PDAC 2023: Lithium Intrigues, Gold Remains Safe Bet

Critical metals dominate at PDAC

While many topics were discussed at PDAC, one of the hottest talking points at the show was the role of critical metals.

In particular, the convention was full of excitement and increased curiosity about lithium.

During the show, mining giant Rio Tinto (ASX:RIO,NYSE:RIO) said it is expecting the world's lithium consumption to surge from 350,000 metric tons today to about 3 million metric tons in 2030.

“We can’t produce that much lithium with every project that is in the pipeline globally now, so that is a huge opportunity for us,” Rio Tinto Chief Executive Sinead Kaufman told the audience during a keynote presentation.

For junior miners hoping to produce lithium, one of the biggest hurdles is permitting. At PDAC, Jonathan Wilkinson, Canada's natural resources minister, said the country is reviewing its regulatory process for clean energy projects, including critical metals.

“The urgency of the climate crisis means it simply cannot take us 12 to 15 years to permit a new mine in this country,” he said. “The work to establish new mines must be efficient if we are to affect the transition to a net-zero future.”

Scenes from the PDAC floor

PDAC President Alex Christopher told INN that in 2023 the convention returned to a strong presence after a few limited years due to the COVID-19 pandemic. “This is great to be back at what I’m going to call pre-COVID levels,” he said.

Click through the photos below to get a sense of the atmosphere at the convention.

Bankers share mining sector strategies

Commentary on the mining space from financial experts was one of the major draws of the show.

Analysts from leading financial institutions such as Toronto-Dominion Bank (TSX:TD,NYSE:TD), Bank of Montreal (TSX:BMO,NYSE:BMO) and Royal Bank of Canada (TSX:RBC,NYSE:RY) spoke on the current mining investment landscape.

Jackie Przybylowski, metals and mining analyst at BMO Capital Markets, said investors have to be prepared to really examine the companies they may be interested in putting money toward.

Among other screening tactics, she said she asks herself if she really understands the strategies of the companies she is looking at, as well as if they are moving in that direction and if their plans sound coherent.

What challenges are miners facing today?

Ballooning operating costs have become a big challenge for resource companies as inflation impacts markets worldwide, but Przybylowski said in a panel that geopolitical considerations are important as well.

“What we’re seeing today is that there’s really no safe place to do business anymore. It’s challenging all over,” she said.

Risk management has always been essential for mining assets, but the BMO analyst told the audience there’s no completely safe jurisdiction when it comes to challenges found in the modern landscape.

When discussing risk modeling, Przybylowski said this is one of the most difficult aspects to factor into share price projections, as even the top analysts have to assess risk in a reactionary way.

Another looming concern is the impact a recession could have on investors. PDAC hosted a series of presentations by newsletter writers, during which several experts pointed to concerning signs.

Lobo Tiggre, editor and founder of IndependentSpeculator.com, told the audience at his talk that he doesn’t expect there to be a soft landing for the sector at-large in the near term.

On a related note, Przybylowski said most of the investors she talks to on a daily basis are looking well past recession projections and are making their plans with a bullish long-term view.

The next wave of resource investors

In a panel discussion focused on the need for mining to become more fashionable for a wider range of investors, Sonia Scarselli, vice president of BHP’s (ASX:BHP,NYSE:BHP,LSE:BHP) Xplor program, said the industry needs a new wave of talent and investment.

She said that one trend to follow is voices from the technology sector jumping into mining. While admitting that this is a shift for the long term, the expert said the mining space could potentially gain a lot from these new entrants.

The theme of getting new faces into mining was discussed elsewhere at PDAC as well.

Experts like Tiggre and Brien Lundin, editor of Gold Newsletter, stressed that it's easier than ever for people to start investing, and said mining could become the go-to market for newcomers who have had their first experience with trendier markets like cryptocurrencies or cannabis.

During her panel, Przybylowski added to this discussion by saying the industry is in need of a younger perspective.

For his part, Peter Harvey, managing director of closure and legacy management at Rio Tinto, spoke about the need for renewed investment interest in the mining space, saying that mining companies need to do more to change the reputation issues plaguing the space. “We need to leave a positive social legacy,” he said.

Investor takeaway

The show floor at the Metro Toronto Convention Center was busy, packed with all sorts of members of the mining industry for a week's worth of insights, opinions and expert discussions of the industry as a whole.

Keep an eye on INN's YouTube channel and PDAC portal for more convention coverage and commentary on the current issues affecting the mining investment space.