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The former president of Franco-Nevada (TSX: FNV; NYSE: FNV) and Newmont (NYSE: NEM, TSX: NGT) said in a phone interview this month. “Essentially, mining has been ignored.”
Pension funds don’t invest in major Canadian mining companies, but Canadian mining companies may invest in juniors, in part because there are few domestic options left. Switzerland-based Glencore (LSE: GLEN) acquired most of Teck Resources (TSX: TECK.A/TECK.B; NYSE: TECK) coking coal assets in November for approximately C$9 billion. , the latest major deal to skim Canadian assets.
Xstrata, now part of Glencore, acquired nickel giant Falconbridge for C$39 billion in 2006, and in the same year Brazil’s Vale (NYSE:VALE) acquired the country’s other major nickel producer Inco for C$19 billion. Purchased for Canadian dollars. Australia’s Rio Tinto (NYSE: RIO, LSE: RIO, ASX: RIO) acquired aluminum producer Alcan for C$38 billion a year later. Mr Lassonde and Mr Giustra said investments in pension funds may have contributed to his staying.
“We’re talking about very large companies, mining giants, that lost out to foreigners,” said Giustra, founder of Lions Gate Entertainment.Fahrenheit 9/11,hunger game) and helped launch Wheaton Precious Metals (TSX: WPM, NYSE: WPM, LSE: WPM) and Endeavor Mining (TSX: EDV, LSE: EDV).
“These are not risky enterprises. This was the backbone of mining in this country.”
Erosion of rules
In fact, Canadian pensions were required to invest 90% of their assets domestically in 1990, but the federal government gradually lowered that restriction until it was completely removed in 2005. Total domestic exposure as a percentage of assets starts at 55% held by Ontario Health Care Pensions. 13% are plans managed by the Public Sector Pension Investment Corporation (PSP). The average for other pension funds around the world is 52%, Letko-Brosseau said.
Pensions are the largest source of wealth for many countries, holding approximately $50 trillion worldwide. According to the International Energy Agency, to achieve net-zero emissions by 2050, annual investment in clean energy around the world will need to more than triple to about $4 trillion by 2030. there is. Just mining enough battery metal over the next three years will cost as much as $450 billion, according to the agency. In 2022, Ottawa budgeted nearly C$4 billion to spend on critical minerals through 2030, but it’s unclear how pension funds will be involved in supporting projects.
“The Government of Canada continues to engage with key mineral stakeholders, including pension plans and other institutional investors,” federal Ministry of Natural Resources spokesperson Michael McDonald said in an emailed response to questions. ” he said.
McDonald’s mention of the pension fund was the only one in an otherwise page-long list of government programs derived from the Significant Minerals Strategy. He will explain how the Canada Development and Investment Corporation (CDEV), a federal corporation that advises governments on fiscal matters, will help mining companies access funding from the C$15 billion Canada Growth Fund. suggested that it was a possibility. CDEV was unable to respond in time for this matter.
pension mom
Pension funds themselves were even more reluctant to discuss the issue. The only organization that responded to an email seeking comment was the Caisse de la Provincial du Québec (CDPQ), which Mr. Lassonde praised for the resource funding. Canada Pension Plan (CPP), Ontario Teachers’ Pension Plan (OTPP), Ontario Municipal Employees’ Retirement System (OMERS), and PSP either did not respond or declined to speak.
“CDPQ is active in the mining sector in Quebec and Canada and has an investment team focused on this sector,” Kate Monfette, the pension’s media director, said in an email. “Above all, with funds like Sodemex supporting exploration projects, we continue to keep an eye on developments and opportunities in the mining and materials ecosystem. Our priority is to focus on the most promising companies. The goal is to support the development of companies while delivering benefits to depositors.”
British Columbia Investment Management (BCI) said it has 29.4 per cent invested in Canada and addresses other inquiries in its annual report. Omers said it would not comment on the matter.
Lassonde and Giustra said Canada should consider Australia’s example. The country’s pension fund, known as the superannuation fund, holds A$3.5 trillion (C$3.1 trillion), the third largest after the United States and Britain. Domestic stocks account for 21.9% of assets. Entrepreneurs argued that the high stakes would discourage foreign takeovers.
“That’s what keeps the domestic mining industry afloat,” says Giustra. “We’re a comparable country to Australia in terms of how rich our mining opportunities are, but we don’t have the same opportunities.”
Letko-Brosseau said Canada’s top eight pension funds have invested more in China than in Canadian companies: C$88 billion versus C$81 billion. According to the company, CPP holds 2% of the domestic shares, BCI holds 0.5%, and OTPP holds 0.1%.
economics is required
Giustra said mining CEOs need to lobby pension funds with moral suasion on why they should invest in Canada and make the economic argument. Ta. China is currently struggling with a turbulent real estate market and a long-term population decline, with the boom years over and Canada’s pension fund the world’s second-largest landmass and top-level mining regulations in place. The time has come to repatriate funds to this country where they apply.
Lassonde went further, saying federal and provincial governments need to legislate pension funds to increase investment in Canadian resource companies. He supports Letco-Brosseau’s presentation to the finance ministers of British Columbia and Ontario, as well as officials in Ottawa.
“We’re reaching out to decision-makers to help them understand what Canada stands to lose by doing nothing,” he said. “They created these funds. It is their prerogative to legislate how these funds are managed.”
Private equity firm Fiore has invested in Colombian mine owner ARIS Gold (TSX: ARIS) and Ontario-focused exploration company West Red Lake Gold Mines (TSXV: WRLG). – Giustra, who heads the group, said the Canadian asset manager has cut back on dedicated non-pension mining. The size of the fund will increase from C$16 billion in 2010 to C$2.8 billion in 2022.
“The industry is starving because there’s just not a source of capital,” he says. “We don’t have senior citizens to fund it, we don’t have pension funds, and we’ve lost traditional mining funding here as well.”
Lassonde, who led the investor group that put together a proposal for Teck’s coking coal assets in May, which later lost out to Glencore, said he had reached out to BCI and Ontario Pension for comment but received no response. Ta.
“If you want steel, and you want the lowest-carbon steel in the world, that’s coal, that’s fine, but there was no one to talk to,” he said. “In Australia, this transaction could have been completed in about five days.”
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