Canada has Resources
When someone considers Canada, the first things that pop up
in the mind are- maple leaf, harsh winter, and….natural resources!
Canada has natural resources like Saudi Arabia has oil and
South Africa has diamond. Its no surprise that Canadian economy is largely
resource based. With 1.7 trillion barrels of oil and plenty of gold and timber,
Canada’s resource sector is the backbone of its triple-A rated economy.
Not only extracting and utilizing these resources from Mother
Nature, the Canadians have taken this resource expertise to global level. They haven’t
been content to stay home and ply their trades domestically. They are more
adventurous than that. “Canadian know-how” has left few areas of the earth
unexplored. Presently Canadian mining companies operate in 350 off-shore mines
in different parts of the globe. They search for silver in Mexico and South
America, gold in China, platinum in South Africa, diamonds in Namibia, oil in
Indonesia, Iron from Sweden…well you get the picture.
Abundance above and
beneath the Earth
Natural Resources- categorized as forests, minerals and
metals, energy- form the backbone of the economy. These sectors have been
engine of economic growth and job creation for generations. In 2009 alone, the
sectors generated 11 percent, or $133 billion, of Canada’s GDP and directly
employed 759,000 people.
Canada’s considerable natural resources are spread across
its varied regions. In British Columbia the forestry industry is of great
importance, while oil and gas industry is important in Alberta and Northern Ontario is home to a wide array of mines.
Canada is a world leader in the production of many natural resources such as
gold, nickel, uranium, diamond and lead. It also is endowed with mineral
resources of coal, copper and iron ore. Several of Canada’s largest companies
are based in natural resource industries, such as EnCana (TSX: ECA), Cameco
(TSX:CCO), Goldcorp (TSX: G) and Barrick Gold (TSX: ABX).
Gold
Canada is the 8th largest gold producer in the
world. As per 2011 estimate, 101 MT or 3.6% of global production was made in
Canada.
The west of township of Timmins, located in the famous
Abitibi Greenstone belt in Ontario-Quebec border is the major center of gold
play. So far, 180 million ounce of gold have been found and 70 million ounce
have been mined. Another prospecful area is the Yukon Territory. Since the
famous Klondike Gold Rush in 1897, a new episode of New Yukon Gold Rush is
taking place. It’s mainly happening due to the placer gold, washed by water and
gravity, originating from a distant source. It is estimated that the amount of
placer gold would be around 160 to 180 million ounce range.
Minerals
Many minerals are found within ancient rocks of the Canadian
Shield, which is located in Central and Eastern Canada. Canada leads the world
in the production of uranium, which is the fuel for nuclear power stations.
Modern energy-hungry world will be hell-bent to get access to this precious
radioactive metal. Canada is also the leading producer of potash- used for
making fertilizers- with 33 percent of world’s supply (in 2005).
Fossil Fuel Resources
A new source of oil- oil sands- is being exploited in places
such as Fort McMurray in northern Alberta. This is a mixture of thick oil and
sand that is dug up and heated, releasing the oil which is then piped off.
Known as Athabasca oil sands, this vast reservoir in Alberta give Canada the world’s
third largest reserves of oil after Saudi Arabia and Venezuela, according to
USGS.
Canada currently
ranks as the world’s sixth largest producer of crude oil after Saudi Arabia,
Russia, U.S., China and Iran, according to U.S. Energy Information
Administration. Resurging growth in Western Canadian oil production and new oil
sands investments drive the positive outlook. Canadian oil production is poised
to more than double to 6.2 million barrels per day by 2030, which will put Canada
in the top three to four oil producers in the world.
Global Center for
Resource Financing
Toronto, Canada’s largest city and commercial center, is
generally viewed as the mining finance capital of the world. Toronto is home to
the Toronto Stock Exchange (TSX), to more than 400 mining and exploration
company offices, over 30 mining company head offices and several hundred mining
suppliers, consulting firms and service providers. The TSX is the global
destination for financing international projects. During the last five years,
32 percent of global mining capital and 82 percent of financing transactions
were handled through the TSX.
Future of Resource
Based Economy
Countries with treasure troves of natural resources
ordinarily experience currency appreciation during commodity bull markets. It
is evident from the U.S. dollar and the loonie (Canadian currency) being in
parity right now. And considering the
commodity super cycle we are currently in, we suggest the bull market in
Canadian dollars still has many years to run. The stocks in TSX and TSX-Venture also have yielded explosive gains
during these times. Especially the junior mining stocks have been showing
valuable returns.
