil and natural gas resources. This paints a target on the Arctic for exploration and development, especially with shorter seasons of ice coverage improving ocean access.

Thawing Ice Cover: Improved Ocean Access, New Trading Routes

As Arctic ice melts, sea routes will stay navigable for longer periods, which could drastically change international trade and shipping. September ice coverage has decreased by more than 25% since 1979, although the area within the Arctic Circle is still almost entirely covered with ice from November to July.

RouteLengthIce-free Time
Northern Sea Route4,740 Nautical Miles6 weeks of open waters
Transpolar Sea Route4,179 Nautical Miles2 weeks of open waters
Northwest Passage5,225 Nautical MilesPeriodically ice-free
Arctic Bridge3,600 Nautical MilesIce-free

Typically shipping to Japan from Rotterdam would use the Suez Canal and take about 30 days, whereas a route from New York would use the Panama Canal and take about 25 days.

But if the Europe-Asia trip used the Northern Sea Route along the northern coast of Russia, the trip would last 18 days and the distance would shrink from ~11,500 nautical miles to ~6,900 nautical miles. For the U.S.-Asia trip through the Northwest Passage, it would take 21 days, rather than 25.

Control of these routes could bring significant advantages to countries and corporations looking for a competitive edge.

Competing Interests: Arctic Neighbors

Eight countries lay claim to land that lies within the Arctic Circle: Canada, Denmark (through its administration of Greenland), Finland, Iceland, Norway, Russia, Sweden, and the United States.

There is no consistent agreement among these nations regarding the claims to oil and gas beneath the Arctic Ocean seafloor. However, the United Nations Convention on the Law of the Sea provides each country an exclusive economic zone extending 200 miles out from its shoreline and up to 350 miles, under certain geological conditions.

Uncertain geology and politics has led to overlapping territorial disputes over how each nation defines and maps its claims based on the edge of continental margins. For example, Russia claims that their continental margin follows the Lomonosov Ridge all the way to the North Pole. In another, both the U.S. and Canada claim a portion of the Beaufort Sea, which is thought to contain significant oil and natural gas resources.

To Develop or Not to Develop

Just because the resources are there does not mean humans have to exploit them, especially given oil’s environmental impacts. Canada’s federal government has already returned security deposits that oil majors had paid to drill in Canadian Arctic waters, which are currently off limits until at least 2021.

In total, the Government of Canada returned US$327 million worth of security deposits, or 25% of the money oil companies pledged to spend on exploration in the Beaufort Sea. In addition, Goldman Sachs announced that it would not finance any projects in the U.S.’s Arctic National Wildlife Refuge.

The retreat of Western economic interests in the Arctic may leave the region to Russia and China, countries with less strict environmental regulations.

Russia has launched an ambitious plan to remilitarize the Arctic. Specifically, Russia is searching for evidence to prove its territorial claims to additional portions of the Arctic, so that it can move its Arctic borderline — which currently measures over 14,000 miles in length — further north.

In a changing Arctic, this potentially resource-rich region could become another venue for geopolitical tensions, again testing whether humans can be proper stewards of the natural world.

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