Enhancing Canadian-German partnerships in the mining industry

Topics
Christopher Schmidt
Alexandra Ermolaeva
DOI: 10.1002/mire.201400005
Enhancing Canadian-German partnerships
in the mining industry
The German industry is highly dependent on imports of metals
and industrial minerals. The Canadian mineral resources market
offers long term resource supply security that Germany needs,
especially for strategic metals. Germany, in return, provides market-leading equipment and specialty services that can help to
meet the challenges of the Canadian mining industry today. On
the initiative and with funding of the Federal Ministry for Economic Affairs and Energy, the Canadian German Chamber of Industry
and Commerce Inc. in 2012 established a Competence Centre for
Mining and Mineral Resources to foster business relationships
between Canada and Germany in the mining sector.
1
Introduction
As a nation heavily reliant on commodity imports to sustain its industrial output, Germany is seeking closer ties
with the Canadian mining industry to maintain its pole
position as Europe’s manufacturing powerhouse. Like
most other industrial countries, Germany needs just about
every mineral and metal, but it is the availability of socalled critical materials – some of which Canadian companies are involved in locally and abroad – that is top of
mind in Germany.
The German manufacturing industry is highly dependent on the import of metals and minerals. Given the current state of the domestic German mining industry, coupled with the low investment and assets globally, Germany’s manufacturing industry may be at stake in the
long-term. Critical metals such as Rare Earth, Tungsten,
Tantalum, Indium, Germanium, are crucial in high-tech
manufacturing processes. The sustained and secure availability of these metals is important to maintain Germany’s
technological edge in manufacturing and the need to keep
costs from escalating is crucial for the competitiveness of
Germany’s industry. Hence, Germany’s access to secure,
long term availability of such strategic metals has a direct
impact on the sustainability of the German high-tech industry.
2
The German Government’s raw materials strategy
To secure the access to resources the German Federal
Government published “The German Government’s raw
materials strategy – Safeguarding a sustainable supply of
non-energy mineral resources for Germany” in 2010 to put
a political, legal and institutional framework in place to
74
foster a sustainable and internationally competitive supply
of raw materials to German industry. The core objectives
of the Federal Government’s raw materials strategy are:
– Reducing trade barriers and distortions of competition,
– Helping German commerce diversify its sources of raw
materials,
– Helping commerce develop synergies between sustainable economic activity and enhanced materials efficiency,
– Developing technologies and instruments to improve
the conditions for recycling,
– Establishing bilateral raw materials partnerships with selected countries,
– Doing research on substitution and materials in order to
open up new options,
– Focussing on research programmes related to raw materials,
– Creating transparency and good governance in raw materials extraction,
– Integrating national measures with European policy on
raw materials.
The Federal Government leaves it up to the companies to
ensure their own supply of raw materials. The government activities at Federal level are concentrated on giving
firm and effective backing to the private sector’s efforts to
secure raw materials; specific measures follow the principle of sustainable development. The government’s backing particularly involves support for the private sector in
the form of the instruments of raw materials policy, support for research, and a joined up international raw materials policy which takes account of objectives of foreign,
economic and development policy [4].
France who had a similar strategy to Germany’s
changed its resources approach in February 2014 and set
up a state owned mining company aimed at exploiting
mineral resources abroad. This move is another sign of the
return of French state intervention in industry to secure
minerals supply.
Despite the importance of mineral resources to the
German economy, the German government does not intend to become commercially active in mining through,
for instance a state-owned mining company, nor does it intend to stockpile industrial raw materials. Its backing involves support for the private sector in the fields of policy
and research.
© 2014 Ernst & Sohn Verlag für Architektur und technische Wissenschaften GmbH & Co. KG, Berlin · Mining Report 150 (2014), No. 1/2
C. Schmidt/A. Ermolaeva · Enhancing Canadian-German partnerships in the mining industry
3
The bilateral importance of the Canadian resource
sector for Germany
In 2012 Germany imported resources worth 150.6 bn €.
