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TORONTO (miningweekly.com) – Professional services firm EY’s quarterly ‘Canadian Mining Eye’ index fell 15% in the September quarter, paring a 9% gain during the previous quarter.
The firm said on Thursday that the fall in the index was in line with the S&P/TSX Composite index, which also plummeted 15% during the period, while the London Metal Exchange index (LMEX) decreased 4% during the quarter.
“In the last quarter, companies continued to focus on strengthening their core businesses by accelerating development of projects, increasing production, managing costs and adding attractively priced assets to their portfolio for strategic objectives.
Still, the M&A [mergers and acquisitions] momentum we witnessed over the last few months is unlikely to die down soon, as companies will continue to look for attractively priced assets for a long-term strategic advantage,” EY’s Canadian mining and metals leader Bruce Sprague said.
Canadian mining equities had suffered owing to a fall in metal prices across the board, especially gold prices, as a result of the strengthening US dollar. The growing uncertainty around the global macroeconomic situation led to investor caution and fuelled the decline in metal prices over the three-month period.
Gold prices slipped 8% in the quarter, reaching a low of $1 131.85/oz last week and continued trading below $1 200/oz this week, after increasing 9% in the first half of the year.
The steady appreciation of the US dollar since June, which hit a four-year high on October 3, also weighed heavily on gold prices that were simultaneously buffeted by sluggish demand in China and India. Following a similar trend, spot silver prices fell by 5% over the third quarter.
A stronger US dollar also hurt prices of industrial metals. Copper prices declined 5% on the LME in the quarter amid concerns regarding slowing growth in China, the world’s biggest consumer of the red metal. A financing scandal at the Chinese port city of Qingdao that had broader implications also triggered a pullback in copper prices.
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