Resource development and banking-a positive partnership

"PREFACEAt the CIM Annual General Meeting in Quebec City, R.E. Pike of The Toronto-Dominion Bank described how the Canadian banking industry worked with the minerals industry to assemble the large capital requirements for resource projects in Canada and overseas. He developed a profile of the mining industry and Canadian banking, both being important sectors of the Canadian economy and global in context. He also outlined the banking and financing partnership that existed in the past. In looking to the future and challenge that lies ahead f or each industry, Mr. Pike questioned whether the financing practices of the 1970s will be acceptable over the next decade. In that regard, he highlighted the risks that impact on each industry and illustrated how that financing partnership might evolve in response to those forces. The folio wing is a synopsis of his paper.IntroductionThe Canadian mining and metals industry is prominent in the domestic economy and respected internationally. Any measure of its performance illustrates that status-percentage of GNP, employment, exports, capital investment, size relative to other producing nations, etc.Energy, Mines and Resources Canada has forecast that the non-fuel minerals industry will grow in real terms by an average annual rate of 3.0% over the period 1981 to 1991. Using the GNP as reference, that growth in non-fuel mineral production will represent 7.7% of GNP. In translating that growth to capital expenditure, the EMR Canada estimates the aggregate amount at $43.8 billion ('79 dollars) or approximately 12% of total business investment in Canada during the 10-year period.About half of the $43.8 billion will be devoted to the ferrous sector-$8.4 billion in iron ore mining and $12.4 billion in the steel industry. Capital investment in nonferrous s projects is estimated at $13.3 billion, and it is projected at $6.7 billion for industrial minerals. The residual $3.0 .billion is exploration spending."