AHK
COMPETENCE CENTRE FOR MINING & MINERAL RESOURCES
CUSTOMIZED MARKET INFORMATION
The Competence Centre for Mining and Mineral Resources serves the purpose of enhancing mutually beneficial business relationships between Canada and Germany.

Therefore, we welcome the opportunity to support you with preliminary market information at no cost. Do you have a specific question about the German or the Canadian market? Do you require information about important industry events or a general overview of the industry and its latest trends?

We provide companies, associations and governmental institutions with relevant market information to enhance transparency and business activity between Canada and Germany

Please contact us for your question or request using the contact form or by writing directly to one of the team members of the Competence Centre for Mining & Mineral Resources.
CANADA

Resource Supplier of World Rank


Canada is one of the leading mining countries in the world, producing more than 60 minerals and metals. Canada ranks among the top five countries in the global production of potash, uranium, niobium, cobalt, aluminum, platinum, nickel, sulphur, titanium, diamonds, and gold with an overall value of nearly $40.8 billion in 2016.

Figure 2: Mineral Production Canada (The Mining Association of Canada, Facts and Figures 2017)

Seven minerals produced in Canada were in the top 3 of global production in 2016. Richly endowed with natural resources, Canada ranks among the top five countries in the global production of 13 major minerals and metals (see figure 2):
  • First in potash
  • Second in Uranium, Niobium and Nickel
  • Third in Cobalt, Aluminum, Gemstones and Platinum group metals (PMG)
  • Fourth in Sulphur and Indium
  • Fifth in Diamonds (Third in value) and Gold


Supplier for Strategic Metals


As one of the leading mining countries worldwide Canada presents great business opportunities and strategic advantages for Germany. For further information on strategic metals produced and explored in Canada please also have a look at our research study on "Opportunities for German Companies in the Canadian Mining Sector" (German).

According to the German Mineral Resources Agency (DERA), Germany aims to secure future supply at reasonable cost for the following commodities with high criticality (supply risk & vulnerability of the German economy): Antimony, Bismuth, Chromium, Cobalt, Gallium, Germanium, Indium, Heavy and Light Rare Earth Metals, Niobium, Palladium, Platinum Group Metals PGM, Rhenium, Silver, Tin, Tantalum and Tungsten.

Canada ranks in the top five producing countries for strategic metals, including cobalt, PGMs (Platinum group metals) and tungsten and could supply these metals to Germany. Lithium, which has seen a recent surge (together with cobalt) due to rising demand in battery manu­factu­ring for electric vehicles, is also being explored and developed in Canada.


Cobalt

Canada is the fourth largest Cobalt producer worldwide with 7,300t and a 5.9% market share (2016). As of 2017, there are 8 open pit and underground mines in Canada that produce Cobalt (as a by-product). Three of those are in Ontario (Redstone Project, Sudbury Operations, and Lockerby) and two in Manitoba (Manitoba Division, Manigo). Fortune Minerals is advancing a late-stage development project that will also produce cobalt as a by-product.

The main application of Cobalt is the production of high performance alloys or Super alloys. They are not only corrosion and wear-resistant, they also have extremely high temperature stability. These properties make them an essential ingredient in today’s turbine engines and in batteries for electric vehicles. A recent surge in the cobalt market has been attributed to the growing demand for batteries by companies such as Tesla. Certain Cobalt based alloys, like Vitallium (65% Cobalt), are also used in dentistry, prosthetics and joint replacement.


Tungsten (Wolfram)

In 2014, Canadas Tungsten production totaled 2,200t (2.7% of World Market) but after North American Tungsten closed its Cantung mine in October 2015, Canadas Tungsten production hit zero in 2016.
The Sisson Mine Project by Northcliff Resources which is located 60km northwest of Fredericton received their environmental assessment approval in early 2017. This roughly CAD$ 580 million project is expected to create around 300 jobs and help Canada and North America to secure a safe and long-term access to Tungsten.


Nearly 50% of all produced Tungsten is used in the production of hard metals. The main constituent is tungsten monocarbide (WC), which has hardness close to diamond.  Tungsten has the highest melting point of all metals and is therefore alloyed with other metals to strengthen them. Hard metal tools are the workhorses for the shaping of metals, alloys, wood, composites, plastics and ceramics, as well as for the mining and construction industries. Other applications include a widespread variety of chemical uses.


Platinum Group Metals (PGM)

With 32,000Kg production volume and a 8.4% market share (2016), Canada is the third largest producer worldwide. Two of the most common Platinum Group Metals (PGM), Palladium and Platinum, are currently being mined in Canada. PGM’s include Ruthium, Rhodium, Palladium, Osmium, Iridium and Platinum.

