Mineral Trade Information Bulletin, April 2011

Canada's Mineral Trade Surplus Rebounds to $18.0 Billion in 2010

Canada depends heavily on its trade of mineral commodities. The export of these products has a significant positive impact on Canada's overall merchandise balance of trade and, therefore, on the national economy and the standard of living of all Canadians. Trade in the mining and mineral processing industry¹ in 2010 continued to occupy an important role in Canadas international trade position, accounting for 21.2% of total exports and 16.5% of total imports in 2010. Moreover, the mineral trade surplus rebounded to $18.0 billion, a 57.3% increase over 2009.

TRADE BY COUNTRY

The United States continues to be Canada’s leading partner in the trade of mining and mineral commodities, accounting for 53.4% of all mineral exports (down from 55.1% in 2009) and for 52.7% of all mineral imports (down from 54.9% in 2009). However, the percentage of Canada’s total mineral exports destined for the United States has been steadily declining since 1999 when it was 78.0%.

The European Union (EU), China, and Japan represent the next largest destinations of Canada’s mineral exports. China, Peru, Mexico, and the EU are the next leading sources of mineral imports after the United States.

While the United States remains Canada’s leading mineral trade partner, emerging countries, such as China, India and some of the Latin American countries, are becoming increasingly important trade partners for Canada. For instance, since 2000, Canada’s mineral exports to India have increased nearly sixfold to just over $700 million in 2010. Exports to Brazil, valued at $1.0 billion in 2010, have nearly tripled over the last decade. Exports to China reached a record $4.7 billion in 2010, which represents a nearly sixfold growth over the last decade. Moreover, with commodity demand in these countries, particularly China, expected to remain buoyant in the short term, Canada’s trade relationship with these regions will take on added significance.

Diversification – whether planned or not – remains a basic strategy for coping with risk. For instance, it is widely held that, among other factors, China’s demand for commodities helped lessen the blow to Canada’s mineral industry during the most recent global recession. Thus, as the destinations for Canada’s mineral commodities continue to diversify, some of the potential risks to the industry are increasingly mitigated. Table 1 provides total mineral export and import values for Canada’s leading trade partners in 2010.

Balance of Trade
Canada’s balance of trade for the mining and mineral processing industry reached record levels in 2007 ($22.5 billion) and 2008 ($25.9 billion) before falling in 2009 to $11.4 billion. It rebounded in 2010 to reach $18.0 billion (Figure 1). Canada continues to maintain a positive balance of trade with its traditional export markets in the United States, the EU, Japan, and South Korea. However, Canada’s imports from China, Brazil, and Mexico exceeded its exports to these countries (see Table 1), most notably due to large trade deficits in the mineral and metal fabrication stages (Stage 3 – semi-fabrication and Stage 4 – fabrication).

TRADE BY MANUFACTURING STAGE¹

Table 2 shows Canada’s trade in minerals and metals by production stage. Traditionally, Canada runs large, positive trade balances in Stage 1 – mineral extraction ($16.9 billion in 2010) and Stage 2 – smelting and refining ($20.1 billion in 2010). Trade balances in Stage 3 (semi-fabrication) tend to be neutral or slightly negative (-$3.1 billion in 2010) while balances for Stage 4 (fabrication) are large and negative (-$15.9 billion in 2010). This pattern reflects Canada’s natural resource wealth and its strengths in mineral extraction; the country tends to export ore and primary metals and to import more highly processed and fabricated metals and mineral products.

TRADE BY MINERAL CATEGORY

Metallic Products
Metal exports account for over three-quarters (75.7%) of Canada’s total mineral exports (Figure 2). Metal exports increased substantially (30.3%) in 2010 to $64.0 billion, nearing the record levels of export value posted pre-recession. The export value for most metals increased (Table 3): iron and steel was up 23.2% to $12.7 billion, copper was up 28.6% to $5.3 billion, and zinc was up 21.7% to $1.7 billion. The export value for gold increased 61.3% to $15.1 billion while that for silver more than doubled to $1.9 billion, both largely based on dramatic price increases during the last year.

Imports of metal products also increased, albeit at a smaller rate than exports, by 23.2% to $56.0 billion. Iron ore, cobalt, nickel, silver, gold, zinc, and molybdenum all showed substantial increases in import value.

