What does BMO Capital Markets’ involvement in Canada’s mining sector look like?

Metals and Mining is one of the most important sectors that BMO Capital Markets serves in Canada and globally. As an example of our recent activity here, we advised Kirkland Lake Gold during their merger with Agnico Eagle, which was one of the largest ever mergers in the gold sector. We also advised Pretivm Resources on their sale to Newcrest Mining, another incredibly large transaction.

How do you predict this type of M&A activity will impact the operational efficiency of the industry?

In the gold sector, we see a trend towards consolidation. This is good for investment because it makes companies stronger financially and better positioned to take on new projects and growth. I believe we will also see increased M&A activity in metals used for the energy transition. For example, we saw Rio Tinto recently acquire a lithium project in Argentina and BHP attempted to acquire a nickel development project in northern Ontario. Ultimately M&A activity of this nature will facilitate the development of mining projects, which involve significant financial and operational risks, and which larger companies are often better equipped to face.

In what ways will increased demand for battery metals influence the markets moving forward?

If you spoke with investors five years ago about lithium, most of them would not understand or would be careful about investing in lithium companies. Today, lithium is well understood by investors, and good lithium projects can find capital. The same will happen for other energy transition materials, such as graphite and rare earth metals. The knowledge supporting these resources is still a bit behind the curve compared with lithium, but we can see the progression.

To what extent do mining companies have to factor environmental concerns into their operations to receive funding in today’s investment climate?

It’s a central concern for mining companies. As an example, mining companies are highly conscious of the fact that if they are producing resources that will be used in making battery cells; doing so with coal power plants or other carbon-intensive measures is counterproductive. The number of mining companies that have incorporated net zero targets into their strategies has jumped over the past year. Whereas it used to be a few, now most major producers have projects in place to reduce their carbon footprint. The same applies to new projects. If you are building a new project and say it will be all hydroelectric with an electric fleet, you will have a much better chance of attracting capital.

How important is it for North America to have its own localized source of critical resources?

If you stood in front of investors a year ago and said your project was based in a Western world jurisdiction close to the source of demand for your product, that would have been seen as an advantage. This advantage has only grown, given recent geopolitical turmoil and most recently the adoption of the Inflation Reduction Act in the US, which includes strong incentives for electric car makers to source critical materials from Western world jurisdictions. Currently, several critical materials such as graphite and lithium come mainly from China. This is a huge opportunity for Québec, which could not only become a key supplier of key raw materials, but also of value-added battery materials.

Looking ahead, how do you see increased activities in Québec’s mining sector impacting demand for BMO Capital Markets’ services?

In Québec there is a good alignment between the government, project developers and producers, the investment community, and many in the general population. There is a view that responsible mining and transformation, particularly for critical minerals, is a wise strategic investment. As such, projects in Québec have higher chances of being developed than projects in other parts of the world. I see potential for BMO Capital Markets to have significant growth in this segment, especially as the trend towards producing materials in safe jurisdictions with the best environmental standards becomes increasingly important. From our perspective, this activity will drive a need for capital, strategic advice, and M&A guidance, and BMO Capital Markets will continue to be there to support companies active in Québec.