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PDAC 2017: Growing confidence seen in global minerals sector

By IM Staff
Published: Tuesday, 14 March 2017

An increase in numbers of people attending this year’s annual Prospectors & Developers Association of Canada (PDAC) international convention signalled to some a return of confidence to the global mineral exploration and mining industry.

By Daniel Sekulich

After three consecutive years of steadily declining attendance, more than 24,000 people from over 120 countries took part in this year’s PDAC convention, held at the beginning of March in Toronto, Canada. The attendance figure is still down from the peak years of 2012 and 2013, when over 30,000 took part, but the increase from last year’s turnout has many hoping it is another indication of upcoming better times for the sector.

John Waldie, mining investor, surveyed the scene inside the sprawling Metro Toronto Convention Centre and said, with a grin, "Well, it’s good to be back." Waldie’s first visit was a decade ago, a visit that spawned an interest in investing with various mining development projects. But like many others, Waldie took a pass on the last few PDAC conventions. "The way the markets and prices were going, it just didn’t make sense to attend. I kind of sat back and waited for things to rebound. But now things feel different. Finally."

The return to the convention of small investors like Waldie is a welcome signal for those eager to see the mining business truly on the rebound.

A year ago, there were empty booths on the convention floor, empty chairs at presentations and a sombre mood among many attendees battered by low commodity prices. But this year’s gathering saw exhibitor space sold out and increased numbers at investor meetings, short courses and other events, leading PDAC to declare that the 2017 convention exceeded expectations.

"The mineral exploration and mining industry is cyclical in nature and has faced a variety of economic challenges over the past several years, but optimism has always remained and it’s fantastic to see this being reflected at the PDAC Convention," said PDAC president Glenn Mullan. "There was an upbeat vibe throughout the convention – a positive sign for the sector going forward."

Ministers speak out

Among the highlights of the convention, PDAC and the World Economic Forum hosted the International Mines Ministers Summit (IMMS). This was the second year the IMMS was held, bringing together 25 ministers from around the world, up from the 16 who came to the first gathering. The focus of the summit was innovation in the mining industry and the clean innovation agenda.

The only major government announcement to come out of the convention was made by Canada’s minister of natural resources, Jim Carr, confirming a one-year renewal of his country’s federal mineral exploration tax credit (METC).

The 15% tax credit is aimed at helping junior companies raise capital for early stage exploration work, and may be added on top of the 'flow-through share system’, allowing exploration companies to transfer costs to the balance sheets of investors, that is also being continued by the Canadian government.

Speaking at the kick-off of the convention, Minister Carr said more than 200 companies issued flow-through shares and more than 410,000 investors benefited from the credit in 2015. The extension of the programme was clearly greeted with relief by those listening to his speech.

Game changer boasts

On the convention floor, exhibitors and attendees alike expressed positive thoughts on future growth for various parts of the industry. 

This was most evident in those engaged in lithium, electric and rare earth elements (REE), who attended in greater numbers than previous conventions.

A common theme with many of these firms is the boastful pitch that their project is a "game changer", when many are, in fact, still in the very early phases of development and sorely lacking in firm financial support.

While some observers of the lithium sector have been wondering when its bubble will burst, at least one firm at PDAC 2017 felt confident about their business plans- Nemaska Lithium. Nemaska Lithium is making final plans for its Québec-based mine and mill to begin commercial operations. As Guy Bourassa, Nemaska’s president and CEO, puts it, "This is an exciting time for us. Demand is strong, we have a high-grade source, we have signed offtake agreements and we are quite advanced in our financing." Bourassa and his team believe that by the time next year’s convention rolls around, Nemaska will be the biggest producer of battery-grade lithium hydroxide in the world.

Trump effect

At the convention’s various networking and social gatherings, one topic that kept arising was concern about the so-called 'Trump effect’.

More than Brexit or the apparently doomed future of the Trans-Pacific Partnership, some individuals worried that whatever recent growth has occurred in the mining business could be tempered by the Trump administration’s protectionist economic actions, such as its 'Buy American’ announcements.

In a bar not far from the convention centre, a group involved with projects in Mexico and South America compared notes after a day at the show, and their comments were blunt.

"All this talk of walls, import taxes, tariffs [is] a big issue for my investors," said the executive director of a base metal firm. His colleague, a geologist in charge of exploration, glumly adds that, "If the [US] market becomes harder to access, we can only hope that China and others will work with us. Otherwise, we do not know."

But sipping a beer as the trade show wound down one afternoon, a mining insider summed up another perspective: "A year ago, no one here was talking about a Trump presidency because we were more focused on the state of our own affairs. Yes, some people are worried, but look: the US needs us. Mining is not the problem with the American economy. In fact, we are one of the solutions."

Back on the floor of the convention’s last day, investor John Waldie agreed. "I don’t think the sky is falling because of Mr Trump. And with mining, it felt like that was happening, at least recently." Waldie pulled out an impressive stack of promotional material he’d acquired over the course of PDAC 2017.

"If you put aside all the hype in these documents and the sales talk at the booths and look at the hard data, you’ll see there are opportunities out there. Absolutely. Opportunities that I don’t think existed a year ago. So count me in again."



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