The provincial government came out swinging in favour of B.C.’s mining industry Tuesday, saying the province’s coal and metal mines are “vital” to a continued economic recovery.
The comments came just hours after Scotiabank unveiled its latest commodity price index and outlook for 2011, stating a “tsunami” of investment capital from China is heading toward Canada’s extractive industries.
“Mining is crucial to B.C.’s success,” commented Minister of State for Mining Randy Hawes. “We are determined to work with the industry for the good of all British Columbians.”
According to Victoria, production of B.C. metallurgical coal, used to make steel, increased 20% to approximately 26 million tonnes in 2010 compared with 2009.
Hawes said China could prove to be an increasingly important market for B.C. coal as the Asian country continues to build new subdivisions to house its emerging middle class.
The province’s metal mines are also faring well thanks to record copper and gold prices.
Overall, the provincial government expects mineral exports to total $5.4 billion this year.
Meanwhile, Scotiabank said Tuesday commodity prices would continue to strengthen in 2011, boosted by demand from emerging markets.
In 2010, the top five commodities with the largest price gains were either metals or minerals, which included sulphur, silver, coal, nickel and molybdenum.
Patricia Mohr, Scotiabank’s vice-president of economics and commodity market specialist, said the capital spending cycle is beginning to swing up in mining and energy sectors, spurring sales for equipment and service suppliers.
Mohr, who recently returned from China, said the country would continue to show a strong demand for Canada’s natural resources in 2011.
“Interest from China in Canadian assets, particularly in the junior mining space, is intense,” Mohr said.
On Wednesday audit and tax firm KPMG LLP said Canada’s mining, energy and industrial sectors accounted for more than 60% of the value of merger and acquisition activity in 2010, with mining leading the way.
“The high transaction values in this sector are not surprising given strong commodity prices driven by the continued and increasing need for commodities from emerging economies,” said Brian Imrie, KPMG Corporate Finance’s head of mining and metals.
Peter Hatges, president of KPMG Corporate Finance, said although overall merger and acquisition activity in Canada was down this year, he expects 2011 to be much stronger.
“Going in to 2011, expect to see stronger participation from Canadian companies on a global M&A basis. The time is perfect.”