Increases in the world prices of gold and silver will bolster industry operators' profit margins.
New York, NY (PRWEB) October 03, 2014
Operators in the Gold and Silver Ore Mining industry in Canada have exhibited growth over the past five years. As investors flocked to the precious metals during the recession, rising gold and silver prices helped bolster the industry's performance and profitability over the period. “However, costs have been increasing for many industry operators, creating a challenging operating environment for small-scale companies,” according to IBISWorld Industry Analyst James Crompton. In the five years to 2014, industry revenue is anticipated to increase at an annualized rate of 5.9%.
The world price of gold is expected to increase at an annualized rate of 5.9% over the five years to 2014. However, the world price of gold fell 15.5% in 2013 and it is expected to fall 8.3% in 2014. As economic conditions have improved around the globe, gold and silver prices have eased. The world price of silver is projected to decrease by 15.8% in 2014; this follows drops of 11.7% and 23.4% in 2012 and 2013, respectively. Consequently, industry revenue is forecast to decrease by 14.1% in 2014 to $5.6 billion. “Though profitability remains strong for most large companies, smaller operators have experienced difficulties as prices have fallen rapidly,” says Crompton. Therefore, merger and acquisition activity has persisted over the past five years. For example, Agnico Eagle Mines Limited and Yamana Gold Inc.'s joint acquisition of Osisko Mining by June 2014 displays the competitive nature of the acquisition activity in the industry.
Industry revenue is projected to increase in the five years to 2019. Though investor sentiment has improved greatly since the recession, demand for gold and silver will continue to be strong as more conservative investors seek safe alternatives to equity markets. Merger and acquisition activity will likely continue over the next five years, as new mining projects are slow to enter production. The largest companies, Goldcorp and Agnico Eagle Mines Ltd., will likely continue competing for market share through acquisitions, as these companies have the scale and access to capital to aggressively pursue small-scale operations.
For more information, visit IBISWorld’s Gold and Silver Ore Mining in Canada industry report page.
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IBISWorld industry Report Key Topics
This industry mines and prepares ores valued primarily for their gold or silver content. Some companies process ore into concentrate or bullion on site, while others maintain refining facilities abroad. Companies in this industry also can store and delay the sale of their output to speculate commodity price fluctuations.
Key External Drivers
Industry Life Cycle
Products & Markets
Products & Services
Globalization & Trade
Market Share Concentration
Key Success Factors
Cost Structure Benchmarks
Barriers to Entry
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