In comparison to the previous year Germany paid 6.1 %
more for these imports. Main imports from Canada by value included Iron ore, Nickel, Copper, Aluminum, Silicon,
Coal, Cobalt, Molybdenum, Ferro-Niobium. Canada also
accounted for more than 20 % of German imports in Tellurium metal, Selenium metal, Titanium ore and concentrate, as well as Tungsten powder. Canada supplies a broad
range of metals German industry requires and offers great
potential for increasing the long term resource supply security Germany needs. With recent project developments
in the Canadian market and the opportunities for global
investments through the Toronto Stock Exchange (TSX),
Canada presents great business opportunities and strategic advantages for Germany.
At the same time, Germany provides market-leading
mining equipment and specialty mining services that can
help meet the challenges of the Canadian mining industry
today. German companies supply equipment to the exploration, mining and mineral-processing industries around
the world and are well-known for their excellence in engineering. A long tradition of innovation and investments in
research and development are key features that support
German success in world markets. The mining equipment
sector in Germany has continued to grow despite the financial crisis, with an average of 13 % growth each year
since 2007 and an export quota of more than 90 %.
Given the complementary business environment of
both countries, Canada and Germany constitute ideal
partners to form mutually beneficial business relationships in both the mining and supply sectors. In order to realize the potential for increased collaboration in the mining and supply sector and in light of a re-evaluation of
Germany’s mineral strategy, the Canadian German Chamber of Industry and Commerce Inc. in Toronto established
a Competence Centre for Mining and Mineral Resources
in 2012. Fully sponsored by the German Federal Ministry
for Economic Affairs and Energy, the Competence Centre
is the primary contact for German and Canadian companies interested in the respective country. Its main focus is
to foster business relationships between Canada and Germany in the mining sector.
The objective of the Competence Centre is:
– To raise awareness about Canada as a resource supplier
and mining market; the Centre increases market transparency and provides market information to the German government, German commerce and public sector
stakeholders,
– To foster business relationships between Canada and
Germany in the mining sector to strengthen the dialogue on how to establish sustainable secure supply
chains for specialty metals and raw materials between
Canada and Germany,
– To communicate business opportunities as a central
contact point to German industry and associations in
the Canadian resource market, to improve access to
strategic metals,
– To establish market expertise and business network in
Canada in order to provide a centralized platform to co-
ordinate activities in Canada and to enhance bilateral
business relationships in the mining sector; the mandate
is to support diversification of supply sources for German industry,
– To work together with partners in Canada (e.g. Canadian Institute of Mining, Metallurgy and Petroleum CIM;
Prospectors and Developers Association of Canada
PDAC) and Germany (e.g. German Mineral Resources
Agency DERA; German Federation of International
Mining and Mineral Resources FAB; Federal German
Engineering Association VDMA; Helmholtz Institute
Freiberg for Resource Technology HIF) to provide forums and events to support business contacts and offer
networking opportunities.
The Competence Centre offers a range of services for
Canadian and German companies in the mining and mining supply sector. Through its expansive direct network
the Centre can facilitate customized and specialized business to business opportunities in the mining sector for
Canadian and German companies in establishing business
activities. The Competence Centre in Toronto is also responsible for the international coordination of German
chambers with resource focus worldwide. The mandate is
to build an international network between German bilateral chambers active in the mining sector. Since 2013 the
centre has established an international quarterly newsletter focussing on mining activities in the countries shown
in Fig. 1.1)
4
The Canadian mining sector
Canada presents great business opportunities and strategic advantages for Germany and is one of the biggest mining nations worldwide (Fig. 2). Canada ranks in the top
five producing countries for at least three of the minerals
on the EU’s most wanted list, including cobalt, PGMs and
tungsten. Cobalt is, for instance, crucial for the manufacturing of lithium-ion batteries and synthetic fuels, while
platinum is used in fuel cells and catalysts and palladium
in seawater desalination. And although it does not yet produce much on the rare earths front, the country has advanced projects and aspirations to supply at least 20 % of
anticipated global demand by 2018.
