Canada's mining sector is bracing for another challenging year in 2015 as slower growth in China is expected to continue to dampen selling prices for many metals.
Iron ore suffered the biggest drop in the past year, losing nearly half its value to reach the lowest price in more than five years. Some expect the price could fall further — perhaps to $60 U.S. per tonne — on increased supply from Australia and Brazil by giants like Rio Tinto and BHP Billiton, outpaces demand.
Not all metals and minerals suffered. Nickel was the big winner, with prices rising 17% following Indonesia's ban on exports. Other gainers were uranium, aluminum, zinc and diamonds.
One industry official said mining companies are very focused on reducing costs and will benefit from both the weakened Canadian dollar and dramatically lower energy prices.
China consumes almost half of the world's base metals. Even though its pace of growth has slipped, one of the world's largest economy and other emerging countries, such as India, will need more metal to make consumer goods and build housing to accommodate a growing middle class, and the shift in population to urban from rural.
Just increasing the rate of car ownership will propel demand for iron, aluminum and other metals.
In the meantime, industry observers say mining companies are cautious about new investments until they get a better sense of when conditions will improve.
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