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APRIL 18 — MAY 1, 2022 / VOL. 108 ISSUE 8 / GLOBAL MINING NEWS · SINCE 1915 / $5.25 / WWW.NORTHERNMINER.COM
Analysts’ metal price assumptions climb on Russia-Ukraine conflict
Federal budget proposes $3.8B to support Canada’s critical minerals industry BUDGET 2022
| Investment a key part of government’s plan to go ‘green’
METALS FORECAST
| Zinc and nickel prices
to remain elevated
C
BY NAIMUL KARIM
anada’s 2022 Budget has proposed to provide a total of up to $3.8 billion over eight years to develop electric vehicle components such as batteries and permanent magnets and ensure that the country becomes a “vital part” of the global critical minerals industry. The budget — the first presented by the Liberal minority government since its re-election last year — allocates up to $1.5 billion for the development of critical minerals supply chains, with “a focus on priority deposits.” It also aims to invest $79.2 million over five years for Natural Resources Canada to provide public access to data sets that inform mineral exploration and development. In addition, the budget proposes to introduce a new 30% tax credit for mineral exploration expenses incurred in Canada that target minerals like nickel, lithium, cobalt, graphite, copper, rare earths elements, zinc, uranium, platinum group metals and others. “We will be investing in Canada’s abundant critical minerals and metals. They are a key part of going green,” said Finance Minister Chrystia Freeland while unveiling the budget. “As carmakers urgently upgrade their assembly lines to make zero emission vehicles, we will be making sure Canadians can afford them. We will manufacture the batteries that power zero emission cars and trucks and we will invest in charging stations from coast to coast. For our children, that means cleaner air and cleaner water tomorrow.” Brendan Marshall, VP economic and northern affairs at the Mining Association of Canada (MAC), described the budget as “exceptionally positive” for the mining sector during an interview with The Northern Miner. “The emphasis on the mining sector in this budget is unique compared to those in recent years, the level of prominence in the sector… as a driver of low-carbon, clean tech development is well thought out and well understood. This is a vision budget for the sector,” he added. A month before the release of
S Finance Minister Chrystia Freeland delivers the 2022 federal budget in the House of Commons. OFFICE OF CHRYSTIA FREELAND/TWITTER
‘THIS IS A VISION BUDGET FOR THE SECTOR.’ BRENDAN MARSHALL VICE PRESIDENT, ECONOMIC AND NORTHERN AFFAIRS, MINING ASSOCIATION OF CANADA
the budget, MAC, which represents about 50 of Canada’s leading mining companies, urged the government to invest more in critical minerals if it wants to avoid “slipping behind” its competitors. It called on the need for “heightened investment in research and development” and doubling the mineral exploration tax credit for critical minerals. Marshall said that the measures proposed in the budget were representative of MAC’s views. He added that the proposed budget provided geoscience and exploration incentives to find more minerals and metals, especially in the case of rare earth and battery metals. More resilient supply chains The budget proposed $603.2 million over five years to build a “more resilient” supply chain. “The recent flooding in British Columbia — which cut off the flow of goods to and from the west coast — reinforced the importance of our highways, railways, and ports as the backbone of our transportation system,” stated the budget document released by
the Finance Ministry. Damage caused due to excessive rains and flooding compelled Teck Resources (TSX: TECK.A/TECK.B; NYSE: TECK) to lower its sales estimates last year. The budget also proposed $1 billion over six years, starting in 202425 to provide “targeted support” towards critical minerals projects, with priority given to manufacturing, processing, and recycling applications. It also hopes to allocate up to $144.4 million over five years to support research development related to critical mineral value chains. In addition, the budget proposed to provide $103.4 million to develop a National Benefits-Sharing Framework for natural resources and the expansion of the Indigenous Partnership Office and the Indigenous Natural Resource Partnerships program. “These investments will increase Indigenous capacity to benefit from all types of natural resources projects, including critical minerals,” the budget stated. In the budget last year, the government said that it would invest $9.6 million over three years to create a Critical Battery Minerals Centre of Excellence at Natural Resources Canada to co-ordinate federal policy and programs on critical minerals. It had also proposed to invest $36.8 million for federal research and development to advance critical battery mineral processing and refining expertise. TNM
BY HENRY LAZENBY
everal market analysts are adjusting higher their metal price assumptions for 2022 as the Russian invasion of Ukraine drags on, wreaking havoc on global metals and mineral supply chains. Moody’s Investors Service released a report on Apr. 6 flagging spiking prices for commodities that Russia plays a crucial role in supplying. These include aluminum, zinc, nickel, copper, gold and metallurgical and thermal coal. Moody’s said the price moves reflected fears of supply disruptions and scarcity at a time of generally low inventories, especially for base metals. In the wake of the heightened volatility, Moody’s noted that some base metals prices, including aluminum and nickel, approached record highs in the first quarter of 2022, while copper and zinc prices have remained elevated. Supply-demand balances for these commodities were already tight, with supply volatile amid low stocks and supply-chain disruptions. As a result, prices were high at the start of 2022, before the military conflict. “Our price assumptions incorporate our expectations that G20 economies will expand by 3.6% in 2022 and 3% in 2023,” said Moody’s. “China’s GDP will grow 5.2% in 2022 and 5.1% in 2023, reflecting policy support with higher infrastructure spending, tax cuts and measures targeted to specific segments; these factors support commodity prices because China is a significant commodity consumer. “Risks to the outlook are high as the escalating Russia-Ukraine crisis has the potential to tip the global economy into a recession,” said Moody’s analysts. The rating agency further elaborates that metals and mining companies will probably benefit from the high commodity prices and sustain profitability above historical levels in 2022. Moody’s expects commodity prices to continue reflecting the risk of supply and trade-flow disruptions in the short term because of the military conflict. Rising energy
THE NEXT ROUND OF LIKELY GOLD MERGERS / 5
and freight costs will also support higher prices because they will lead to additional production curtailments in Europe, where high energy prices are already straining industrial production and further tightening base metals supply. “Moreover, surging energy and steelmaking input costs and fears of potential raw material and steel product shortages caused steel prices to rise during March, after steep declines during the second half of 2021. These factors are expected to keep steel prices at elevated levels in 2022 and possibly longer,” said Moody’s. “The military conflict has put Russian coal exports at risk, further disrupting supply and increasing coal prices.” Moody’s expects, at least for the medium term, that some countries will look to reduce their dependence See METALS / 6 PM40069240