Thanks to its rich geology, Canada is one of the
largest mining nations in the world producing more than
60 minerals and metals. Canada ranks in the top five
countries in the global production of potash, uranium, aluminum, cobalt, titanium, tungsten, cadmium, diamonds,
platinum, sulphur and nickel with an overall value of mineral production of nearly $46.9 bn in 2012 (Table 1). Seven minerals produced in Canada were in the top three of
global production in 2012. Canada had 1,264 mining establishments in 2012 consisting of 76 metal mines and
1,188 non-metal mines. Provinces with the most metal
mines are Quebec (22), Ontario (19) and British Columbia
(10) [1].
1) If you are interested in receiving this newsletter, please
contact the author Christopher Schmidt.
Mining Report 150 (2014), No. 1/2
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C. Schmidt/A. Ermolaeva · Enhancing Canadian-German partnerships in the mining industry
Canada
Organisatorof Network
Russia
Future Partner
China
Future Partner
Mexico
Future Partner
In Cooperation with
Peru
Future Partner
Chile
Partner
South Africa
Partner
Australia
Partner
Fig. 1. International German Chamber mining network worldwide
Canada
Basic Informaon
Canada world rank
Germany world rank
Populaon1
35,1 m
36
36
16
Land Area1
9,98 m km2
22
63
1.573 bn CAD$
13
13
5
10
10
20
GDP1
GDP per capita2
42.734 CAD$
Country Rang (S&P)3
AAA Stable
Inst. Investor Index4
92,8
44
8
84
99
13
Corrupon Index5
AAA
Canadian Mineral Producon in 20126
46,9
bn US$
Canada`s Mineral Exports6 (Metals & Non-metals & Coal)
92,5
bn US$
Foreign Trade with Germany7
Source: Natural Resources Canada, 2006
→ Exports to Germany
4,45
m€
→ Imports from Germany
8,85
m€
35
27
Sources:
1) Stascs Canada 2013 (hp://www.statcan.gc.ca); 2) World Economic Outlook Database - April 2013, Internaonal Monetary Fund. Accessed on 20
April 2013; 3) Sovereigns Rangs List -Standard & Poor's, 2013; 4) Instuonal Investor Credit Country Rang 2012 (100 hoch, 0 niedrig); 5) Corrupon
Percepons Index 2012 – Transparency Internaonal (100 hoch, 0 niedrig); 6) The Mining Associaon of Canada – Facts & Figures 2013; 7) Stassches
Bundesamt – Außenhandel - Rangfolge der Handelspartner im Außenhandel der Bundesrepublik Deutschland - 2012
Fig. 2. Basic information about Canada and Canada’s economy
The Canadian mining industry is also a major employer with more than 418,000 people working in the mining and mineral processing industries. Also, the mining
sector is the largest private sector employer of Aboriginal
peoples in Canada on a proportional basis. Mining in
Canada contributed $52.6 bn to Canada’s Gross Domestic
Product (GDP) and accounted for 20.4 % of the value of
Canadian goods exports in 2012. The mining industry’s
payments to Canadian federal and provincial governments total $71 bn in taxes and royalties over the last
decade (2003 to 2012). Fig. 4 shows the Canadian mining
industry clusters, that are distributed across Canada, depending on the world class deposits.
2013. Investment reached $3.9 bn in 2012 in Canada,
which are 16 % of the budget worldwide (Fig. 3).
Canadian companies account for approximately
31 % of global exploration spending budgets – the largest
share of all nations and 800 of those companies are actively exploring outside of Canada in over 100 countries.
Canada has been the recipient of the largest share of
global exploration spending since 2004 and is very well
explored, even given its size. Canadian firms account for
the largest share of exploration spending in Canada, the
United States, Central and South America, Europe and,
most recently, Africa [2].