Palladium is currently mined at three Canadian locations: Lac des Iles mine, Ontario (primary commodity) and Moshkinabi Mine, Ontario and Shakespeare Mine, Ontario (by-product). Platinum is a by-product of Nickel and Copper mining and is currently produced in Lac Des Iles (ON), MacWatters (ON), Moshkinabi (ON), Dumont (ON) and Sudbury Operations (BC).

The main application (45%) of Platinum and Palladium today is Vehicle emission Control (Catalysts) because it allows the complete combustion of low concentrations of unburned hydrocarbons from the exhaust into carbon dioxide and water vapor. The second Largest (30%) is Jewelry since it is rarer than both gold and silver (only around 10,000t exist in total).


Lithium

Canada lost its spot in the top 5 of the world’s Lithium producers and currently has two open pit Lithium mines in Quebec (James Bay and Whabouchi). Additionally, there are several advanced Lithium projects in Quebec (Canada Lithium Corp., Nemaska Lithium, Lithium One / Galaxy Resources, Critical Elements Corp.) and Ontario (Avalon Advanced Materials) being developed as demand is rising mostly due to increased battery production for electric vehicles, one important use of Lithium.

Other important applications of lithium are in the glass and ceramics field and in the production of aluminum. Lithium carbonate is added to glass to make it stronger. Producers of aluminum use lithium carbonate in preparing aluminum metal from aluminum oxide. Another important compound of lithium is lithium stearate. Lithium stearate is added to petroleum to make thick lubricating grease. Lithium greases are used in military, industrial, automotive, aircraft, and marine applications. Lithium stearate is also used as an additive in cosmetics and plastics.


Rare Earth Elements (REE)

Furthermore, Canada has several advanced Rare Earth projects. 11 Canadian REE projects are in an advanced exploration stage, all of which are Canadian owned. Frontrunners among Canadian juniors despite current market conditions and difficulties in obtaining financing are
  • Avalon Rare Metals Inc. (Nechalacho Project)
  • Pele Mountain Resources Inc. (Eco Ridge Project)
  • Quest Rare Minerals Ltd. (Strange Lake Project)
  • Matamec Explorations Inc. (Zeus-Kipawa Project)
Rare earth metals and alloys that contain them are used in many devices that people use every day such as computer memory, DVDs, rechargeable batteries, cell phones, catalytic converters, magnets, fluorescent lighting and much more.

Several pounds of rare earth compounds are in batteries that power every electric vehicle and hybrid-electric vehicle. As concerns for energy independence, climate change and other issues drive the sale of electric and hybrid vehicles, the demand for batteries made with rare earth compounds will climb even faster.

Rare earths are used as catalysts, phosphors, and polishing compounds. These are used for air pollution control, illuminated screens on electronic devices, and the polishing of optical-quality glass. All of these products are expected to experience rising demand.



Important Mining Clusters


The Canadian Mining Industry forms several clusters around Canada’s major cities depending on the resource concentration within the different Canadian provinces.

With about 1,200 exploration companies, Vancouver is a global centre of expertise in mineral exploration. Companies based in British Columbia conduct exploration work all over the world.

Saskatoon is the focal point for companies in the uranium, salt and potash production. Edmonton gathers the oil and gas industry due to the proximity to the Athabasca oil sands, whereas most iron ore and aluminum firms are located in Montreal. Iron ore production concentrates in the area due to the richness of iron ore in the Labrador belt and major aluminum production facilities are located in Quebec due to low electricity prices. Sudbury is known for its mining supply cluster while Toronto is a global hub for mine financing due to the Toronto Stock Exchange.

Figure 4: Canada's Mining Cities

Other clusters exist based on the geological preconditions and the concentration of certain minerals and metals (see figure 5).

To point out a few, the Northwest Territories is the country’s dominant source of diamonds and also home to Canada’s Cantung tungsten mine. Ontario and Quebec are leading in the country’s production of gold. British Columbia dominates in the production of metallurgical coal and also hosts Canada’s molybdenum deposits. Newfoundland and Labrador and Quebec produce virtually all of Canada’s iron ore. Several provinces have strong copper and nickel production, the Sudbury Basin in Ontario is world famous of its nickel deposits. Important mining locations such as Red Lake (Ontario), Timmins (Ontario) and Val d’Or (Quebec) are considered world class gold camps. Figure 3 below provides a detailed overview of Canadian mining clusters and mineral concentrations. Saskatchewan has one of the world’s largest uranium and potash deposits and hosts all of Canada’s uranium and potash mines.

