Philip Cross: Mining rebounds as Canada’s surprising new growth engine

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Success stories are increasingly rare in Canada’s economy. But mining is one. And it’s mainly market-driven.

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These days most public commentary in focuses on chronic slow growth, low investment and stagnant exports. In all this gloom, mining’s buoyancy is a reminder that Canada can still be a beacon for investment and compete successfully in global markets. The sector’s resurgence is an example to our many struggling industries that even a poor decade can be followed by brighter days. Another lesson worth learning: mining’s revival was not due to elaborate government plans for growth clusters, but mostly involved allowing market forces to operate.

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Mining’s recovery over the past two decades has been truly remarkable. The industry contracted steadily in the 1990s. Slumping demand and depressed prices on world markets caused output to decline. Investment plumbed depths so low that mining’s capital stock fell outright. Not surprisingly, employment also fell. At the time, many analysts believed all these negative trends signalled the end of mining’s place among Canada’s growth leaders.

Instead, the doldrums of the 1990s were followed by two decades of spectacular growth. Record high prices on global markets boosted exports, investment and employment to their highest levels ever. Led by gold, potash, copper, nickel, iron ore and even coal, metals and minerals are now Canada’s second largest export sector behind energy. But few Canadians seem aware of mining’s turnaround.

Mining’s nominal GDP is now $61 billion per year, more than double its pre-pandemic high. Its share of GDP is up from 0.9 per cent in 2000 to 2.0 per cent, no mean feat when each tenth of a point represents $3.1 billion. This surge reflects both higher production volumes and consistently higher prices for mining products. In fact, mining prices have risen more than any other commodity’s. Energy prices get most of the public’s attention because of the impact gasoline and home heating bills have on household budgets. But prices for metals and minerals have increased almost three times faster than energy prices since 2000.

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Mining’s record volume of production in 2024 brought its total real growth since 2009 to 88 per cent, putting it in the vanguard of Canada’s growth industries. And its surge has benefited most provinces: almost all have a significant mining industry, often in remote areas where opportunities for economic development are rare.

Investment has taken off in almost all areas of mining since 2021. Gold and potash stand out with exceptional gains. Investment in gold totalled $19.0 billion over the last three years as high prices spurred producers to search for new deposits. As recently as 2007, gold attracted less than $1 billion of investment. Potash investment has also mushroomed since 2021, with outlays of $10.5 billion.

But capital spending has been buoyant in almost all other areas, too. Nickel and copper attracted record investment of nearly $2 billion in each of the past three years. Iron ore posted its best three years since 2011. Investment in coal mining tripled from its lows a decade ago, belying its reputation as a dying industry a world weaning itself from fossil fuels wants to shun. Although domestic coal consumption has fallen, overseas demand, mostly from Asia, has accelerated and now accounts for nearly three-quarters of export sales.

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Mining exports more than tripled after 2003 to become Canada’s second leading export after energy. Gold exports spearheaded the gain, more than tripling since 2016 to a record $4.9 billion last November. Without fanfare, gold has become Canada’s second largest export, ahead of the value of all vehicle exports. The strength in mining exports extends to iron ore, potash, aluminum and copper. And the market for mine output is much more diversified than for energy and autos, Canada’s other two largest exports, which go mainly to the U.S. In 2023, 44.1 per cent of metal and mineral product exports went overseas.

Canada also exports technical expertise in mining engineering and finance. It’s said that every major mining site in the world employs Canadian know-how. The Toronto Stock Exchange is the world’s largest source of finance for mining projects, with 40 per cent of the world’s public mining companies listed on it, reflecting decades of experience evaluating and financing mining projects. Exporting expertise brings the mining industry lots of income, on top of the export earnings from minerals.

As Canadians in other industries struggle with slow growth, weak investment and low productivity that hinders our export competitiveness, the recent boom in mining stands out as an example of how our resource base can help strengthen our economy — when government stops erecting barriers to its expansion.

Philip Cross is a senior fellow at the Macdonald-Laurier Institute.

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