6
5
Globally, Canada has been the top destination for mineral
exploration investment for 20 of the past 34 years. SNL
Metals Economic Group Exploration analysis shows that
although Canada led in global exploration investment in
76
Canada is the leading global centre for mining finance
Canada’s world role in global exploration spending
Mining Report 150 (2014), No. 1/2
Toronto is the global hub for mining finance. Almost 60 %
of the world’s public mining companies are listed on the
Toronto Stock Exchanges TSX and TSX-Venture. The
TSX and TSXV handled 70 % of the world’s mining equity
transactions in 2012, and together comprised 70 % of
C. Schmidt/A. Ermolaeva · Enhancing Canadian-German partnerships in the mining industry
Table 1. Canada’s world role as a producer of certain important minerals, after [1]
Mineral
Production 2012
Volume [t]
% of ∑ World
Rank
Potash (K2O equivalent)
9,000,000
26.5
1
Uranium (metal content)
9,145
16.7
2
Cobalt (mine production)
6,700
6.1
3
Aluminum (primary metal)
2,700,000
6.1
3
Titaniumconcentrate
700,000
11.3
3
Sulphur (elemental)
6,600,000
9.4
3
Tungsten (mine production)
2,000
2.7
3
Platinumgroup metals
19.5
7.0
4
Diamonds (precious) (2011)
10,795,000 carats
9.3
4
Nickel (mine production)
220,000
10,5
5
Molybdenum (Mo content)
8,400
3.4
6
Zinc (mine production)
575,700
4.7
6
Gold (mine production)
98
3.4
7
Iron ore (mine production)
33,573,000
1.2
9
Lead (mine production)
60,000
1.3
9
Copper (mine production)
551,100
3.4
9
Silver (mine production)
530
2.2
10
Canada
16%
Russia
3%
Europe
4%
Mexico
6%
United
States
8%
China
4%
West
Africa
7%
Peru
5%
Brazil
3%
Chile
5%
Pacific
6%
Sub
Sahara
9%
Australia
12%
Source: Referring to The Mining Associaon of Canada – Facts and Figures 2013
Fig. 3. Top countries by non-ferrous exploration budget 2012
the world’s mining equity capital that year. Vancouver
features the world’s leading cluster of exploration companies, while Montreal is home to major aluminum and iron
ore firms. Edmonton has become a global centre for oil
sands expertise and Saskatoon for uranium and potash
(see Fig. 4).
The Toronto Stock Exchange traded more than $280
bn of mining stock in 2012. Out of all firms listed on the
Mining Report 150 (2014), No. 1/2
77
C. Schmidt/A. Ermolaeva · Enhancing Canadian-German partnerships in the mining industry
Fin Flon
(gold, copper, zinc)
Nunavut
(gold)
Yellowknife
(diamonds)
Athabasca
(uranium)
Fort McMurray
(oil sands, allied industries)
Thompson
(nickel, cobalt)
Yukon
(gold)
NWT
(tungsten)
Raglan
(nickel, copper)
Rouyn-Noranda
(copper, allied industries)
Val-d`Or
(gold, copper, zinc, allied industries)
Kimat
(aluminium)
Labrador City/ Sept-Iles
(iron, aluminium)
Kamloops
(copper, molybdenum, gold)
Red Lake
(gold)
Saguenay
(aluminium, niobium)
Hemlo
(gold)
Vancouver
(allied industries, junior
exploraon, mining finance)
Bathurst
(zinc, lead)
Windsor
(gypsum)
Trail
(lead, zinc)
Theord Mines
(chrysole)
Elk Valley
(coal)
Fort
Saskatchewan
(nickel)
Montreal
(allied industries, head offices,
research)
Timmins
(zinc, copper, lead, gold)
Saskatoon/ Esterhazy
(potash, salt)
Becancour
(aluminium, magnesium)
Toronto
(allied industries, senior
exploraon, mine financing)
Sudbury
(nickel, copper, cobalt, gold,
pgm, allied industries)
Source: Referring to Natural Resources Canada; Compiled by The Mining Associaon of Canada
Fig. 4. Canadian mining industry clusters
#1
#1
In listed mining companies
In equity capital rised