Figure 5: Mining clusters in Canada detailed (Source: Natural Resources Canada; Compiled by The Mining Association of Canada)



Facts & Figures - Canadian Mining Industry


The Canadian mining industry is a major employer:
  • In 2016, Canada had 1,201 mining establishments consisting of 65 metal mines and 1,136 non-metal mines. Provinces with the most metal mines are Quebec (20), Ontario (18) and British Columbia (8).
  • Canada has one of the largest mining supply sectors globally with more than 3,200 companies supplying engineering, geotechnical, environmental, financial and other services to mining operations.
  • More than 403,000 people across Canada work in the mining and mineral processing industries.
  • Those who work in mining enjoy the highest wages and salaries of all industrial sectors in Canada with an average annual pay of $111,000, surpassing the earnings of workers in finance, manufacturing, construction and forestry.
  • Mining is the largest private sector employer of Aboriginal peoples in Canada on a proportional basis, and employment is poised to increase.
The Canadian mining industry contributes to economic growth:
  • The extractive industry as a whole, including mineral extraction and oil and gas extraction, contributed $124.8 billion, or nearly 7.5%, to Canada’s GDP in 2016.
  • The extractive industry is the fourth largest of Canada’s 18 industries, surpassed only by the services, real estate and manufacturing sectors
  • Mining alone contributed $57.6 billion to Canada’s Gross Domestic Product (GDP) in 2016.
  • The industry accounted for 19% of the value of Canadian goods exports in 2016.
  • Canada’s value of mineral production was nearly $41 billion in 2016.
  • The mining industry’s payments to Canadian federal and provincial governments total more than $7.1 billion in taxes and royalties in 2017

Figure 6: Facts Canadian resource market (Source: Referring to The Mining Association of Canada - Facts and Figures 2017)



Trends in Mining Development & Exploration Spending


Globally, Canada has been the top destination for mineral exploration investment for 20 of the past 36 years. SNL Metals Economic Group’s Exploration Analysis shows that Canada reaffirmed its leading role in global exploration investment with $1.84 billion in 2017, equalling 14% of the expenditures worldwide (see figure 7). This constitutes the first increase, roughly 15% YTY, after decreasing between 2014 and 2016.


Figure 7: Worldwide Exploration Spending 2017 (Source: S&P Global Market Intelligence for the PDAC International Convention, Worldwide Mining Exploration Trends, 2017)

Furthermore, Canadian companies also have a strong global presence in exploration. More than 800 Canadian companies are actively exploring outside of Canada in over 100 countries. Hence, Canadian firms also account for the largest share of exploration spending not only in Canada, but also in the United States, Central and South America, Europe and, most recently, Africa (SNL Metals Economic Group, Natural Resources Canada).

Looking at more trends in exploration spending within Canada, it stands out that precious metals continue to attract the lion’s share of Canadian exploration spending in 2016, accounting for 60% overall spending. Base metal exploration’s share of total investment remained relatively stable, with a 13% share in 2016. Figure 8 provides an overview of the share of exploration budgets of the most important minerals and metals explored and mined in Canada.


Exploration Spending Trends in Canada 2008-2018

Figure 8: Canadian Exploration Trends, Source: Natural Resources Canada

However, figure 8 also indicates that when looking at mid-term exploration spending trends, across the board expenditures are on a sharp decline. Following the current downturn in commodity markets, overall exploration investment has seen a sharp decrease globally since 2011 (see figure 9). This continued downward trend coincides with a period of declining prices across a broad range of mineral commodities, a persisting dim market outlook, an unfavourable capital market for financing mineral exploration, and, as a result of these circumstances, the adoption of measures by companies to trim costs and focus efforts on core assets.




Exploration Spending Trends in Canada 2010-2017

Figure 9: Exploration Trends, Source: Referring to Mining Association of Canada, Facts & Figures 2017.

In 2016 alone, Canada experienced a 18% decrease in exploration spending compared to 2015, marking the fifth year in a row in sharply decreased exploration spending. Figure 8 visualizes this overall trend, indicating that Canadas total exploration spending dropped by nearly 56% between 2011 (CAD $4,227.4 Billion) and 2015 (CAD$1,867.3 Billion). Although the total amounts differ slightly between data sources, looking at exploration expenditures by province over the past two years, the downward trend is also clearly visible.


Canadian Exploration Expenditures by Province 2016-2018


Figure 10: Exploration Expenditure Trends 2016-2018, Source: Natural Resources Canada

Consequently, while precious metals (mainly gold) remains the leading commodity group with shares of total spending of 60% and 65%, respectively, in 2016 and 2017, decreases in dollar terms are notable.

Precious-metals expenditures have dropped from a peak of $2.3B in 2011 to $776M in 2015. Spending increased in the subsequent years, hitting $1.4 B in 2017 and is projected to stay at this level throughout 2018.

As the second-ranked commodity group, the base-metals category fell 21% in 2015 to $330M, but recovered and increased again by 21.9% to $294M in 2017. Additional growth is expected in 2018 by 38.4% to total $406.9M.

