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 told miners that global economic forces indicate improvement in markets for Ontario minerals. Ms Mohr, Scotiabank Vice President of Economics and Commodity Market Specialist, was the featured speaker at an OMA board of directors meeting held earlier this month. Her address was titled “Price Outlook for Base and Precious Metals 2014 – 2015.”
“Prices for base metals appear to be bottoming,” said Ms Mohr. “There are reasonable hopes for a rebound in the next two years.” 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. The index is weighted approximately 40% for oil and gas, 30% for minerals, 15% for forest products and 15% for agriculture products.
“We think the U.S. economy is on the cusp of a stronger recovery based on the most recent job number reports, lower consumer debt and improving mortgage affordability,” she added. “However, China still gets the gold medal among countries for economic growth.”
Although China’s growth rate is slowing a bit from the hectic pace of 7.7% in 2013 and 2012, it is still predicted to be more than 7% in 2014 and throughout the balance of the decade. China is consuming key metals at four times the pace of the U.S.
Ms Mohr said China is consuming about 44.3% of global copper production, 48% of nickel output, 45% of zinc production and 48% of aluminum supply. She added that “China has an absolutely enormous motor vehicle sector, which is very positive for metal markets.”
The number of motor vehicles per 1,000 people stood in 2012 at 794 in the U.S., 588 in Western Europe, 585 in Japan, 81 in China and 24 in India. China is building out auto ownership into the population, which is metal and gas intensive.
On specific projections about future prices for key Ontario metals, Ms Mohr showed gold holding steady and improving gradually, palladium shooting up significantly higher, copper holding its own, zinc rising and nickel continuing to increase, especially in light of the Indonesian ban on nickel exports. Her forecast for palladium is already becoming reality. Strikes in South Africa and the Russian-Ukrainian tensions have this metal’s price poised to reach a 14-year high.
While she also spent time assessing geo-political risks, she stressed the importance of the need for pipeline construction to Canada’s Atlantic and Pacific coasts to get oil and gas exports to foreign markets. Pipeline construction is viewed as essential to future economic prosperity.
The OMA regularly has experts in various fields share their perspectives and predictions with its members. We thank Ms Mohr for her welcome and thoughtful participation in the most recent OMA board meeting.