Metals & Mining Theme, Non-Ferrous

February 03, 2025

Canadian miners can weather tariffs, may profit on strong US dollar

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HIGHLIGHTS

Canadian miners look to customers outside US

Weaker Canadian dollar will boost profitability for miners

Many Canadian mining companies will shrug off US President Donald Trump's looming tariffs and sell metals and minerals to other buyers in global markets, Pierre Gratton, president and CEO of the Mining Association of Canada, said in an interview.

Trump on Feb. 1 announced a 25% tariff on most Canadian imports and a 10% tariff on imports of energy resources, which includes coal, uranium and critical minerals.

"We are not the most vulnerable of sectors from these measures, because we sell commodities that are internationally traded," Gratton said. "You're not selling bread or frozen foods — consumer goods — where US competitors can, because of a tariff, eat into your market share."

The US tariff measures are set to go live Feb. 4, leaving little time for Canada and the US to avoid a costly trade war. Still, there remained the possibility of a reprieve, as Trump announced on Feb. 3 a one-month delay to tariffs on goods from Mexico after speaking with President Claudia Sheinbaum.

Trump said on social media on Feb. 3 that he had spoken with Canadian Prime Minister Justin Trudeau and was set to speak with him again later in the day.

Otherwise, the Canadian mining industry was still gearing up for the US tariffs and Canadian countermeasures that could drive up prices of products crossing the border in both directions.

In many cases, Canadian miners do not depend on the US as a customer, and if they do, they can find ready buyers for their metals outside the US, Gratton said.

"Probably all [British Columbia] miners — where most of Canada's copper comes from — export to Asia, not the United States. So the tariffs don't hurt directly," Gratton said.

Canadian leaders have repeatedly flagged US dependence on metals and minerals from Canada. In 2023, Canada was the top US source of metals and minerals with $46.97 billion worth of imports, according to US International Trade Commission data.

Canada is also a big gold producer and accounted for 5.8% of global output in 2023, according to S&P Global Market Intelligence data. But gold miners are not tied to US customers, Gratton said.

"You can put it on the plane. You can sell it anywhere. It doesn't make a damn bit of difference. They'll just bypass the United States," Gratton said.

Gold is a relatively rare, high value metal that investors and central banks hoard as a safe-haven asset and an alternative to currencies.

In response to Trump's punitive trade measures, Canada announced a 25% tariff on C$155 billion worth of goods. The country will start with a 25% tariff on C$30 billion worth of US imports, and impose the balance 21 days after Feb. 1, when the policy was announced.

The countermeasures could have a negative impact on the US suppliers of some inputs to Canadian miners, Gratton said.

Canadian miners are "starting now to look at alternative sources, which is going to hurt the Americans because we're going to be buying less from them," Gratton said.

Stronger dollar helps miners

Meanwhile, Gratton noted that the economic uncertainty caused by tariffs has weakened the Canadian dollar, which can benefit miners selling commodities typically priced in the stronger US dollar. The result is that miners make more money in Canadian-dollar terms, which then goes further in covering operational costs in Canada including labor and energy.

Labor and energy are typically a mine's biggest costs.

"On balance, a lower Canadian dollar is actually a buffer against these tariffs," Gratton said.

If the tariffs go ahead, US buyers will have to pay more for Canadian metals and minerals. In some cases, the US may not have quick alternatives to cover supply.

This is especially true for metals such as aluminum and nickel. The US depends on Canada for more than half of its aluminum supply and 60% of its nickel comes from Canada, while the US can't easily build domestic capacity, Gratton said.

US buyers could shift nickel purchases to non-Canadian sources, such as Indonesia, though Gratton said Canada's proximity makes Canadian nickel much cheaper to transport.

The US has "one nickel mine near end-of-life. They have no nickel refining capacity. They're punishing themselves," Gratton said.

Lundin Mining Corp.'s Eagle nickel-copper mine in Michigan is scheduled to close in 2027.


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