Looking at iron ore exploration in Canada over the last decade (2004 to 20014), the sharp decrease in the past year, from CAD$ 111.3M in 2013 to CAD$ 67.2M in 2014, due to tumbling iron ore price, becomes visible. Even though iron ore exploration had seen a dramatic increase between 2004 and 2011 and still, compared to 2004, has increased fivefold from 12.4M to 67.2M $CAD in 2014, compared to a decade ago, the outlook for iron ore is currently more doom than gloom.

Expenditures on iron ore increased 16.9% in 2017 to $26.8M. This is the first increase since prices peaked and expenditures reached record levels in 2011 and 2012 at over $300M.



Figure 11: Trends in Iron Ore Exploration in Canada, Source: Referring to Facts & Figures 2017, Statistics Canada.

Base Metals followed a similar trend. The overall value in exploration spending doubled from CAD$ 241.3M in 2004 to CAD$ 416.8M in 2014. However, the most recent developments show a drastic decrease since 2011 (CAD$ 734.4M) down to CAD$ 209.7M in 2016. In 2017 on the other hand, expenditures increased by almost 22% to CAD$ 294M and are expected to grow an additional 38.4% to 406.9M in 2018.

Canadian Exploration Spending in Base Metals 2009-2018



Figure 12: Trends in Iron Base Metal Exploration in Canada, Source Facts & Figures 2017, Statistics Canada

The impacts on the sector include a significant reduction in the number of active mineral projects (down one-third from the 2011 peak) and a number of projects reporting only minimal expenses related to maintaining mineral claims and leases in good standing and head-office expenditures aimed at keeping the corporate entity alive. This and other statistics from the latest survey underscore the ongoing struggle to conduct work programs that advance projects into later stages of development (Natural Resources Canada, March 2016; latest available data).

Furthermore, many companies are not able to remain on the market. Whereas the number of companies acting as project operators was 713 in 2014 and 598 in 2015, it is expected to further decrease to 480 in 2016. Since the record high of 911 in 2012, it is projected that 431 project operators will have become dormant, merged, or ceased to exist by 2016. Of this total, junior mining companies are anticipated to account for the vast majority (412) of lost project operators, highlighting the impact of current operating challenges on their ability to remain viable (Natural Resources Canada, March 2016; latest available data).

This trend is not limited to Canada alone, of course, but reflects a global economic trend or bear market. In a recent global study, SNL Mining & Minerals determined that, based on data from nearly 3,500 companies, worldwide exploration investment in 2016 fell to US$6.89 billion for non-ferrous metals. This is a 20% decrease from 2015, and a near 66% drop from the all-time record high of US$20.53 billion in 2012 (MAC, Facts &Figures 2017, SNL Financial).
According to Natural Resources Canada, the future for major mining project investments is very grim. Even though the commodity prices are on the rise, Capital investment has and still is declining since 2012. The fact that the federal environmental assessment registry only received two new mining project submissions only confirms this trend.


Figure 13: Canadian Environmental Assessment Agency, Source: Facts & Figures 2017



Figure 14: Values of Mining Projects by Year, Source: Facts & Figures 2017



Figure 15: Total Capital Expenditures in Canada, Source: Facts & Figures 2017.


When looking at capital expenditures by Canadian province (see Figure 16) Saskatchewan stands out as the province with the highest capex in 2016. While roughly $ 196M was spent on exploration, Mine Complex Development accounted for the remaining whopping $ 2.34B. Saskatchewan is home to all of the four Canadian uranium mines (producing 22% of global market share) and has recently seen extensive investments into two new potash projects, BHP Billiton’s Janson Mine project ($ 3.7B) which is still in development, and German based K+S’ Legacy Project solution mine ($ 4.1B), which was opened and renamed to “Bethune” in May of 2017. Ontario and Quebec have historically been strong mining provinces in Canada with a large number of existing gold and metal mines. Gold has been doing comparatively well and accounts for a substantial amount of the capex in these provinces.

Figure 16: Total Capital Expenditures for Mineral Resource Development within Canada (Source: The Mining Association of Canada - Facts and Figures 2017)
GERMANY

Domestic Raw Materials Production & Raw Materials Imports


Germany is one of the leading industrial nations in the world and a large-scale user of raw materials. The majority of bulk materials such as sand, gravel, silica, bentonite, clay and gypsum are produced domestically. However, the required metals and selected industrial minerals as well as raw materials for energy production, except for lignite, have to be imported. Especially with respect to metals needed for the manufacturing of advanced technologies, Germany is highly dependent on imports and on a stable and reliable supply with raw materials such as Rare Earth, Tungsten, Tantalum, Indium, Germanium, which are crucial ingredients in many of today’s high-tech manufacturing processes.

