PwC Canada’s Monica Banting on the ‘step change’ in sentiment toward mining

Key Concepts

Silver Market Dynamics: Historic price highs, supply tightness, CME outage, gold-silver ratio, speculative drivers, inventory levels.
Mining Industry Support: Ontario Minister of Energy and Mines Steven Leche's strong endorsement, focus on action over talk.
Barrick Gold Dispute in Mali: Resolution of a dispute over a new mining code, release of detained employees.
Tether's Gold Holdings: Significant investment in gold by the cryptocurrency company, becoming a major holder outside central banks.
Italy's Gold Reserves Debate: Proposal to declare national gold reserves as property of the people, potential implications for the financial system.
Rare Earths: China's streamlined export licenses, environmental concerns in Thailand due to mining.
Nickel Market: China's pivot away from nickel-intensive EV batteries, oversupply and declining prices.
Arctic Mineral Exploration: Race for critical minerals in the Arctic due to climate change and the need to break China's dominance.
Novo Resources: Greenfield exploration strategy, focus on gold and copper, team expertise, land access challenges, funding and joint ventures.
Copper Market: Supply-demand imbalances, smelter-miner tensions, American premium, China's slowdown impact, bullish price outlook.
London Metal Exchange (LME): Fee reductions to boost liquidity.
Mining M&A: Continued activity, focus on critical minerals, majors investing in juniors.
Canadian Mining Sector: Positive momentum, political ambition, budget implications (critical mineral sovereign fund, tax incentives), regulatory environment, talent and technology needs, public-private partnerships.
Artificial Intelligence (AI): Impact on commodity demand (copper) and opportunities for efficiency in mining.

International Mining Symposium and Silver Market Surge

The International Mining Symposium in London, England, was a notable event, featuring an interview with Rick Rule and insightful panels. A significant highlight was Ontario Minister of Energy and Mines, Steven Leche, expressing strong support for the mining industry, emphasizing a shift from discussion to action. The podcast also covered an "all-star gold panel" with Rob McCuin, John McCcluskey, and Rick Rule.

The silver market experienced historic highs, with prices reaching $58.81 per ounce, surpassing previous records. This surge was attributed to supply tightness and increased speculative bets. A trading disruption on the CME due to a "cooling system failure" acted as a catalyst. Daniel Hines, a commodity strategist at ANZ Group Holdings, noted that with gold taking a "breather," investors turned to silver. David Wilson of BNP Paribas highlighted the speculative nature of the move and the decreasing gold-silver ratio, which fell close to 70. The cost of call and put options on silver futures also leaped, indicating a surge in the cost of capitalizing on price spikes. Silver inventories in warehouses linked to the Shanghai Futures Exchange hit their lowest in nearly a decade, and a previous squeeze in London also contributed to global supply pressures.

Barrick Gold Employees Released from Mali

Barrick Gold employees, detained for over a year in Mali's capital, Bamako, have been released following an agreement with the Malian government. The dispute stemmed from the implementation of Mali's new mining code, which grants the country a larger share of revenue from gold miners. Barrick reached an agreement to resolve all disputes over the Loulo Gotto gold mining complex, leading to the release of the four employees who had been held since November 2024. This resolution was seen as vindication for the company's board.

Tether's Growing Gold Holdings

Tether, a prominent cryptocurrency company known for its stablecoin USDT, has become a significant holder of physical gold, ranking as the world's largest holder outside of central banks. The company has invested billions of dollars from its deposits into gold, with its stockpile reportedly equivalent to that of smaller central banks like Korea, Hungary, and Greece. Last quarter, Tether's gold purchases accounted for nearly 2% of total global gold demand and approximately 12% of central bank purchases.

Debate Over Italy's Gold Reserves

Lawmakers in Italy are proposing to declare the nation's gold reserves, approximately 2,452 tons valued at about $285 billion, as the property of the Italian people. Critics fear this move could lead to a government sell-off of the metal. The Bank of Italy states the gold is held as part of official foreign exchange reserves to boost financial system stability.

