Canada

GOLD MINING INDUSTRY ANALYSIS

Submitted By : Rashi Sethi

19IB338

PGDM IB (2019-21)
S

CONTENTS

ACKNOWLEDGMENT PAGE 2

INTRODUCTION PAGE 3

GOLD MINING INDUSTRY PAGE 4-5

PESTEL ANALYSIS PAGE 6-15

GRAPHS AND CHARTS PAGE 16

REFERENCES PAGE 17

PAGE 1
ACKNOWLEDGMENT

With immense please, I, Ms Rashi Sethi presenting “country report on Canada” a

project report as a part of curriculum of Global business environment. I wish to
thank all the people who gave me unending support.

I express my profound thanks to my teacher Mrs Monika Jain who has shown
immense support and guidance during this entire project and helped in
understanding this project thoroughly.

PAGE 2
INTRODUCTION

Canada is a rich and beautiful country full of agricultural land,

but the majority of the population resides in the southern
provinces.

In 1867, Canada became a recognized country by the British

North America Act. Nearly one hundred years later, the country
chose their official white flag: a maple leaf between two red
stripes. Now, Canada has become the second largest country in
the world, following behind Russia.

Canada, is a country in North America consisting of 10 provinces

and 3 territories. Located in the northern part of the continent, it
extends from the Atlantic to the Pacific and northward into the
Arctic Ocean. At 9.98 million sq km in total, Canada is the world's
second-largest country by total area, and its common border with
the United States is the world's longest land border shared by the
same two countries. Canada is a developed country and one of
the wealthiest in the world, with the eighth highest per capita
income globally, and the eleventh highest ranking in the Human
Development Index.

It ranks among the highest in international measurements of

education, civil liberties, quality of life, government transparency,
and economic freedom.
Canada is a recognized middle power and a member of G7, G8,
G10, G20, International Covenant on Civil and Political Rights,
NATO, North American Free Trade Agreement, Organization for
Economic Co-operation and Development, World Trade
Organization, Uniting for Consensus, Commonwealth of Nations,
Organization of American States, Asia-Pacific Economic
Cooperation, and the United Nations. According to OECD, in
Canada, the average net adjusted disposable income of the top
20% of the population is an estimated $55,718/ year, whereas the
bottom 20% live on an estimated $10,526/ year.

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THE GOLD MINING INDUSTRY

 Gold is Canada's most valuable mined mineral, with a

production value of $8.7 billion in 2018

 Ontario and Quebec together accounted for more than 75%

of mined gold production in Canada in 2018

 In 2018, the value of Canadian gold exports was

$18.6 billion.

 Canadian mines produced an estimated 176 tonnes of gold

in 2017, which represents an 80% increase over the
2008 production. In 2017, mine production increased in
Newfoundland and Labrador, Quebec, Manitoba,
Saskatchewan, Alberta, British Columbia and Nunavut,
which offset declines in Ontario and Yukon.

 In 2017, Ontario and Quebec produced more than 75% of the

gold mined in Canada. Other provinces, like British
Columbia, and the territories contributed to the overall
Canadian production of gold.

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 Canadian gold production, by region, 2017 (p)

Thousand
Ranking Province/Territory troy ounces Kilograms Percentage of total

1 Ontario 2,449.3 76,182.7 43.2%

2 Quebec 1,844.3 57,365.8 32.6%

3 British Columbia 633.8 19,714.9 11.2%

4 Northwest 398.1 12,381.8 7.0%

Territories and
Nunavut

5 Prairies 215.4 6,700.0 3.8%

6 Yukon 103.5 3,220.6 1.8%

7 Atlantic provinces 21.7 674.4 0.4%

Total for 5,666.1 176,240.3 100.0%

Canada

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Source : Government of Canada

PESTLE ANALYSIS

PEST analysis ('Political, Economic, Social and Technological

analysis''') describes a framework of macro-environmental
factors used in the environmental scanning component of
strategic management. It is a part of the external analysis when
conducting a strategic analysis or doing market research, and
gives an overview of the different macroenvironmental factors
that the company has to take into consideration. It is a useful
strategic tool for understanding market growth or decline,
business position, potential and direction for operations.

POLITICAL FACTORS:

Canada, a democratic country, has a parliament government

containing the house of commons. The governmental parties are
Liberals, Conservatives, New Democratic Party (NDP), Bloc
Quebecois, and the Green party. But the leading parties switch
between the liberals and conservatives, followed by the NDP.

Canada is a founding member of the United Nations and is a

powerful country. It maintains good relations with the most
powerful country in the world, the USA. It also maintains good
relations with the United Kingdom, France and many other
countries in the world. Ottawa is the capital of Canada.

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Canada is a democratic country with a parliamentary system in
place. It also has a constitutional monarchy. Queen Elizabeth II is
the head of state, while the Governor General is her
representative who usually carries out most of the royal duties in
Canada. The Prime Minister is the head of the government and
holds the executive power.

 Canada enjoys a very good political stability. It is in fact

one of the safest countries in the world. With a low crime
rate and trustworthy policing services, Canada positions
itself a very good place for business and tourism. It is worth
mentioning that Canada’s focus on international
peacekeeping has earned it a very good global image.

