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“valuation impasses that often prove too difficult to bridge” can result when sellers over-value themselves based on an outdated view of their worth.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

Red Deer group looking to keep roads safe for cyclists

A Red Deer cycling group is concerned about road safety after multiple… Continue reading

Smoke and pets do not mix

Take care of your pets during the smoky weather

Former Red Deer lawyer sentenced

Charges included possession of stolen property

Man causes mischief with axe in Ponoka

Arson and attempted break and enter charges laid

WATCH: Raising money for kids at the Gord Bamford Charity Golf Classic

Former NHL players, Olympians, pro rodeo circuit members and musicians teed off… Continue reading

Oilpatch fears delays as U.S. judge orders further review of KXL pipeline route

CALGARY — Potential delays in the completion of the Keystone XL pipeline… Continue reading

‘Queen of Soul’ Aretha Franklin dies at 76

NEW YORK — Aretha Franklin, the undisputed “Queen of Soul” who sang… Continue reading

Arrests in Burnaby, B.C., as order against Kinder Morgan protest camp enforced

BURNABY, B.C. — The RCMP arrested protesters Thursday as officers enforced a… Continue reading

‘Hot and dirty work:’ Commander describes fighting massive Ontario wildfire

BRITT, Ont. — From a helicopter flying over a smouldering swath of… Continue reading

Calgary Fire Department logs record opioid overdose calls in July

CALGARY — The Calgary Fire Department says there were a record number… Continue reading

RCMP in Burnaby, B.C., say Kinder Morgan protest camp to be dismantled

BURNABY, B.C. — The RCMP arrested protesters when officers enforced a court… Continue reading

Study: Smokers better off quitting, even with weight gain

NEW YORK — If you quit smoking and gain weight, it may… Continue reading

Most Read


Five-day delivery plus unlimited digital access for $185 for 260 issues (must live in delivery area to qualify) Unlimited Digital Access 99 cents for the first four weeks and then only $15 per month Five-day delivery plus unlimited digital access for $15 a month