Rare Earths and Environmental Concerns

China has issued its first batch of streamlined rare earth export licenses, a move seen as fulfilling commitments made at the Trump-Xi summit. Chinese magnet makers like JL Mag Rareearth, Nimbo Yong Shang, and Beijing Jang Kan Juan Hi-Tech have received licenses for their clients, many of whom are in the automotive industry.

Concurrently, environmental concerns are rising regarding rare earth mining. A memorandum of understanding between Thailand and the US on critical minerals has sparked backlash due to the environmental devastation already occurring in Thailand's rivers from existing rare earth mines. Toxic chemicals from rare earth mining in Myanmar have poisoned rivers in northern Thailand and parts of the Mekong River. Recent tests have detected arsenic levels five times higher than accepted levels in the Salween River.

Nickel Market Oversupply

China's financing and development of Indonesia's nickel industry have transformed the country into the world's largest producer. However, Chinese electric vehicle manufacturers are shifting away from nickel-intensive batteries, leading to an oversupply. Global exchange inventories of refined nickel have ballooned from 54,000 metric tons in January 2023 to 366,000 tons, representing about 10% of global usage last year. This oversupply has caused nickel prices to languish below $7 per pound.

Arctic Mineral Exploration Race

A global scramble for the Arctic's untapped critical mineral resources is intensifying as countries aim to break China's dominance. The thawing Arctic region offers potential for raw materials, including rare earths, base metals, precious metals, gemstones, and uranium. Greenland, in particular, is being eyed as a potential alternative source due to improved navigation capabilities.

Novo Resources: Greenfield Exploration Strategy

Novo Resources, an Australian-based company listed on the TSX and ASX, is a greenfield explorer focused on discovering gold and copper projects. Their strategy involves extensive mapping, geophysics, and drilling, with a focus on projects that could potentially host over a million ounces. Key projects include Tipper Bar and John Bull in New South Wales, and various gold antimony and gold projects in Western Australia, such as Techman, where rock chip samples have shown up to 60 g/ton. The company emphasizes a disciplined decision-making process, a willingness to walk away from unpromising projects, and a strong team with experience in exploration and operations. A critical aspect of their operations is land access, managed by a dedicated team that engages with traditional owners, including a part-time archaeologist. Novo Resources is well-funded with approximately AUD 10 million in cash and an investment portfolio of AUD 25-30 million. They also utilize joint ventures, such as with Northern Star, to advance projects.

Copper Market Turbulence

The global copper market is experiencing significant upheaval due to supply-demand imbalances, China's role, and trade uncertainties. Pricing talks in Shanghai were intense, with miners pressuring smelters to accept low processing fees. Yearly premiums have reached all-time highs. Nicholas Snowden of Mercuria Energy Group described the copper supply chain as being at a "historic point of tightness." Key themes include:

Smelters vs. Miners: An oversupply of copper smelters and a shortage of ore are driving down smelter fees, sometimes into negative territory.
American Premium and Tariffs: Fears of new tariffs on copper could distort the market. The US is projected to hold 90% of global copper inventories by Q1 2026, leading to shortages elsewhere. Chile's Codelco is offering record high premiums of $350 per ton to Chinese customers.
China's Slowdown: A potential slowdown in China could negatively impact copper prices.

Kostas Bentus of Mercuria Energy Group is bullish on copper prices, warning that a rush of metal to the US, driven by a significant premium on the Comex exchange, is depleting global inventories and will lead to shortages outside the US. He stated, "If the world keeps going like this, we will be left without copper cathodes in the rest of the world."

London Metal Exchange (LME) Fee Reductions

The LME plans to reduce client fees on its LME select electronic platform by 7.4% to 8.5% in 2026 to enhance liquidity and support physical market trading.