 INCREASED REGULATIONS: Canada has a parliamentary

system of government and so the regulations are stringent
and a long process is needed to be followed in the mining
industry. Starting from the very first stage till the end ,
various procedures needs to be carried out .

 LENGTHY MINING PERMIT PROCESS: The permit process

takes a lot of time because of the safety measures taken in
following up the process . The gold mining process needs to
be taken care of with utmost safety and because of that
effective safety measures needs to be taken.

 PARIAH STATE: A pariah state (also called an

international pariah or a global pariah) is a nation
considered to be an outcast in the international community.
A pariah state may face international isolation, sanctions or
even an invasion by nations who find its policies, actions, or
its very existence unacceptable. So in this case , the mining
industry may face certain unacceptable sanctions and
policies .

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ECONOMIC FACTORS :

Canada is the 10th largest economy in the world as of April

2018. It has membership in the Organization for Economic Co-
operation and Development (OECD), the World Trade Organization
(WTO), the G20 and the Commonwealth of Nations. It also has
free trade agreements with a number of countries. For example,
Canada signed a free trade agreement called Comprehensive
Economic and Trade Agreement (CETA) with the EU in September
2017. This agreement aims to make it easier to export goods and
services to benefit people and business both in Canada and the
EU. Canada along with Mexico and the United States signed the
North American Free Trade Agreement (NAFTA) in 1994 to create
a trilateral trade bloc.

Economic Growth for 2019 is forecasted at 2.0 % , up from an

earlier projection for 1.7 %.

 With a strong and dynamic economy, diverse and

entrepreneurial people, world-class infrastructure, and one
of the best banking systems in the world, Canada draws the
attention of investors and businesses around the world. It
is worth mentioning that the recession in 2007/8 hit Canada
badly; however, it managed to recover from the crisis well
because of its sound fiscal policy and financial systems.

 Mining: Rated one of the most attractive and profitable

industries favorable to start new businesses: The low
corporate tax available in Canada gives emphasis to the
mining industry in terms of profit margin . This would

PAGE 8
 directly effect the income of the workers in the mining
industry and increase their living standards.

 HIGH GDP GROWTH : The high GDP growth gave way to

smooth business and increased confidence in the country .
More funds are available to the mining industry to carry out
the business . It also give emphasis to extended export and
import in the country of Gold which increases the income
and the business.

 HIGH INSURANCE AND TAX COSTS : Canada is known for

levying high taxes and insurances . So it becomes difficult
for the industry to give safety assurances to each worker
during the process . It also increases their cost on the
whole and thus the price.

Source: DailyFX.com

PAGE 9
SOCIAL FACTORS:

Canada is the 2nd largest country in the world by area; however,

its population is not that big. As of May 2018, the total population
of the country is 36.90 million growth has been fairly consistent
over the last four decades and currently there is no sign of
slowing down.

Canada is a very diverse country. In fact, diversity has played a

big role in the history of Canada, and many people call the
country a country of newcomers. There is a big shortage of
skilled workers in a number of sectors in Canada and many
business owners say that this shortage is obstructing the growth
of their companies.

The government of Canada is dealing with this situation with the

development of people in the country and a flexible immigration
system. Canada encourages immigration and people with
appropriate skills and experience can apply to immigrate to the
country.

According to some sources, around 46% of Canadians aged 15

and older could be foreign-born, or could have at least one
foreign-born parent by 2031. While English and French are the
two official languages, there are over more than 200 languages
which are spoken in Canada as a home language or mother
tongue.

Freedom of religion in the country is a constitutionally protected

right. Therefore, Canadians are free to have their own beliefs and
opinions, and they can assemble and worship without limitation
or state interference. This makes Canada an ideal place for
expatriates of many different faiths and none to work in the
country.

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 EGALITARIAN DISTRUIBUTION OF WEALTH :

The distribution of wealth in Canada is unequal. The top

20% of households own about 67% of the total wealth and
the bottom 20% of households own less than 1%. Because
of this gap , there comes a negative approach towards the
workers working in mines and the higher officials are
getting paid heavily whereas the laborer’s are undermined .

 SOCIAL INEQUALITY

Sociologists use the term social inequality to describe the

unequal distribution of valued resources, rewards, and
positions in a society. Key to the concept is the notion
of social differentiation. Social characteristics—differences,
identities, and roles—are used to differentiate people and
divide them into different categories, which have
implications for social inequality. Social differentiation by
itself does not necessarily imply a division of individuals
into a hierarchy of rank, privilege, and power.
In an industry like mining , it is important to bridge the
sentiments and emotions of the workers . Their pay ,
bonuses , rewards act as an intensive to them and if not
rendered effectively can prove hazardous to the industry as
a whole.

 STRONG LABOUR UNION :

A major reason for Canada's greater income equality is that

unions represent 31 percent of its workers, compared to 12
percent in the U.S.
Unionization and collective bargaining improved incomes
and security, so workers could afford home ownership, a
comfortable retirement and college tuition for their kids. In
other industries, too, lousy jobs became middle-class jobs,
thanks largely to unions.

