Canadian Mining Assets

Information Bulletin, December 2016

(published in January 2017)

The Global Presence of Canadian Mining Companies

(Note: All values are in Canadian dollars.)

Canadian mining assetsFootnote 1 (CMA) totaled $259.1 billion in 2015, a 3.5% increase from the 2014 value of $250.3 billion. Canadian mining assets abroad (CMAA) totaled $170.8 billion, up 2.6% from the 2014 value of $166.4 billion. CMAA accounted for two thirds of CMA for both years.

Since 2013, exchange rates have had an escalating impact on the CMA values of firms reporting in U.S. dollars. These companies accounted for almost 90% of the value of CMA in 2015, although they represented only a little over 10% of all companies. The value of the U.S. dollar rose from C$1.153 at the end of 2014 to C$1.371 at the end 2015, an 18.9% increase.Footnote 2 Had the exchange rate remained constant, the value of CMA would have declined by 9.6% instead of increasing by 3.5% in 2015, and the average annual growth rate over the past five years would have been 2.9% rather than 7.6% in Canadian dollars.

Canadian mining and exploration companies were present in 102 foreign countries in 2015, down from a peak of 110 in 2011. The majority of CMAA (66.3%) were in the Western Hemisphere (the Americas) where values remained consistent with the previous year. Africa and Asia experienced growth in 2015 while values in Oceania and Europe declined. Table 1 displays the amount and percentage of CMAA by region and Figure 3 provides more regional details on a map. Below is a regional overview that highlights more notable variations and some of their principal contributing events.

Africa experienced notable growth (15.9%) in 2015 as the top two countries in the region, Zambia and the Democratic Republic of the Congo, experienced gains that were only partly offset by a decline in Madagascar:

  • Democratic Republic of the Congo (+$1.3 billion): Ivanhoe Mines reassessed the value of its Kamoa copper project following its partial sale.
  • Madagascar (-$1.6 billion): Sherritt International recognized an impairment loss at its Ambatovy nickel-cobalt project in which it owns a 40% stake. SNC-Lavalin also held a 5% stake in this project that was divested in 2015.
  • Zambia (+$2.3 billion): First Quantum Minerals officially opened the Sentinel copper mine in 2015 and continued to make investments at Kansanshi, the largest copper mine in Africa.

In Latin America, which accounted for 52% of CMAA, increases in Brazil, Panama, and Peru were offset by declines in Chile, the Dominican Republic, and Guatemala. This resulted in a consistent overall value for the region compared to the previous year at $88.5 billion in 2015:

  • Brazil (+$1.7 billion): Silver Wheaton, a precious metals streaming company, increased its interest in Vale’s Salobo copper-gold mine.
  • Chile (-$2.4 billion): Barrick Gold sold a 50% interest in the Zaldívar copper mine to Antofagasta Plc. Yamana Gold recorded an impairment loss at its El Peñón gold-silver mine.
  • Dominican Republic (-$1.6 billion): Impairment losses were recorded at the Pueblo Viejo gold-silver-copper mine by its owners, Goldcorp (40%) and Barrick Gold (60%).
  • Guatemala (-$0.9 billion): Goldcorp recorded impairment losses against the carrying value of its Marlin gold-silver mine and disposed of a non-controlling interest in a third party with mining assets in Guatemala.
  • Panama (+$2.2 billion): Development continued at the Cobre Panama copper mine owned by First Quantum Minerals.
  • Peru (+$0.9 billion): Hudbay’s Constancia copper-gold-molybdenum mine reached commercial production during 2015. Silver Wheaton acquired an interest in Glencore’s output from the Antamina copper-zinc-molybdenum-silver mine. Rio Alto, who held the La Arena gold mine, merged with a company headquartered outside of Canada and became a wholly-owned subsidiary of the foreign company.

Asia experienced the greatest gain in percentage terms (+18.2%), brought on in part by growth in China (+$0.9 billion) where China Gold International Resources continued work to expand its Jiama copper-gold mine.

In Europe, the CMAA value declined 8.0% in 2015. Loses were mostly incurred in Greece (-$1.1 billion) where Eldorado Gold recorded impairment charges attributed mainly to permitting issues and escalating development costs at its Skouries gold-copper mine.

The CMAA value in Oceania declined 12.2% as Barrick Gold sold its Cowal gold mine in Australia (-$399 million) and a 50% stake in the Porgera gold-silver mine in Papua New Guinea (-$204 million).

The value of CMA held by junior companiesFootnote 3 rose 12.0% in 2015 as a number of firms advanced projects towards production, including Torex Gold Resources and its El Limon Guajes gold mine in Mexico, Asanko Gold and its Asanko gold mine in Ghana, and Stornoway Diamond and its Renard diamond mine in Canada. Despite this increase, many junior companies continued to struggle with difficult market conditions and their count declined almost 10% from 1,424 companies in 2014 to 1,289 in 2015. Some of these companies were the subject of a merger or acquisition while others left the industry, became dormant, or ceased to exist. Junior companies accounted for over 90% of the total company count and for about 8% of the total CMA value in 2015. Over 40% of their assets by value were located in Canada with another 35% located elsewhere in the Americas.