China is a very important supplier of technology metals to Germany. However, it is worth mentioning that Canada also produces and supplies a broad range of metals German industry needs. Hence, Canada offers great potential for increasing the long-term resource supply security for Germany’s manufacturing sector by offering opportunities to diversify supply sources on the part of German industry. To date, 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.

The most important raw materials by value produced in Germany are lignite (Braunkohle) with a value of 2,33 billion € in 2016, Potash (Kalisalz) with a value of 1,65 billion €, sand and gravel (Sand und Kies) with a value of 1,58 billion €, and crushed rock (gebrochene Natursteine) with a value of 1,5 billion € in 2016 (see figure 1).The production of hard coal has been declining for several years and is set to end by the year 2018. Germany is therefore focusing on the development of and the investment in renewable energy. Natural gas contributes about 21% (of which 7% are produced in Germany) to national gas consumption and is an important factor in national energy security. Potash and salt production are significant contributors to German industry in terms of value and represent important export commodities for the international chemical and fertilizer industries (see figure 1).

Figure 1: Production of Domestic Raw Materials by Value in 2016 (Source: BGR)

In 2016, Germany imported raw materials totalling a value of 91,4 billion € (including energy raw materials, non-metals and metals: ore, concentrates, and alloys). Compared to 2015, this represents a decrease by 15,5 billion € (14,5 %), which resulted from lower raw material prices, especially with respect to energy raw materials. In addition, Germany imported value added raw materials equaling 45,4 billion €, bringing the total combined imports of metallic, non-metallic, and energy resources to 136,8 billion € in 2016. 

Figure 2 shows the high dependence on imports for metals and energy.

Figure 2: Germany's Exports and Imports of Raw Materials (Source: BGR 2016)

It is therefore not surprising that the overall trade balance for raw materials is negative, especially with respect to energy resources. However, it is worth noticing that for metallic raw materials, the picture is a more balanced one because of the value-added manufacturing and production taking place in Germany. Whereas ore, concentrate and refined products are imported, value-added metal products as well as scrap metals are being exported. With respect to gravel, sand, and rock, Germany’s exports outweigh the imports and the trade balance is positive (see figure 3).

Figure 3: Germany’s Trade Balance for Raw Materials in 2016 (Source: BGR)



Main commodities mined in Germany


Main advantages of Germany as a mining location are the reliability and stability of existing mining regulations, stable political conditions, reliable business relations, excellent infrastructure, proximity to customers, a qualified workforce and skilled engineers, as well as the availability of reliable and innovative technology.

Hard Coal production has a very long tradition in Germany.  Hard coal deposits are predominantly located in the Ruhr area where coal outcrops. The coal-bearing strata descend very quickly and reach a depth of 2,000 m in the area of the city of Münster. Under the North Sea, the coal seams are already 5,000 m deep. The average depth of German mines today is 1,250 m, with the deepest going down to 1,600 m. Exploitation of hard coal is exclusively done through long wall mining. Typical long wall dimensions are more than 300 m in long wall width, and the individual panels achieve lengths of up to 3,000 m. Panel length is often limited by ventilation and air conditioning issues. The seam thickness varies between 1 and 3.5 m and determines the extraction equipment to be used. In thin seams, ploughs are applied whereas in thicker seams shearer loader operation is the rule. Plough operation in particular is fully automated.

Lignite mining takes place in four locations within Germany. The largest is the Rhenish mining area where just under 100Mt lignite is mined each year. In the eastern part of Germany is the Lusatian area where about 63.6Mt of lignite is mined annually. In addition, some smaller operations are located in central Germany. In the Lusatian lignite mining area, the deposit is much shallower at only 80 to 100 m and this allows the application of a totally different technology. The rule is to use a bucket-conveyor excavator in combination with the so-called overburden conveyor bridge, which is possible only because the distance between the mining and the filling bench is within the range of 60 to 80 m.

Potash is used as fertilizer by the agricultural industry. K+S is the only German producer mining and producing potash products at seven different locations. Production has been stable for a decade and lies at around 3Mt per year. In international comparison, the German producer K+S ranks fifth after the predominant Russian and Canadian producers. K+S is currently developing a Greenfield potash solution mine in Canada called “Legacy Project”.

By numbers, the aggregates, sand and gravel industry is the biggest section of the mining industry in Germany. In contrast to other mining activities a lot of small and medium sized companies are active in this industry section. Hence, the number of gravel and sand mining sites amount to more than 2,200 quarries with a total annually production of nearly 500Mt. The industry has a turnover of 3.2 billion € and employs about 27,000 people. The variety of minerals produced in Germany is tremendous and it covers hard rock like granite, basalt, quartzite, diabase, limestone and dolomite, sandstone, tuff, clay, bentonite, kaolin, feldspar, quartz sand, gypsum, gravel and sand. The following figure 4 gives a summary of the construction minerals sector in Germany.