1673
57% of all public mining
companies are listed
Global Mining
Equity
Financing
Trend 2012
C$ Billions
10.3
708
2.1
185
TSX/TSXV
ASX
LSE/ AIM
128
NYSE/ MKT
1
57
0.7
49
HKEx
JSE
TSX/TSXV
ASX
Source : Referring to
LSE/ AIM
NYSE
0.3
Oslo
0.4
Other
TMX Group – A Capital Opportunity, 2013, Presentaon
Fig. 5. Toronto Stock Exchanges (TSX/TSXV) – lead the mining sector
TSX (not TSX-V), 364 are mining companies. These firms,
together valued at $381.1 bn, raised $7.5 bn in equity capital in 2012. TSX-listed mining companies mainly deal in
gold, potash, uranium, copper, silver, nickel, iron ore, coal
and diamonds. The 1,309 mining companies listed on the
TSX-V in 2012 were valued at $19.3 bn, and together
they raised $2.8 bn in equity capital in the same year – just
under one-third of the overall total of equity raised [1].
Junior mining companies are currently facing challenges in raising capital. The global mining industry raised
$14.8 bn in equity in 2012 (together with the other impor-
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Mining Report 150 (2014), No. 1/2
tant mining exchanges like the London Stock Exchange
LSE, Alternative Australian Securities Exchange AIM, Johannesburg Stock Exchange JSE, Hong Kong Exchange
HKEx and the New York Stock Exchange NYSE/NYSE
MKT). Investment Market raised less than half of the
$31.7 bn raised worldwide in 2011. This decline reflects
the challenges of raising capital in the current global economic environment (Fig. 4).
TSX-listed mining companies have a strong global focus. As of December 2012, TSX companies, including
those listed on the TSX-V, were involved in 9,736 mineral
C. Schmidt/A. Ermolaeva · Enhancing Canadian-German partnerships in the mining industry
Advanced
Exploraon
890
Exploraon
1211
Producon
890
Development
122
Rare Earth, 2%
Others, 8%
Iron ore, 3%
Nickel, 4%
Gold, 38%
Molybdenum, 4%
Uranium, 4%
Zinc, 6%
Diversificaon of
Resource Projects
Silver, 14%
Copper ,
17%
Source: TMX Group – A Capital Opportunity, 2013, Presentaon
Fig. 6. Number of mining companies by stage of project and primary metals at TSX/TSXV
projects worldwide. Most of the projects involve exploration, and very few will turn into operating mines. However, the projects listed at the TSX Exchanges cover all
project stages in the mineral resources industry (Fig. 6).
7
The German Day at the Prospectors and Developers
Association of Canada PDAC Convention 2014 in Toronto
The Competence Centre for Mining & Mineral Resources
at the Canadian German Chamber of Industry and Commerce Inc. works as a platform that provides various forums and organizes first-class events, which offer excellent
opportunities to build relationships, exchange experiences
and support establishing business contacts within the
Canadian German mining business community.
Selected events and activities in 2013/14 included:
– German Presentation Room at PDAC Convention on
March 6, 2013, in Toronto, Canada,
– Workshop on Canadian-German Partnerships on April
24, 2013 in Sudbury, Canada,
– Seminar on “Mining and Renewable Energies in Canada”, June 7, 2013 in Toronto, Canada,
– Workshop on Tungsten availability with the German
Mineral Resources Agency, on October 8, 2013, in
Berlin, Germany,
– Workshop on TSX/Financing with German association
FAB and the German Mineral Resources Agency, December 11-12, 2013, in Berlin, Germany,
– German Day at PDAC Convention, on March 4, 2014, in
Toronto, Canada.
