Looking Ahead – Canadian Mines Prepare for 2025

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Looking Ahead – Canadian Mines Prepare for 2025

January 29, 2025

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As Canadian mines consider their plans for the coming year, the industry remains a mainstay of the Canadian economy and a key player in the global mining sector. In 2025, we will see a balanced approach. On the one hand, demand for energy and precious metals will remain strong, and the pace of development in these sectors will continue. On the other, capital has become a number one concern as investors demand greater fiscal accountability.

SMS Equipment will remain active as a collaborative growth partner, working with Canadian mines to ensure that their substantial investment in equipment is financed according to their cash flow cycles, and that the equipment delivers a full complete and uninterrupted productive advantage throughout its lifecycle.

Demand Remains Strong

Political instability in energy-producing regions has created concern in the West about energy security, boosting demand for Canadian oil and gas. Accordingly, The Canadian Association of Energy Contractors (CAOEC), in a press release on November 29, 2024, predicted the highest level of drilling since 2015. Completion of the Trans Mountain Expansion (TMX) and LNG Canada pipeline projects will increase Canada’s oil and gas delivery capacity, increasing the opportunities for further exploration.

As the global movement towards electrification gathers momentum, demand will remain strong for copper, nickel, lithium, cobalt, and rare earth elements. While the electric vehicle sector experienced less than expected demand in 2024, as reported by Reuters on September 12, 2024, demand for minerals used in batteries, such as lithium, saw a decline. However, according to market intelligence firm NaI500, lithium is likely to recover in 2025 as surpluses are depleted. Exploration and development are expected to intensify, aided in some cases by the Canadian Government’s Critical Minerals Strategy.

Concerns about Capital

In EY’s “Top 10 Risks and Opportunities in Mining and Metals Report for 2025”, respondents ranked capital as the top risk facing the sector, overtaking environmental, social, and governance (ESG) concerns. This reflects growing pressure from investors to be able to demonstrate how their money is being spent. Canada, however, has managed inflation better than most of its peers, giving it the freedom to lower interest rates in order to encourage investment.

The failure last summer of a tailings dam near Mayo, Yukon has raised concerns about environmental risks, and is expected to delay investments and development in the region and potentially in other areas.

Concerns about capital will affect how companies manage their substantial ongoing investment in equipment, and SMS Equipment is committed to helping them maintain a high level of transparency and fiscal common sense.

From ESG to Environmental Stewardship

2024 saw retrenchment in many sectors from their previous stances on ESG and DEI – programs that SMS Equipment remains firmly committed to. Mining has been a mixed bag in this respect. On one hand, investors have called for companies to pay less attention to renewable energy and sharpen their focus on the bottom line. Conversely, mines continue to invest in technologies that reduce energy consumption, such as electrification and smart mining control systems.

Furthermore, mines continue to improve their stewardship of the land on which they operate, according to EY Canada, a member firm of Ernst and Young Global. For example, more Canadian mines emphasize water management, as outlined in The Mining Association of Canada’s Water Stewardship Protocol, and are experimenting with methods to improve safety and reduce environmental impact. Last but not least, we expect the dialogue with Indigenous communities to grow stronger as mines find new ways for the two groups to work together.

Labour Shortages

The difficulty of recruiting employees in mining is a perennial challenge that hasn’t abated for years. In Canada, this is compounded by the difficulty of finding people to work in remote regions like Northern Alberta or Saskatchewan. We are by no means immune to this challenge at SMS Equipment, and we believe that all of us in the mining community are in this together – the more each of us can do to welcome people into our industry, the better we all do in the long run.

SMS Equipment has met this challenge in several ways. One is to encourage more women, who are under-represented in mining, to join our ranks. We proudly report that some of our most inspiring success stories are about women who have taken on this challenge. Other strategies are working closely with Indigenous communities, from which we’ve recruited some of our most talented individuals, and supporting and working closely with government apprentice programs in our community colleges.

Mining offers a promising career path for young people, and we hope this message continues.

The Bottom Line - Partnerships Matter

At SMS Equipment, one of the trends we are seeing for 2025 is the increasing need for mines to work with strategic partners to mitigate their risks. This isn’t news – our customers have been telling us for years that “going it alone” is no longer a viable approach. The risks inherent in investing millions in mining production equipment are substantial, and mines need partners to help reduce the foreseeable downsides of that.

We at SMS Equipment believe that as the largest independent supplier for Komatsu in Canada, it is incumbent on us to serve this vital role. We are committed to working with our mining customers openly and transparently to ensure that their equipment strategy aligns with their business strategy. When our customers succeed, we succeed.

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