Figure 4: Summary construction minerals sector - aggregates, sands and gravels (Source: VRB)

Main advantages in the German mining industry are the reliability of mining procedures, the secureness of mineral supplies, the qualified workforce and skilled engineers, the excellent infrastructure, stabile political conditions, the proximity to the customers, sound and inspiring business relations.



German Mining Industry in International Comparison


According to the Austrian world mining data, Germany ranks first worldwide in lignite mining. Germany also ranks fourth in the production of salt and fertilizer products and is one of the leading world exporters in this segment. The international ranking of important minerals produced in German is shown in figure 5. 

Figure 5: International Ranking of Germanys Mineral Production (Source: World Mining Data 2015)

However, with a total of 15 billion € per year the value of overall production appears comparatively low. This is due to the fact that the majority of production (by volume) stems from inexpensive gravel and sand production while the more expensive metal products have to be imported.

In 2014, minerals with a total value of 123 billion €, equaling 63% of all minerals consumed by the German manufacturing sector, were imported. Consequently, Germany has an overall negative import-export balance for resources. Figure 6 shows that Germany can only supply limited resources domestically and indicates its strong dependency on imports of metal ores and concentrates.

Figure 6: Germany's Exports and Imports of Raw Materials (Source: BGR 2012)



German Mining Equipment and Technology


Germany is the third largest exporter of mining equipment worldwide after the Unites States of America and China (see figure 7). Through innovation and continued investment in research and development, German equipment and service providers are able to cater to the needs of today’s miners worldwide by providing client- and deposit-specific equipment that is high quality, safe, reliable, and cost-effective.

German expertise in engineering is based on a historical dedication to innovation and an outstanding commitment to research and development. Many German mining supply and engineering companies have histories that date back to the 19th century and are still family-owned, which explains the long tradition of innovation and the deep understanding of the cyclical nature of the industry. A strong focus and a long tradition of R & D resulted in high-precision equipment known around the globe for its endurance and reliability.

R & D expenditures still make up 6.3% of the revenue of manufacturing companies. To ensure future competitiveness and improve mining safety, R& D needs to focus on the following key areas:
  • Improve energy efficiency
  • Improve understanding of rock mechanics
  • Develop automated transport systems (OP and UG)
  • Improve data transmission and control systems

The branch - The biggest exporters worldwide

Mining Equipment Export to VDMA partner Countries in millions of euros €
Figure 7: The biggest exporters of mining equipment worldwide (Source: VDMA)

German mining equipment manufacturers cover all fields of mining technology: open pit, underground, processing, and conveying - at all stages of project development, from exploration to mining and mineral processing.

The mining equipment portfolio of German companies includes: underground mining equipment, crushing, pulverizing and screening machinery, portable drilling rigs and parts, portable crushing, screening, washing, and combination plants, drills, and other machinery and the same for all kind of surface mining equipment.

German mining technology is leading in low total life-cycle costs providing big advantages for the mining industry. German technology is known to increase efficiency, optimize operating costs, and improve safety in underground and surface operations as well as at the mill.

German mining equipment and technology is exported all over the world, with an export quota of over 90%. Over the last decade, the German mining equipment industry tripled its revenues from worldwide sales to 3.57 B€ in 2015.

Figure 8: Export of German Mining Equipment 2015 (Source: VDMA)

Key export markets for German mining equipment are the Mediterranean and Middle East (17% market share), Latin America (11% market share), Saudi Arabia (8% market share), China (8% market share) and USA (7% market share) (see figure 8). At the moment, Latin America is the fastest growing market for German suppliers.



Mining Equipment Export to Canada


Due to current market conditions, the inflow of new orders from Canada is still decreasing. However, exports to Canada have been rising the first Quarter of 2016, albeit from a low base level, totaling CAD$ 7.88Mio. For comparison, during the same period the total exports decreased by 20% to a total of CAD$ 736.68Mio.


Figure 9: German exports to Canada 2007 to 2016

The following graphic shows the most important mining equipment types exported to Canada, comparing 2015 and 2016. It is worth pointing out that exports to Canada are on a positive trend even though exports in general and order inflows are continuing to experience a low, leading to an expected 15% less in total turnover for 2016 for German mining equipment manufacturers.

The outlook is only moderately positive, mostly lead by the slow recovery of some metals and metal prices, such as gold, and the surge of prices in specialty metals such as lithium and cobalt due to increased demand from battery manufacturers. The mid and long term view is, however, positive, according to the German Engineering Federation (VDMA).


