Some minerals are 'critical' to the digital economy, but current prices don't reflect that

For almost a century now, players from across the mining industry — big or small, Canadian or international — have been gathering in Toronto annually to talk about capital, technical innovations, and market trends. 

This year's Prospectors & Developers Association of Canada (PDAC) convention is no different, with some of Canada's critical mineral explorers hoping to close deals that will help overcome a tough year in the capital markets. 

That's especially the case for those looking for nickel, lithium or cobalt, some of the building blocks of the technology that will eventually help combat climate change.

"I've been in the industry since 1987. I'm quite familiar with the cycles, the ups and downs," said Alain Lambert, co-founder of Ontario's Beyond Lithium, which has 63 properties across the province.

"But that last part of 2023 and so far in 2024 has probably been one of the most challenging environments for junior mining companies."

These companies make up most of the mining project operators in Canada. They typically have no operating revenues and rely on equity financing to do their higher-risk, early stage exploration work.

Natural Resources Canada is projecting some $4 billion will be spent on mining exploration and deposit appraisal in Canada in 2024.

That is relatively high, historically speaking, but doesn't necessarily reflect how much money is coming into the sector, especially for those looking for critical minerals.

According to data from TMX Group and PDAC, the share of money going to mineral exploration from the overall amount of money raised by the mining industry equity has been decreasing for three years in a row.

Junior mining companies depend on strong commodity prices to convince investors to put their money in the ground.

And nowadays, prices are rocky, even by mining industry standards.

The price of nickel — a mineral used to produce stainless steel, alloys, and the batteries used in electric vehicles —  jumped in the early days of the war in Ukraine to historic highs, but has now collapsed in response to increased supply from Indonesia, creating market uncertainty for years to come. 

Companies with deep pockets — like Wyloo Canada, which owns the high-grade Eagle's Nest project in Ontario's controversial Ring of Fire region — are able to wait out the market slump. 

"We're taking a longer term look at how we develop and where we deploy funds," said CEO Kristan Straub.