NEWS RELEASE: Commodity expert provides outlook for OMA members’ products

This article was provided by the Ontario Mining Association (OMA), an organization that was established in 1920 to represent the mining industry of the province.

Commodity expert Patricia Mohr delivered two primary messages to Ontario Mining Association directors recently – China continues to supplant the United States as the main driver of the global economy and the Canadian economy would benefit from new pipelines for oil and gas. Ms Mohr, Scotiabank Vice President of Economics and Commodity Market Specialist, was the featured speaker at a recent OMA board of directors meeting. Her address was titled “Metal Prices, Currencies and Global Growth.”

“China is all dominant in the commodity markets. It would get the gold medal for economic growth around the world,” said Ms Mohr. “China is buying base metals at four times the rate of the United States and China is buying 45% to 50% of the world’s steel.”

These statistics are based on a blended index for nickel, copper, zinc and aluminum, which indicates China consumes 44% of the global supply of these metals and the U.S. consumes 10%. She sees China’s economic growth at 7.9% in 2013 and 8% in 2014.

“The once a decade change in leadership in China is now as important to global economic growth as the U.S. presidential election,” she said. “There have only been five leadership changes in China since Mao.” She sees this new leadership moving in a direction, which will continue development in China but in a more environmentally friendly fashion while raising living standards.

Ms Mohr pointed out that while consumer spending is 71% of the U.S. GDP, in China consumer spending accounts for 35% of the GDP and is likely to grow. In using vehicle ownership as an example, she noted that in 2011, 793 Americans per 1,000 people owned cars, while in China the comparable number is 70. “The average person in China does not currently own a motor vehicle but he wants one.”

In general, she foresees the prices for metal products produced by OMA members as being relatively flat in the near future but with a pick-up in prices due to higher demand coming in the second half of this decade. “I have a lot of faith in China, I see it with my own eyes,” she said. “I was in China one and one half weeks ago and I can tell you building is still proceeding.”

Closer to home, she sees the need for pipelines for ship petroleum products to Atlantic and Pacific ports as vital for the future of the Canadian economy. “We have in Canada an oil dominated economy, which is why pipeline issues loom large,” she said. “I think the number one issue for Canada is the need to build new pipelines.”

“We need more oil export optionality. We could be exporting crude oil through eastern Canada,” said Ms Mohr. “This is a huge opportunity for the Canadian economy.” She also foresees the launch of LNG (liquefied natural gas) projects in British Columbia before 2020.

Ms Mohr developed the Scotiabank Commodity Price Index, which was the first yardstick designed to measure price trends for Canadian commodities in export markets. It was introduced in 1987. In 2012, she won the Metal Bulletin Apex awards for the most accurate gold and overall precious metals price forecasts throughout the year.

The OMA regularly has experts in various fields share their perspectives and predictions with its members. Recent, speakers at board meetings have included Darrell Bricker, Chief Executive Officer of Ipsos Global Public Affairs; Gareth Watson, Vice President Investment Management and Research at Richardson GMP; Don Drummond; and University of Toronto economists Peter Dungan and Steve Murphy, who produced the economic impact study “Mining: Dynamic and Dependable for Ontario’s Future.”