Figure 10: German Exports to Canada by type of equipment

The German mining equipment manufacturers are represented by the VDMA. VDMA is the German Engineering Federation, Europe’s largest industry federation with a sole focus on mechanical engineering and with 40 sub-associations for machinery. VDMA represents more than 3,100 European member companies and est. 1,003,000 employees (in Germany). The VDMA sub-association for Mining Equipment has 135 member companies with more than 12,400 employees. The overall production value of these member companies was 3.57 B EUR in 2015 with an export quota of 94%. Please download the Mining Equipment Supplement “Best of Germany” to learn more about German mining equipment suppliers.

Germany also hosts the world's largest and probably most important trade fair for the building & mining industry - bauma. The trade fair bauma, which was established in 1954, presents a comprehensive international product range in the area of construction machinery, construction equipment, vehicles and mining machines. bauma is a hub for international business and an important venue for gathering information and establishing contacts. In 2016 more than 580.000 visitors came to Munich to see the 3423 exhibitors. For more information please visit the bauma website.


BILATERAL TRADE

Trends in Bilateral Trade Relations


Germany is the largest economy in the European Union and the fourth largest in the world. Germany has a strong export orientation. Hence, exports to Canada have seen an increase over the past five years (~50%) while imports from Canada have been rather steady (see figure 1). In 2015, Germany was Canada's eighth-largest export market whereas Germany ranked sixth among Canada's suppliers.

Figure 1: Bilateral Trade Canada - Germany (Source: Statistics Canada 2015)

Looking at the past 15 years, bilateral trade shows an overall growing trend: Canadian imports from Germany have more than tripled, from $3.8 billion in 1990 to $14.97 billion in 2015, while Canadian exports to Germany grew moderately from $2.2 billion in 1990 to $3.9 billion in 2015.

Popular goods imported from Germany included machinery (33%), vehicles, aircraft and transport equipment (28%), chemical products (16%), pharmaceutical products (8%) and data processing technology (6%). Most popular imports from Canada included machines (18%), mineral products (15%), vehicles (7%) and metals (2%) (see figure 2).

Figure 2: Foreign Trade between Canada and Germany in 2015 and basic trade information (Sources: Statistics Canada 2016 (http://www.statcan.gc.ca); World Economic Outlook Database - April 2015, Institutional Investor Credit Country Rating 2016 (100 high, 0 low); Corruption Perceptions Index 2016 - Transparency International (100 high, 0 low); The Mining Association of Canada - Facts & Figures 2015)



Foreign Direct Investment


With estimated assets of $13.5 billion in 2015, Germany ranks 8th in foreign direct investment (FDI) in Canada. Canadian firms, on the other hand, hold $6.6 billion in assets in Germany.

Many multinational German companies are represented in Canada, including Bayer, BASF, Siemens, Daimler, Dr. Oetker, Mannesmann and Thyssen-Krupp. Overall, a total of 1,500 German business representations - or respectively 800 German companies - are spread throughout the country, the majority of which, however, are SME’s (small-medium-sized enterprises). Mississauga in Ontario is home to more than 300 German businesses and is therefore called the “German business centre” by locals in Canada.

By the same token, more than 120 Canadian owned companies have holdings in Germany. Notable investors include Rio Tinto Alcan, Research in Motion, CAE Electronics, Bombardier, Pratt and Whitney, Trizec Hahn and Magna.



Canada - Resources Supplier for Germany


Canada is a resource producer of world rank (see figure 1 and also see Canada section for more information). In 2015, Canada ranked first for Potash and Cadmium production in the world, second for Niobium, and third for Nickel, Titanium, Cobalt, PGMs, and Aluminum as well as fourth for Tungsten. With the exception of Potash, what all these mineral resources have in common is that they are invaluable for Germany’s high-tech manufacturing sector.

Figure 1: Canadian production of selected mineral raw materials 2015 (DERA 2018)


Figure 2 shows that Canada already is an important partner for Germany with regards to the supply of natural resources and strategic metals and minerals. The chart also implies that Canada represents a great opportunity to further diversify resource supply sources to decrease supply risks for the German manufacturing sector.

Figure 2: Canadian share of German imports of selected mineral resources (DERA 2015)

Looking at trends in German imports for Canadian mineral products by value and volume (figures 3 and 4), it is worth noting that imports of precious metals and ferroniobium increased between 2012 and 2016, while imports of copper, silver, and cobalt decreased with respect to value as well as volume.
Another interesting observation from the charts below is that even though imports of titanium and nickel have decreased in value and volume, imports of value-added products (powder) for titanium as well as nickel have increased in the same period. This is also the case for Cobalt, which is now imported as refined product, whereas it was imported as ore and concentrate prior to 2014.
Other important value added mineral products which are imported from Canada but are not listed in the charts include for example products of nickel as alloys or ash, as well as diamonds, tungsten (powder) and iron products.

