Growth of Canada’s Mining Sector in 2024

Canada’s mining industry saw a reduction in growth in 2023 when compared to 2022, but the 2024 forecast is fairly positive. Some prominent reasons for this downfall are the increase in interest rates, also the slowing down of mergers & acquisitions (M&A). M&A’s reduction slowed down the mining industry’s expansion. The reduction also coincided with the world economy tumbling and facing borrowing rates at an all-time high. This caused a huge slowdown in the mining industry.

1,218 deals of M&A happened between January to May 2023 which is 27% less than the previous year’s similar months. As we see currently there is a rapid focus on reducing carbon emissions and a shift towards critical elements, the possibilities are immense for the industry in 2024. With EVs expanding and Ontario turning into an EV hub Canada’s Mining Sector will be filled with surprises Let us explore it in detail.

Underground critical mineral mine
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Canada’s Mining Sector’s Performance in the Year 2023

As per an oilprice.com report, an expert from Price Water House Coopers LLP (PwC) blamed the pandemic for the slowdown in 2020. In 2023 however, he said the slowdown was triggered by financial uncertainty. Doubts still persist if the Mining Sector saw a slowdown in 2023, considering the oil and power industries reached a five-year high of $70.4 billion, an increase of 56% from the previous year 2022. 

Regardless M&A took place even in 2023 but less in volume when compared to 2022, the top acquisition of 2023 was Glencore’s acquisition of Teck Resources’s coal and steel-making business for a $9 billion deal. 

A Reuter’s report even stated that the Glencore deal elevated the M&A in the sector by 34.7%, that’s $26.4 billion, but still falling short of outperforming the previous year's increase. Bankers are very positive regarding the increase to be continuing in 2024. Some other significant deals that we saw are, Baytex Energy buying out Ranger Oil Corporation in a $2.2 million deal, which also includes the debt of the bought company. Crescent Point Energy acquired Hammerhead and Conoco Philips bought out the remaining 50% surmount of Total Energies at a whopping $2.7 billion in cash.

Many experts in the business world acknowledged the consolidation including Tom Pavic, Sayer Energy Adviser’s president, where he predicted that more consolidation is going to happen in the mining industry. Another expert Mike Boyd, head of Global M&A at Canadian Imperial Bank of Commerce (CIBC) states, “In 2023 we did see a lot of M&A in the resource & energy sector. The average decrease in M&A in the mining sector in comparison to 2022 was in line with the global decrease of M&A after 10 years to $3 trillion.

In 2023, only 1 company registered an IPO from the sector on the Toronto Stock Exchange. However, this figure is likely to change. Blake, Cassels & Graydon Law Firm partner Alex Moore said that the market was pretty much non-existent in 2023.

EV Charge station used to charge an Electric Vehicle
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Canada’s Mining Sector Growth Projection 2024

The mining sector is poised to grow wonderfully in 2024. The major development in Canada in 2024 will be the focus on renewable energy and critical elements. The trends suggest that a 2050 carbon-free global economy plan can only be achieved when we transition from the emission of hydrocarbons to using green energy. 

Critical elements will play a fundamental role in developing green energy infrastructure. Critical elements such as Zinc, Lithium, Uranium, Cobalt and Titanium play a key role in producing essential components of green energy such as wind turbines, Electric Vehicle (EV) batteries, solar panels, transmission grids, energy storage systems, and transmission cables that could transport electricity to far away places.

Photo of Black Rock or Magnetite often used as iron ore
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Canada’s Economy Powered by Critical Minerals

As per the Mentor Works platform, Canada’s mineral market produces more than 60 critical elements for energy needs, powering industries and manufacturing centres. The market was valued at $55.5 billion in 2021 which was 20% higher when compared to 2020, in 2024 the market has expanded even more. The Canadian government’s ambitious push to increase EV count in the production of new vehicles will be 20% in 2026, 60% in 2030 and 100% in 2035, further increasing the digging of these valuable minerals. 

Copper and Zinc power the existing automotive EV industry, along with these minerals lithium, nickel, cobalt and graphite are being acquired to build various parts of an EV. The increase in the acquisition of these minerals is also because of the $27 billion in investments that Ontario is receiving from different corporate institutions around the world.

Along with growing govt assistance, we are also seeing a rapid shift in corporate and environmental governance. More institutions exist now that look after the net zero emissions progress of companies especially if it's from the manufacturing sector. Sustainability features like waste management, and water stewardship suggest that sustainability is helping mining companies to get funding and investment from larger firms. A sustainable business model often prepares you to be ready for any eventualities when climate change is such a vogue topic and its concerns are real.

Another major booster that has become apparent in the shift towards critical minerals is the govt funding programmes that are introduced for people to accept and appreciate sustainable technologies that call for creative solutions to age-old problems. Many industries are now employing green energy on their entire supply chain to save costs and find creative solutions to produce in a carbon-limited way. 

In 2022, as per a report by the International Energy Agency (IEA), the global demand for critical minerals is clogging at $320 billion and it is only expected to rise considering every country is trying to achieve a net zero hydrocarbon goal by 2050. Canada is in a unique position where it can use this opportunity to take its products and integrate them into the global market. 

Conclusion

The mining sector saw an initial slowdown in 2023, but the energy industry grew at an above-average pace. Despite M&A being less in number compared to 2022, various industry leaders in the energy sector acquired many smaller players. In 2024 the expansion in critical minerals is what Canada aspires to going forward. It is working consistently to manufacture EVs and other green energy infrastructure to secure the global dream of net zero hydrocarbon emission by 2050.