Mine 2018

Tempting times

Navigating tempting times in Canada

Canadian mining companies are well-positioned to grow amid a continuing upswing in the mining cycle that has led to impressive financial performances by the global Top 40. Six Canadian-based miners stayed in the global Top 40—with three rising, two dropping and one holding firm compared to the 2017 report—and the continued recovery in commodity prices underpins a healthy confidence for 2018.

Reflecting renewed optimism, Canadian miners have increased exploration spending by 31% as they gear up for long-term growth. Despite this, the order of the day is about embracing the power of partnerships, accelerating digital transformations and exercising restraint when pursuing new projects or acquisitions.

“Last year was a remarkable year for Canadian miners. A heightened focus on safety, technology and finding efficiencies shows we’re moving toward the goal of creating sustainable, long-term value.”

- Liam FitzgeraldNational Mining Leader

Explore the Canadian insights from Mine 2018

Accelerating digital to transform

Canadian miners in the Top 40 continued to be world leaders in digital transformation, focusing on increasing efficiency, enhancing safety and mitigating cybersecurity risks that global mining leaders say are increasing in likelihood and severity.

Partnerships and alliances with technology companies have become a key element in Canadian digital strategies. For example, Teck has partnered with Canadian start-up LlamaZOO to create MineLife VR, a virtual reality program that accelerates planning by turning data into an immersive visualization of a mine’s complete life cycle. Partnerships are helping mining companies to keep pace with change and to become market leaders in transformation.

Miners are using technologies that include artificial intelligence and digital twins to explore digital pilot projects. The upswing provides the opportunity to test the cost-saving potential of digital technologies before deployment at scale.

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Prioritizing safety

Canadian miners showed a strong commitment to safety, making up more than a third of the global Top 40 companies that reported decreased or steady injury frequency rates in 2017. Miners are also turning to technology in this domain, using predictive analytics to identify hazards and autonomous technology to remove people from high-risk tasks like drilling and blasting.

Organizations are also addressing the human factor in accidents. For example, a few Canadian mining companies are studying and monitoring operator fatigue to best decide how and when to intervene.

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The power of partnerships

With rising shareholder expectations and a 5% growth in aggregated global labour costs, Canadian miners are unlocking value through collaboration to reduce costs, consolidate infrastructure and increase sustainability.

In this vein, Quebec-based miners have gained access to new financing sources by entering into alliances with government, private equity and capital markets. These partnerships provide timely access to cash and connect leadership with experience from outside the mining industry.

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International tax impacts

US tax reform has had a positive impact on Canadian mining companies with operations in the United States. These companies saw their tax burden fall by 15%, reducing the effective tax rate by approximately 5%.

But tax reforms may have a different effect for miners with operations across the Atlantic, as reports circulate that some African governments may use tax as leverage to adjust their home countries’ shares of revenues from operations. While these claims are considered unsubstantiated, Canadian companies must pay attention to how they engage with foreign governments in the areas of taxes, royalties and sharing of economic benefit.

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Diversity and governance

Canadian miners continue to show leadership in boardroom diversity. For example, women make up 25% of directors among Canadian miners, compared to 19% among their global peers. While the Top 40 companies nearly matched the Canadian year-over-year increase in boardroom representation by women, Canada slightly leads the global group as a whole.

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Renewed exploration interest

The upswing in the mining cycle has renewed enthusiasm for exploration, an area of strength for Canadian miners. Exploration spending among Canadian-based companies rose 31%, more than doubling the average increase of the Top 40. The eagerness for exploration is also reflected in the 2018 rise in equity financing activity in Toronto, the location of world-leading exchanges with listings focused on early development and exploration

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Dig deeper into Mine 2018

Listen to Liam Fitzgerald on Business in Vancouver’s BIV Today podcast to explore the Canadian trends.

2018 outlook shows further gains

We expect performance to keep improving into 2018, with global revenues continuing to increase on the back of higher prices and marginally higher production volumes, as we’ve seen in Q1 2018. Despite the successes of cost-saving initiatives to date, we expect operating costs to rise globally as a result of inflationary pressures on input costs.

Mining companies were able to capitalize on the increased price environment as the additional production capacity created at the end of the previous boom was able to deliver into healthy demand.

Source: Mine 2018: Tempting times

The global Top 40 mining companies

Global production profile and external market drivers

Contact us

Liam Fitzgerald
Partner, National Mining and Metals Leader
Tel: +1 416 869 2601
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Nochane Rousseau
Managing Partner, Greater Montréal, PwC Canada
Tel: +1 514 205 5199 
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Mark Platt
Partner, Assurance
Tel: +1 604 806 7093
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Dean Braunsteiner
National Mining Leader, PwC Canada
Tel: +1 416 869 8713
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Mark Patterson
Partner
Tel: +1 604 806 7160
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James Lusby
Partner, Assurance Group
Tel: +1 416 365 8181
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Marelize Konig
National Business Transformation Leader, PwC Canada
Tel: +1 416 814 5862
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Stephen Mullowney
Partner, Corporate Finance, Mining
Tel: +1 416 687 8511
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James Strapp
Partner, Digital Operations Leader, PwC Canada
Tel: +1 416 540 8211
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Subo Chatterjee
Senior Director, Digital Operations, PwC Canada
Tel: +1 416 687 8872
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Kristine Doherty
Senior Manager, Assurance, Mining, PwC Canada
Tel: +1 416 814 5761
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