Prices of many metals, minerals could jump

A shortage of metal and mineral exploration will create a “severe supply constraint,” causing prices to jump to new highs, according to a paper released Tuesday by professional services firm Ernst & Young.

TORONTO — A shortage of metal and mineral exploration will create a “severe supply constraint,” causing prices to jump to new highs, according to a paper released Tuesday by professional services firm Ernst & Young.

Many miners have essentially stopped exploration activities, a decision that will lead to shortages in “a few years time” when the global economy recovers, the paper says.

Because of the depletion of existing mines and the length of time required to bring on new projects, prices could “soar to new heights.”

“What we’re seeing now . . . is an overall unwillingness to take on additional risk,” stated Tom Whelan, leader of Ernst & Young’s Canadian mining and metals practice.

“This makes immediate sense, of course, but there’s another side to the story, which is the predicted and inevitable scramble for scarce resources when the global economy recovers.”

The paper also found that the recession has divided Canada’s mining industry into three camps: opportunists, innovators and survivors.

Major mining firms with strong balance sheets are usually the opportunists, looking for low-cost acquisitions. But “valuation impasses that often prove too difficult to bridge” can result when sellers over-value themselves based on an outdated view of their worth.

“After the past few years of high-profile cash deals, we are far more likely to see future transactions that rely less on cash and more on share swaps,” said Whelan.

The mid-tier players are generally the innovators as they devise “creative solutions for survival,” while the junior miners are the survivors focused on conserving cash, the paper says.

Another study released Tuesday by PricewaterhouseCoopers LLP found that the pace of merger and acquisition activity in the global metals industry declined “significantly” in the first quarter of 2009 due to the global recession, weak commodity prices and a difficult operating environment.

In the quarter, 18 deals were announced compared to 138 in 2008 and 142 in 2007.

Just Posted

Rural transit service rolled out

2A South Regional Transit will link Innisfail and Penhold with Red Deer

Some Red Deer waste collection schedules change due to holiday season

Tuesday collections will be moved for two weeks

Red Deer ‘champion’ helps hospital by sharing ongoing petition

It’s been about three years since many physicians at Red Deer Regional… Continue reading

Red Deer Airport’s prospects are looking up for 2019

Ultra-low-cost passenger service is on the horizon

Funding down for Red Deer Christmas charities

Food hampers and toys for children going out to those in need

Alberta’s Sundial starts shipping to AGLC this week

Sundial’s Rocky View facility has received the green light from Health Canada… Continue reading

Penny Marshall dead at 75, best known as TV’s Laverne and director of ‘Big,’ ‘A League of Their Own’

Bronx-born Penny Marshall, who found ’70s sitcom success on “Laverne and Shirley”… Continue reading

Chabot scores overtime winner to lift Senators over Predators 4-3

OTTAWA — Thomas Chabot saw an opening and he took it. And… Continue reading

Canadian Marielle Thompson earns World Cup ski cross bronze in season opener

AROSA, Switzerland — Canada’s Marielle Thompson captured bronze at the opening World… Continue reading

Canada doesn’t make Oscars short list for best foreign language film

LOS ANGELES — Canada is no longer in the running for best… Continue reading

Warrant issued for arrest of ‘Schwimmer lookalike’ suspect

LONDON — A British judge has issued an arrest warrant for an… Continue reading

Moneywise: Canadian workers unhappy with pay, want pension plans

Many working Canadians are feeling underpaid and are so worried about their… Continue reading

Brazil police say faith healer has turned himself in

RIO DE JANEIRO — A celebrity faith healer accused of sexually abusing… Continue reading

B.C. hockey coach creates ‘gear library’ to remove cost barrier of sport

VANCOUVER — Nicola Froese says she has always loved playing sports, but… Continue reading

Most Read