Senior companiesFootnote 3 held a smaller portion of their assets by value in Canada (33.3%), but also held a large portion of their assets in the rest of the Americas (44.5%). In 2015, the overall CMA value of senior companies increased by 2.8%. The top 10 companies by value for 2015 accounted for nearly two-thirds of total CMA and for almost 40% of the net year-over-year increase with a cumulative value of $163.5 billion.

Annual Variations

In comparing asset totals across years, it is important to consider the causes of variations. Additions arise mostly from mining asset development and construction. Subtractions arise from asset write-offs, impairments, depreciation, sales, and mine closures. Exchange rate movements, changes in accounting methods, mergers and acquisitions, and the relocation of company headquarters also contribute to annual changes.

For 2015, 1,425 companies were identified as possessing mining assets abroad, of which:

  • 31 (2%) had mining assets with a value in excess of $1 billion;
  • 136 (10%) had operating revenues;
  • 714 (50%) had interests outside of Canada; and
  • 523 (37%) had mining assets in at least two countries.

Use of CMAA Statistics

When the question is asked “What is the value of Canadian mining investment in Country X?,” some care is required in answering. CMAA, as tracked by Natural Resources Canada, differ from Canadian Direct Investment Abroad (CDIA) figures estimated by Statistics Canada. CDIA is based on Foreign Direct Investment (FDI) as defined internationally, based on national systems of accounts. CMAA are based on financial accounting standards applied by Canadian public companies and auditors. Table 2 outlines the principal differences between these approaches.



Figure 1
Percentage of CMAA by Country, 2015

 

Percentage of CMAA by Country, 2014

 

 

Source: Natural Resources Canada.

Text version

Figure 1
Percentage of CMAA by Country, 2014

Figure 1 is a pie chart that shows the leading countries with Canadian mining assets abroad in 2015. More than half of Canada's mining assets abroad are in five countries of the Western Hemisphere: the United States (15%), Mexico (11%), Chile (11%), Argentina (8%), and Peru (6%). The other leading countries are Zambia, Brazil, Panama, the Dominican Republic, and China, each with a share ranging from 3% to 5%.


Figure 2
CMA by Region and by Company Type, 2015

 

Percentage of CMAA by Country, 2014

 

 

Source: Natural Resources Canada.

Text version

Figure 2

CMA by Region and by Company Type, 2015

Figure 2 is a column chart that shows the geographic distribution of Canadian mining assets by junior and senior companies. Canadian mining assets of junior companies are mainly located in Canada (42%) while 35% are in the rest of the Americas (excluding Canada), 17% are in Africa, 2% are in Oceania, 2% are in Asia, and 1% are in Europe. Canadian mining assets held by senior companies were less concentrated in Canada at 33%, but had a higher concentration in the rest of the Americas (excluding Canada) at 45%; the remainder were divided between Africa (12%), Asia (5%), Europe (4%), and Oceania (2%).


Figure 3
Geographic Distribution of CMA in 2015

 

Percentage of CMAA by Country, 2014

 

[larger file]

Source: Natural Resources Canada.
M = Million; B = Billion.
Notes: All amounts are in Canadian dollars. Company counts are for the 2015 reference year and do not add to totals since companies can be active in multiple jurisdictions. Figures for 2015 are preliminary.

Text version

Figure 3
Geographic Distribution of CMA in 2015

Figure 3 is a map of the world. The countries are colour coded according to a range of values for Canadian mining assets in each country (for example, countries in light green have Canadian mining assets in the range of $10 million to $100 million). For each continent and for Canada, the United States, and Mexico individually, the 2014 and 2015 asset values are listed along with the number of Canadian-based companies with assets in that region. Refer to Table 1 for the specific values for each region.


Table 1. CMA by Region, 2014 and 2015 (p)
Region 2014
($ billions)
2015 (p)
($ billions)
Change
 (%)
Africa 27.0 31.3 15.9
Americas (excluding Canada) 113.4 113.3 -0.1
Asia 9.4 11.1 18.2
Europe 11.7 10.7 -8.0
Oceania 4.9 4.3 -12.2
Total CMAA 166.4 170.8 2.6
Canada 83.9 88.3 5.2
Total CMA 250.3 259.1 3.5

Source: Natural Resources Canada.
(p) Preliminary.
Note: Numbers may not add to totals due to rounding.

Table 2. CDIA Compared to CMAA
CDIA CMAA
Financing must come from Canadian sources Source of financing is immaterial
Examines all assets and liabilities Examines only non-current mining asset values
Based on first destination (investment destined for Mexico through a U.S. subsidiary is allocated to the United States) Based on final destination (the transaction in the left column would be considered CMAA in Mexico)
Canadian company: incorporated in Canada with foreign affiliates Canadian company: headquarters in Canada and not foreign controlled
Limited data by region for mining CMAA are available by country

Source: Natural Resources Canada.

Annex 1. Canadian Mining Assets (CMA) by Country and Region, 2014 and 2015

© Her Majesty the Queen in Right of Canada, as represented by the Minister of Natural Resources, 2017