Author: Gabriel Friedman

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A United States president fixated on critical minerals? Check. One who is hostile to an energy transition that has created demand for critical minerals? Check. Artificial intelligence-fuelled emerging technology that could upend the exploration process? Check.

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Starting this weekend, the Prospectors & Developers Association of Canada will host one of the world’s largest mining conferences in downtown Toronto, drawing tens of thousands of geologists, engineers and investors as the sector confronts an uncertain backdrop.

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Two years ago, PDAC attendees were electrified by the possibilities after the U.S. Congress passed the Inflation Reduction Act (IRA), a bill that provides rich subsidies for companies producing batteries in that country and even countries that have free trade agreements with the U.S.

“It’s changed everything,” Ken Hoffman, head of battery raw materials at consulting firm McKinsey & Co., said in a keynote speech in 2023. “It’s going to change metal flows; it’s going to change the pricing; it’s going to introduce premiums.”

Hoffman estimated the bill could inject US$1 trillion into the battery metal supply chain.

Since then, things have changed for Canada’s mining sector, albeit nothing seismic. Between 2023 and 2024, mining sector companies listed on the Toronto Stock Exchange raised an average total of $9 billion in capital per year — almost exactly what the sector raised on average in the previous two-year period.

Now, the IRA faces an uncertain future: U.S. President Donald Trump issued an executive order on his first day in office that called for a pause in funding on IRA projects — it would require an act of Congress to fully annul the bill — and he has called for eliminating government mandates that require automakers to produce an increasing percentage of electric vehicles during the next decade.

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Of course, he is only weeks into his four-year term, and it remains too early to discuss the overall impact of his policies. Already, Trump has talked about the critical minerals in Greenland, Ukraine and, ahem, Canada, suggesting he would like to see greater mining in all three countries.

With that in mind, here are three themes showing up in this year’s conference.

Potash push

Mike Henry, the soft-spoken Canadian chief executive of BHP Group Ltd., the world’s largest mining company, based in Australia, will deliver the first PDAC keynote on Sunday morning.

His speech is being billed as: “A 2050 population nearing 10 billion, increasingly urbanized, seeking higher standards of living and embarking on the energy transition, will need a lot more metals and minerals. What will it take to get where we want to go?”

Throughout his tenure as CEO, Henry has pushed for a more Canadian-centric approach. About 140 kilometres east of Saskatoon, the company is building one of the world’s largest potash mines, at an estimated cost of $14 billion, and is set to begin production in 2026.

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He has said he is redirecting BHP into more future-facing commodities that are likely to be in demand based on “megatrends” such as decarbonization and growing populations.

Natural Resources Canada estimates the world produced 67.5 million tonnes of potash, a fertilizer used to increase crop production, in 2023. Canada accounted for about one-third of global production, and only a few other countries — Russia, Belarus and China — also produce significant quantities.

BHP’s Jansen mine is expected to eventually produce 8.5 million tonnes per year.

“There are only two big production basins, Russia-Belarus and Canada,” Henry said in 2023. “Obviously, Canada is a much more attractive investment destination on a whole range of fronts.”

The company has also established an office to oversee global exploration in Toronto.

US$3,000 gold

Whatever happens with critical minerals, gold prices continue to zoom upward and have crept within striking distance of US$3,000 per ounce, which is a milestone that has long been discussed inside the mining sector but never achieved.

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On Thursday, the price of an ounce of gold was at around US$2,873 per ounce, up 43 per cent in the past year.

Eric Sprott, the Toronto-based billionaire who has invested heavily in Canadian exploration companies with a flair for precious metal companies and is delivering a keynote address at PDAC, said it’s only a matter of time before gold hits US$3,000 per ounce.

“In reality, gold can get to US$8,000,” he said.

Gold prices started rising significantly in 2023 as central banks in China and other countries stepped up purchases for their reserves.

In reality, gold can get to US$8,000

Eric Sprott

“They really stepped up to the plate after the Russia-Ukraine conflict ignited,” said Ryan McIntyre, a managing partner at Sprott Inc., a global investment manager founded but no longer affiliated with its namesake billionaire.

He said the increased bullion purchases by central banks were a response to sanctions on Russia that froze many of its assets that were denominated in U.S. dollars. Afterwards, he said countries realized that gold looked more attractive as an independent store of value.

Still, he said many Western investors and financial institutions haven’t stepped up their exposure to gold because other investments have performed so well.

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“I think people have done so well with generic, call it S&P 500 stuff, they haven’t really had to worry about it,” he said.

Sprott said that may be changing as the U.S. equity markets suffer.

“The things that people are used to putting money into are showing signs of strain,” he said.

To the moon

Striking the mother lode, a.k.a. finding a high-grade, large-scale mineral deposit, has long been considered one of, if not the, hardest parts of the mining business.

What used to be a practice that began with prospectors walking hills and kicking rocks in search of something shiny or at least different has started to dramatically change.

Now, companies such as Fleet Space Technologies Pty Ltd. are combining satellite imaging and artificial intelligence to model mineral deposits.

In December, Teachers’ Venture Growth, the late-stage venture and growth investment arm of Ontario Teachers’ Pension Plan, led a US$100-million funding round for Fleet Space, which is based in Australia.

This year, company co-founder and chief executive Flavia Tata Nardini, who has a background in aerospace engineering, is also giving a keynote speech at PDAC.

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Her company’s clients have included Barrick Gold Corp. and Rio Tinto LLC, among other major mining companies.

In addition to exploring subsurface mineral deposits on Earth, the company is planning to deploy a geophysical device to the moon in 2026.

“Humanity is on the brink of making tremendous strides in our scientific understanding of the lunar regolith by using advanced seismic technologies to acquire deeper insights about the Moon’s subsurface,” Matt Pearson, co-founder and chief exploration officer at Fleet, said in a release about its mission to the moon.

• Email: gfriedman@postmedia.com

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