EY Canadian Mining Eye index ends 2018 with continued declines

Sources available to discuss 2018 trends and 2019 outlook

• EY Canadian Mining Eye index falls 2% in Q4 2018
• Positive outlook for gold, nickel, copper and zinc in near term after base metals decline in fourth quarter
• Strategic transactions and digital transformation are the focus for reinvention in 2019

(Toronto, 21 February 2019) Challenges continued in the final quarter of the year, with the EY Canadian Mining Eye index down 2% after a 12% drop in Q3 2018.

Index comparisons	Q4 2018	Q3 2018
Canadian Mining Eye index	-2%	-12%
UK Mining Eye	-7%	-3%
S&P/TSX Composite Metals and Mining index	-11%	-1%
Major index	7%	-16%

“Although some commodities saw considerable volatility in 2018, we remain optimistic for the year ahead,” says Jeff Swinoga, EY Canada Mining & Metals Leader. “Strategic transactions, refocusing on quality deposits and, of course, digital transformation are top of mind as the mining and metals industry continues to work toward reinventing itself this year.”

Following a 5% decline in both Q2 and Q3, uncertainty over future economic growth and the possibility of fewer than three US Federal Reserve interest rate hikes in 2019 saw gold prices increase 8% in Q4 2018. Meanwhile, nickel, copper and zinc prices all fell quarter-over-quarter.

Rising demand for nickel from the stainless steel sector and the electric vehicle battery market, coupled with fewer new production projects, is expected to boost prices in the near term. The outlook for cooper and zinc is also favourable following supply constraints and tight market conditions.

“The challenges we saw last year with global commodity prices are, in part, due to a slowdown in the Chinese economy near the end of 2018,” says Jay Patel, EY Canada Mining & Metals Transactions Leader. “Although Canadians can anticipate more positive pricing in the near term, slower growth is expected to continue in China over the coming year, and will inevitably have an impact on global commodity prices.”

Commodity price volatility isn’t the only consideration for mining and metals companies in the year ahead. The EY Top 10 business risks facing mining and metals in 2019-2020 report identifies other challenges that continue to evolve in the sector.

“The shifting stakeholder landscape is creating mounting concerns from Canadian mining and metals companies over their license to operate,” says Swinoga. “Companies must commit to being sustainable and responsible if they want to strengthen positive stakeholder relationships and attract new investment for future growth.”

Special Q&A with Jeff Swinoga, new EY Canada Mining & Metals leader
In this interview, Jeff shares insights from his experience in the sector and predictions for 2019, particularly around on emerging technologies and digital transformation.

To access the complete interview and the EY Canadian Mining Eye Q4 2018, visit ey.com/ca/miningeye.

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