Nonmetallic Products
Export trade in nonmetallic products also increased in 2010 to $14.3 billion (+18.2%). Increases in potash (41.9%) and diamonds (38.5%) erased the declines experienced as a result of the recession. Nitrogen (fertilizer) went against the overall trend, declining 3.7%, as did salt, which decreased 21.2%. That said, these four major nonmetal exports accounted for over two-thirds of Canada’s total nonmetallic exports

Nonmetallic imports increased in 2010 but, following the same pattern as metals, they declined proportionately less (10.0%) than exports. Almost all nonmetallic product groups experienced increased imports, but prominent increases were in imports of nitrogen (37.5%) and diamonds (35.3%).

Coal Products
Metallurgical coal (or coking coal, used in steel-making) exports increased from $4.3 billion to $5.5 billion in 2010, while thermal coal (used for making electricity) exports declined from $0.6 billion to $0.5 billion. Canada does not import metallurgical coal; its imports of thermal coal climbed 2.0% in 2010 to $1.1 billion.

TRADE BY PROVINCE AND TERRITORY

As in previous years, the majority of Canada’s 2010 mineral trade flowed to and from Ontario and Quebec (Table 4). With respect to mining and mineral exports, Ontario accounted for nearly half (46.3%) and Quebec accounted for 20.0%. With respect to imports, Ontario accounted for 61.0% and Quebec for 16.5%. British Columbia and Alberta combined to account for 17.5% of Canada’s exports and 14.6% of its imports.

Exports of mining and mineral processing products were a significant portion of exports for most provinces and territories, accounting for virtually all exports from the Northwest Territories, 94.7% of exports from the Yukon, and over one-third of exports from British Columbia.

Each province and territory, with the exception of Manitoba, Nova Scotia, Ontario, and Prince Edward Island, had a positive balance of trade. The trade deficit was particularly substantial in Ontario at -$1.5 billion.

Note: Information in this bulletin was current as of March 24, 2011.

¹ For trade purposes, NRCan divides the mining and mineral processing industry into stages according to the degree of processing or manufacturing corresponding to the product Harmonized System Classification Code. The four stages include Stage 1 Mineral Extraction and Concentrating; Stage 2 Smelting and Refining; Stage 3 Nonmetals and Metals-Based Semi-Fabricating Industries; and Stage 4 Metals and Fabricating Industries. For more information, please visit our statistics web site.

Figure 1. Mining and Mineral Processing Industry Trade by Value, 2001-10

Figure 1. Mining and Mineral Processing Industry Trade by Value, 2001-10
Sources: Natural Resources Canada; Statistics Canada.
Note: Mineral trade includes coal.

Figure 2. Value of Trade of Mining and Mineral Processing Industry Products, 2001-10

Figure 2: Canada, Value of Trade in Mining and Mineral Processing Industry Products, 1999-2009
Sources: Natural Resources Canada, Statistics Canada.
Note: Stages 1 to 4 for metals and nonmetals; Stages 1 to 3 for coal.

TABLE 1. VALUE OF CANADIAN MINERAL TRADE, 2010
Stage	Domestic Exports	Total Exports	Total Imports	Balance of Trade
Stage	($000)
Stage 1	24 523 620	24 623 223	7 720 274	16 902 949
Stage 2	31 856 904	32 444 373	12 376 030	20 068 343
Stage 3	14 587 984	15 608 334	18 744 683	- 3 136 349
Stage 4	10 440 387	11 851 502	27 715 591	- 15 864 089
Total	81 408 895	84 527 432	66 556 578	17 970 854

Sources: Natural Resources Canada; Statistics Canada.
Notes: Mineral trade includes coal. Totals may not add due to rounding.

TABLE 2. VALUE OF CANADIAN MINERAL TRADE BY COUNTRY, 2010
Country	Total Exports	Total Imports	Balance of Trade
Country	($000)
United States	45 148 260	35 080 865	10 067 395
EU-27	18 629 447	5 801 231	12 828 216
China	4 684 593	5 866 819	- 1 182 226
Japan	3 427 517	1 112 685	2 314 832
Korea, South	1 955 899	555 640	1 400 259
Norway	2 221 739	151 358	2 070 381
India	764 006	526 171	237 835
Mexico	934 549	2 843 689	- 1 909 140
Brazil	1 030 709	1 170 689	- 139 980
Other countries	5 730 713	13 447 430	- 7 716 717
Total Canada	84 527 432	66 556 577	17 970 855