Along with the German Mineral Resources Agency
DERA, Helmholtz Institute Freiberg for Resource Technology HIF, German Federation of International Mining
and Mineral Resources FAB and the German Engineering
Federation VDMA the Competence Centre organized the
German day at the PDAC International Convention,
Trade Show & Investors Exchange 2014. The convention
was held in downtown Toronto from March 2–5, 2014 –
where the world’s mineral industry meets. The Prospec-
Fig. 7. German day at the PDAC Convention 2014
tors & Developers Association of Canada (PDAC) is a national association representing the mineral exploration
and development sector. The PDAC has more than 10,000
individual and corporate members, and encourages the
highest standards of technical, environmental, safety and
social practices in Canada and around the world and also
hosts the mineral industry’s largest annual convention in
downtown Toronto.
The PDAC International Convention, Trade Show &
Investors Exchange showcases over 1,000 exhibitors promoting the latest technology, products, services, mining jurisdictions and their mining projects & discoveries. With
Mining Report 150 (2014), No. 1/2
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C. Schmidt/A. Ermolaeva · Enhancing Canadian-German partnerships in the mining industry
25,122 delegates from more than 120 countries in 2014
this was a world’s leading convention (4th largest PDAC
ever since 1932) for people, companies and organizations
in, or connected with mineral exploration, to attend technical sessions, short courses as well as social and networking events.
The “German Day” at the PDAC Convention 2014
(March 4th) with the slogan: “The Mineral Resources Value-Added Chain: Increase Efficiency with German Technology” focussed on Germany’s mineral resource strategy,
its equipment and engineering prowess and mineral processing technology and innovations (Fig. 7). The organizers were very pleased to welcome more than 80 attendees
during a series of short presentations on German expertise and mining technologies along the supply chain of
minerals and metals and more than 150 people at the German Reception following the presentations to meet German decision makers (Fig. 8). German institutions like the
Federal Institute for Geosciences and Natural Resources
(BGR) and HIF offered an insight into Germany‘s Mineral
Resources Strategy. German companies showed the potential of mining expertise made in Germany (e.g. DMT
GmbH & Co. KG, Aumund Fördertechnik GmbH, Bosch
Rexroth, Herrenknecht AG) and allowed a deep insight into the efficiency in mineral processing (CRONIMET Mining AG, Outotec, RWTH Aachen). During the German reception – partly sponsored by K+S Potash Canada – many
other German companies presented their services and
products. The presentations are available for download on
the Competence Centre’s website: www.Canadian-German-Mining.com.
Germany is one of the main manufacturing and exporting countries in the world. Its industry relies on the
availability of commodities at reasonable prices. The
Canadian mineral resources market offers opportunities
for Germany’s security of long-term resource supply. On
the other hand, Canada’s demand for technical mining solutions and special services for the mining industry is covered by German companies. These topics were reflected
in the presentations of the German companies and organizations and the networking opportunities. This event
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Mining Report 150 (2014), No. 1/2
Fig. 8. German Day attendees at PDAC 2014 Convention in
Toronto
was important to keep this topic in public discussion alive
and was another step toward the success of the German
Government’s raw materials strategy in Canada.
References
[1] Mining Association Canada (MAC): Facts & Figures 2013.
Ottawa, 2014. www.mining.ca/documents/facts-figures-2013.
[2] SNL Metals Economic Database & Market Information –
Intierra RMG.
[3] Natural Resources Canada – market information 2014:
www.nrcan.gc.ca/mining-materials
[4] The German Government’s raw materials strategy – Safeguarding a sustainable supply of non-energy mineral resources for Germany. Federal Ministry of Economics and
Technology (BMWi), Berlin, 2010.
Authors
Christopher Schmidt (M.Sc.)
[email protected]
Alexandra Ermolaeva (Dipl.-Kff.)
[email protected]
Competence Centre for Mining & Mineral Resources
Canadian German Chamber of Industry and Commerce Inc. in Toronto
480 University Avenue, Suite 1500
Toronto, ON M5G 1V2
Canada