Figure 3: German imports of mineral products from Canada by value (DERA 2018)


Figure 4: German imports of mineral products from Canada by volume


With respect to ore and concentrate, it is notable that iron ore and coking coal imports reflect the significant price drop for these raw materials. While the import volume for coking coal remained stable, the value dropped by almost 50%. With respect to Iron Ore, the charts show that while the import volume increased, the overall value decreased, again reflecting a sharp decline in the iron ore price.
The decrease in import value for other commodities can be explained away with decreasing commodity prices since 2012. It is therefore recommended to overlay the volume and value charts to get a better understanding of the trends in bilateral trade relations.
Figure 5 and 6 show the trends in German imports of ore and concentrate from Canada. Data for precious metals are not available before 2013 and for Nickel before 2014.


Figure 5: German imports of ores and concentrate from Canada by value (DERA 2018)


Figure 6: German imports of ores and concentrate from Canada by amount (DERA 2018)

Important: Please note that most of the diagrams are in logarithmic scale!

TORONTO STOCK EXCHANGE

Leading Stock Exchange for Mining Finance


The Toronto Stock Exchange (TSX, formerly the TSE) is the largest stock exchange in Canada, the third largest in North America, and the seventh largest in the world by market capitalization. Based in Toronto, it is owned by and operated as a subsidiary of the TMX Group for the trading of senior equities. Toronto is a global hub for mining finance as more mining and oil & gas companies are listed on the Toronto Stock Exchange than on any other stock exchange.

More than 50% of the world’s public mining companies are listed on the Toronto Stock Exchanges TSX and TSX-Venture. The TSX and TSXV handled 53% of the world’s mining equity transactions in 2016, and together raised 47% of the world’s mining equity capital that year (see figure 1). The Toronto Stock Exchange traded almost $189 billion in mining stocks in 2016.

Figure 1: Canada center of mining (source: TMX Group, 2017)


In February 2018, 1210 mining companies were listed on the TSX and TSX-V with a total estimated value of over $298 billion. 221 mining companies are listed on the TSX (not TSX-V). These companies, together valued at $275.5 billion, raised more than $4 Billion in equity capital in 2016.

The remaining 989 mining companies listed on the TSX-V. In February 2018, they were valued at $23 billion, raising $5.35 Billion in equity capital - just above 43 percent of the overall total of equity raised.

TSX-listed mining companies mainly deal in gold, potash, uranium, copper, silver, nickel, iron ore, coal and diamonds. Most of the projects involve exploration, and very few will turn into operating mines. However, the projects listed at the Toronto Stock Exchange cover all project stages in the mineral resources industry (see figure 2).


Figure 2: Overview (Source: TMX Group - A Capital Opportunity, 2015, Presentation)



Figure 3: Overview (Source: TMX Group, 2018)



Global Impact of TSX listed Mining Companies


TSX-listed mining companies have a strong global focus and impact. As of 2017, the 1,210 TSX mining companies (see figure 1) were involved in 6,351 mineral projects worldwide and the equity raised on the TSX financed mining projects on all continents (see figure 4).

Figure 4: Mining Projects (Source: TMX Group “ Guide to Listing, 2017, Presentation)


Let’s take a closer look at the two biggest destinations of TSX/TSX-V listed Mining Companies, Africa and Latin America. In 2015, 315 Latin American mining companies raised $2.2 B for 1169 mining projects in Latin America alone (Figure 5). In Africa, the Top 5 Countries alone are home to 237 Mining projects. While the more mining companies operating in Africa are listed on the ASX than on the TSX/TSXV (156 and 132 respectively), the Canadians own more property (492 versus 467) (Figure 6). 

Figure 5: Mining in Latin America (Source - A Capital Opportunity, 2016, Presentation)


Figure 6: Mining in Africa (Source: TMX, November 2016)


Furthermore, Canadian-headquartered mining companies accounted for nearly 32% of budgeted worldwide non-ferrous exploration expenditures in 2016, which were spent on projects within Canada and in over 100 countries worldwide (Source: The Canadian Trade Commissioner Service, 2018).

However, mining exploration companies are currently facing challenges in raising capital. According to data collected by SNL Metals & Mining, the worldwide exploration investment in 2016 fell by 20% to US$6.86 billion for non-ferrous metals. It is even worse if we compare this to the record year 2012, when investment was in excess of US$20.5 billion which constitutes an overall decrease of 66% within the last four years (MAC, 2017). Although global economic prospects have improved over the past five years, the road to full recovery in advanced economies is still bumpy. This uncertainty is reflected in the hesitation of banks to finance (often risky) mining exploration projects. Combined with reduced mineral demand and lower commodity prices, this uncertainty affects the availability of capital for the development of mining projects.