Download Economic outlook Mining companies need to adjust to new challenges

Shaping the mine of the future
www.pwc.com/ca/shaping-the-mine-of-the-future
Economic outlook
Mining companies need to adjust to new challenges
today to be successful tomorrow
As the industry continues to suffer through depressed commodity prices
and unstable global capital markets, mining companies are being forced
to look for innovative ways to transform the way they do business and
survive the extended economic downturn.
This global transformation has redefined the way mining companies
operate. To respond to such unprecedented change, mining companies
should not only centre their attention on the new normal of low
commodity prices, but also begin to develop innovative strategies
across the spectrum of technology, community engagement, talent and
diversity, partnerships and collaboration.
“The drop in commodity
prices has been a huge
blow to our resource sector.
It’s weighed down the
Canadian economy. Now
the issue is going to be the
fact that industries need to
adjust to the new reality.”
By executing a plan that encompasses these functions to shape
their business model and solve the new challenges in the industry,
mining companies will be able to emerge from the downturn,
ready to build a mine of the future.
Craig Alexander
Vice-President of Economic Analysis,
CD Howe Institute
Lower for longer: the new norm
“We really do need to
diversify into the faster
growing markets of Asia
Pacific if we want to have
a healthy oil industry and
all the benefits that come
from it for the Canadian
economy.”
With commodity prices expected to remain stagnant for the foreseeable future,
mining companies need to stop hoping for an imminent rebound and recognize that
we’re in an era of ‘lower-for-longer’ prices. We can’t use the traditional supply and
demand assumptions built around strong demand from China and other emerging
markets anymore. Instead we need to focus on a model that considers broader global
and local demand metrics for each commodity, as well as how supply can contract
and expand as mining companies make the most of their operations.
Eventually the combination of supply tightness and the industry’s response to it is
expected to drive demand, with a careful balance of the return on investment. This
is a long-term process, and companies will need to adapt to it.
Patricia Mohr
Vice-President, Economics and
Commodity Market Specialist,
Scotiabank
Mining companies need to adjust to new challenges today to be successful tomorrow
“When the world economy is weak, it’s
really difficult for the Canadian economy
to grow.”
Craig Alexander
Vice-President of Economic Analysis at CD Howe Institute
Oil is still king
Despite the long-term downturn, crude oil remains Canada’s
largest export. The United States has historically been Canada’s
main export partner, but as the United States becomes more ‘oil
independent’, finding alternative markets will be critical to offset
the current low-price environment the oil industry’s experiencing.
By reinforcing ongoing export pipelines and building more
channels from east to west, Canada will be able to further expand
into growing markets like Asia Pacific and the Atlantic, giving
the country’s economy an opportunity to grow past the North
American market
“I see fairly tight supplies for many
metals as we close the decade and,
with that, better prices.”
Patricia Mohr
Vice-President, Economics and
Commodity Market Specialist,
Scotiabank
on the global commodities outlook.
Watch online >
Global trends setting the tone
As Canada’s economy measured by its GDP is relatively immaterial
in global terms, our development and growth will invariably be
influenced by global events that we can’t control. Low commodity
demand in Asia, Europe and the United States impacts the
Canadian resource sector directly, stalling our economic growth.
Once the global economy gains momentum and some normalcy
returns to supply and demand, commodity prices will hopefully
gradually begin to improve, bringing the Canadian economy along
for the ride.
Mega mining minds speakers’
insights come to life through a graphic
facilitation.
Check it out online
Additional insights online
www.pwc.com/ca/shaping-the-mine-of-the-future
Contacts
Liam Fitzgerald
Stephen Mullowney
Mark Platt
National Mining Leader, Partner, Tax
Managing Director, Deals
416 869 2601
[email protected]
416 687 8511
[email protected]
B.C. Mining Leader
Partner, Assurance
604 806 7093
[email protected]
Nochane Rousseau
Quebec Mining Leader
Partner, Assurance
514 205 5199
[email protected]
© 2016 PricewaterhouseCoopers LLP, an Ontario limited liability partnership. All rights reserved. PwC refers to the Canadian member firm, and may sometimes
refer to the PwC network. Each member firm is a separate legal entity. Please see www.pwc.com/structure for further details. 4904-03-01 0516