Mining M&A and Canadian Sector Developments

Anglo American and Teck Resources: The Canadian government has cleared Anglo American's proposed takeover of Teck Resources on national security grounds.
Lundin Mining Lawsuit: Canada's Supreme Court ruled that investors can sue Lundin Mining for failing to disclose a rock slide at one of its Chilean mines, affirming the need for timely disclosure of material information.
Barrick Gold IPO Plans: Barrick is considering an IPO of its North American gold assets, including interests in Nevada Gold Mines and the Four Mile discovery, to create a pure gold vehicle.
Zijin Mining Founder Retires: Chen Jing, founder of the $100 billion Chinese miner Zijin Mining Group, is retiring as chairman. The company's market value has surged due to high commodity prices, particularly copper and gold.
Orano Uranium Convoy Safety Concerns: French nuclear fuels group Orano stated that a uranium convoy from its seized mine in Niger poses "serious safety and security risks."
Ivanhoe Mines Copper Smelter: Ivanhoe Mines has fired up Africa's largest and "greenest" copper smelter at Kamoa-Kakula, with anode production expected by year-end.
Saudi Arabia Mineral Exploration: Saudi Arabia is launching bidding for 13,000 square kilometer mineral exploration licenses.
Zimbabwe Gold Royalties: Zimbabwe plans to hike royalties on gold producers to 10% if prices exceed $2,510 per ounce.

Canadian Mining Sector Strategy and Budget Analysis

Monica Banting, National Mining Leader at PwC Canada, discussed the positive momentum in the Canadian mining sector, driven by geopolitical shifts and increased political ambition. She highlighted the recent federal budget's positive implications for mining, including:

Critical Mineral Sovereign Fund: A new fund to support the sector.
Expansion of Incentives: Boosts to productivity through tax credits, such as the clean manufacturing technology credit, now applicable to poly metallic producers with over 50% critical mineral content.
Arctic Development and Indigenous Funding: Commitments that have direct interplay with mining.

Banting also pointed out areas for attention:

Transfer Pricing Rule Changes: A shift from legal form to economic substance in pricing cross-border transactions.
Clarification of CE Definition: Changes impacting flow-through financing, excluding expenses related to determining economic viability or engineering feasibility from November 4th, 2025.

She emphasized the consistency in government strategy, including the Major Projects Office aimed at accelerating permitting. However, she stressed the need for agility, stakeholder engagement, and addressing pain points such as regulatory efficiency, access to capital, talent gaps, and technology adoption.

Regarding strategy, Banting suggested a balanced approach rather than an "all-of-the-above" strategy, acknowledging the need for flexibility for multi-commodity producers. She highlighted the potential for gold companies to pave the way for critical minerals through infrastructure development and funding. She also noted the significant demand for copper driven by AI and the strategic importance of niche commodities for defense and energy security.

Banting sees a future with increased partnerships, including public-private and cross-sector collaborations, and is particularly excited about the potential of Artificial Intelligence (AI) to drive demand for commodities like copper and to enhance efficiency in capital projects and operations.

Metal Prices Overview

Precious Metals: Gold ($4,222/oz, +$98), Silver ($57.56/oz, +$7), Platinum ($1,664.90/oz, +$117), Palladium ($1,432, +$24). A strong week for precious metals.
Industrial Metals: Copper ($5.20/lb, +$0.22), Iron Ore ($14.84/ton, +$0.42), Aluminum ($1.31/lb, +$0.03), Lead ($0.91/lb, +$0.01), Nickel ($6.75/lb, +$0.08), Tin ($17.76/lb, +$1.12), Cobalt ($22.30/lb, unchanged), Lithium ($13.34/kg, +$0.37), Uranium ($76.45/lb, +$0.60), Zinc ($1.41/lb, +$0.05). Metals across the board showed strength, with silver being a standout.

Conclusion

The mining industry is experiencing a period of significant activity and heightened attention. Historic price surges in silver, coupled with supply chain disruptions, are driving market dynamics. Governments globally, including Canada, are increasingly recognizing the strategic importance of critical minerals, leading to policy shifts and investment initiatives. While challenges related to regulation, capital access, and talent persist, there is a palpable sense of momentum and a growing emphasis on collaboration and technological advancement, particularly AI, to unlock the sector's full potential. The future points towards increased partnerships and a more strategic approach to commodity development.