Philip Cross: Mining rebounds as Canada’s surprising new growth engine

By Philip Cross – Financial Post

These days most public commentary in focuses on chronic slow growth, low investment and stagnant exports. In all this gloom, mining’s buoyancy is a reminder that Canada can still be a beacon for investment and compete successfully in global markets. The sector’s resurgence is an example to our many struggling industries that even a poor decade can be followed by brighter days. Another lesson worth learning: mining’s revival was not due to elaborate government plans for growth clusters, but mostly involved allowing market forces to operate.

Mining’s recovery over the past two decades has been truly remarkable. The industry contracted steadily in the 1990s. Slumping demand and depressed prices on world markets caused output to decline. Investment plumbed depths so low that mining’s capital stock fell outright. Not surprisingly, employment also fell. At the time, many analysts believed all these negative trends signalled the end of mining’s place among Canada’s growth leaders.

Instead, the doldrums of the 1990s were followed by two decades of spectacular growth. Record high prices on global markets boosted exports, investment and employment to their highest levels ever. Led by gold, potash, copper, nickel, iron ore and even coal, metals and minerals are now Canada’s second largest export sector behind energy. But few Canadians seem aware of mining’s turnaround.