PDAC: Trade war could fast-track mine approvals, panelists say

Could the escalating trade war with the United States unwittingly spur Canadian authorities to cut approval times for much needed mines and natural-resource projects? Some investment bankers think so.

Citing “national emergency” motives, US President Donald Trump on Tuesday slapped 25% import tariffs on most Canadian goods and 10% on energy and minerals. That prompted Canada to retaliate with C$30 billion worth of duties against its biggest trading partner. Another C$125 billion worth of Canadian levies are set to come in about three weeks after the government consults with industry, Prime Minister Justin Trudeau said.

“Maybe the one good thing about Trump is the slap in the face we need to build pipelines and build mines in this country,” Ted McGurk, head of investment banking at TD Securities in Vancouver, said Tuesday during a panel discussion at the Prospectors & Developers Association of Canada annual conference in Toronto. “We’re a resource country, and government needs to get out of the miners’ way. They are the biggest impediment to the industry, and they need to realize that.”

Drawn-out permitting timelines have been a long-standing irritant for miners in Canada. As a result, governments nationwide have been pledging to cut red tape to bring mines into production faster.

‘Build them faster’

The current trade tensions are serving as a new push for governments to rethink their regulatory processes around mines, said Josh Goldfarb, a Toronto-based managing director in BMO Capital Markets’ metals and mining group.

“The impact of everything that’s happening is rethinking the regulatory framework,” he said. “Is there a way to move quicker in a responsible way?”

McGurk cited the case of an unidentified Canadian company that started working on a permitting application for a mine in 2012. If all goes well, it’s now expecting to get the permit in two years.

Canadian miners are hardly alone in facing higher regulatory hurdles. It now takes about 17.9 years to build a gold, copper, nickel or lithium mine, up from 12.7 years for projects that started 15 years ago, according to S&P Global data released last year.

While rising commodities prices have boosted mining’s appeal, permitting delays represent a major stumbling block for Canadian miners seeking to raise capital on public markets, panelists said.

“There has to be way more investment quickly,” McGurk said. “If we want to achieve any of our goals on electrification and AI, we need more and more minerals and metals. Strong commodity prices definitely help, but we have to get risk out of the business, and the permitting timelines have gotten ridiculous. Our governments have to do more.”

Tap Canadian riches

Although it’s too early to say whether the tariffs will remain for the long term, Canada should do everything it can now to crank up mining output regardless of how the trade war unfolds, said Steven Reid, head of CIBC Capital Markets’ global mining group in Toronto.

“We’re in a very volatile time,” he said. “In any outcome here we’re going to need more resources. Canada is incredibly rich in mineral resources. All this uncertainty still sets Canada up very well. They’re going to need all this stuff and we have it.”

Coupled with strong demand dynamics, the current geopolitical uncertainty should make Canadian miners even more attractive to investors, Reid said.

“The investment case for commodities is very strong,” he said. “There’s not enough deposits out there. We’re seeing growth in demand in the medium to long term. Precious metals prices are up and companies are generating more cash flow than before. It takes time but I think you will see more and more capital coming into the space, which hopefully (will) provide a tailwind for equities.”

Miners “are making money,” said Elian Tener, head of global mining and metals investment banking at National Bank Financial. “The sector is investable.”