PAGE 11
TECHNOLOGICAL FACTORS

Internet use in Canada :

 A new study says 80 per cent of Canadians aged 16 and

older, or 21.7 million people, used the Internet for personal
reasons last year.

 Canadian 15-year-old students use of information and

communication technologies at home and at school.

 The agency says Internet use was highest at 85 per cent in

both British Columbia and Alberta, followed by 81 per cent
in Ontario. Calgary and Saskatoon were the most online-

PAGE 12
 savvy cities, with web-usage rates at 89 per cent apiece.
They were followed by Edmonton, Ottawa—Gatineau,
Vancouver and Victoria, each at around 86 per cent.

 Canadians make use of technology for many purposes, most

notably education, careers, and leisure. The technology
sector provides people with high-paying jobs, with an
average salary of $67,000 compared to the national average
of approximately $48,000 (Rodgers, 2016).

 Both public and private investments in Canada’s technology

industry are growing swiftly. In addition, political, economic
and social stability have made the country a fertile ground
for entrepreneurship advancement. In fact, many
international IT professionals and firms see Canada as one
of the best countries in the world to advance their careers
and grow their businesses. Across Canada, technology is
changing the landscape of many traditional industries and
is offering both people and companies a lot of
opportunities.

 In Mining: - Mining is one of the most technologically

advanced industry. Since the first Gold mine opened on
Nova Scotia’s Cape Breton Island some 350 years ago, the
mining industry in Canada has changed considerably.

 Presently, Canada has more than 800 mines. The industry

employs at least 363,000 people and is one of the most
technologically advanced sectors in Canada. The machines
used in mining industry are much advanced and efficient
which reduces cost to a very large extent.

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Source : Ontario mining association

ENVIRONMENTAL FACTORS :

Millions of tourists visit Canada every year to experience its

scenic beauty. The Arctic mountains, glaciers, lakes,
forests, deserts, and many more offer tourists a diverse
landscape which is full of surprises. However, there are a
number of environmental challenges that Canada is facing
today.
For instance, a number of air pollutants, acid rain, smog,
and climate change are affecting Canadians. Many
Canadians in fact see air pollution a major environmental

PAGE 14
 concern. However, it is worth mentioning that the
government of Canada has taken a number of initiatives to
decrease air pollution and the emissions of greenhouse
gases like carbon dioxide that cause climate change.
Canada’s climate is dominated by extreme long and cold
winters. With the exception of the Pacific coast. Just 8% of
Canada’s land area is farmland, more than 30% of Canada is
forest. The forest between Newfoundland and the Yukon is
one of the worlds biggest. More northern areas are
occupied by tundra and the arctic islands are covered by
permanent ice caps.

 Gold Mining operations by Canadian firms across nine Latin

American countries are causing "serious environmental
impacts" by destroying glaciers, contaminating water and
rivers, and cutting down forest, according to the report, as
well as forcibly displacing people, dividing and
impoverishing communities, making false promises about
economic benefits, endangering people’s health, and
fraudulently acquiring property.

 Some who protest such projects have been killed or

seriously wounded, it states, and others persecuted,
threatened or accused of being terrorists.

 The growth of Canada’s mining in Latin America is an

integral part of its current foreign policy, and refers to a
"new policy of using international cooperation mechanisms
as a method of promoting Canadian Gold mining companies
in developing countries.

 The Impact of Canadian Mining in Latin America and

Canada’s responsibility was submitted to the Inter-
American Commission during a recent meeting with
representatives from two of the Work Group members – the
DPLF and the Jose Alvera Restrepo Lawyers’ Collective

PAGE 15
 (CAJAR), from Colombia – following a formal hearing at the
Commission last October on mining and human rights in the
Americas.

 Between 50% and 70% of all mining in Latin America is now

done by Canadian firms, the report states, and as of 2018
70% of shares issued by the mining industry worldwide
went through the Toronto Stock Exchange.

LEGAL FACTORS

PAGE 16
 THE SUPREME COURT OF CANADA

Canada is a federal state with a parliamentary political System.

Governmental structure is based on both the British North
America Act of 1867 and unwritten customs. Britain´s influence
ended with the Constitution Act of 1982.

Supreme political authority rests with Canada’s bicameral

Parliament, which consists of a Senate and a House of Commons.
The leader of the majority party becomes automatically the
‘Prime Minister’.

Canadas constitution is its supreme law, and any law passed by

any federal, provincial, or territorial government that is
inconsistent with the constitution is invalid. Laws passed by the
federal government are initially announced in the Canada
Gazette, a regularly published newspaper for new statutes and
regulations. Only the Supreme Court of Canada has authority to
bind all courts in the country with a single ruling.

PAGE 17
 Certain rights of employees are protected by law in
Canada. There are some minimum standards employers
must abide by concerning employees’ hours of work,
minimum wages, sick days, vacation, dismissal, and many
more. With regard to these , the workers and the employees
working in the mining industries feel inductive and
persuasive to work . Basic amenities are abide by the law.

 There are many methods to do business in Canada. For

instance, corporations, joint ventures, general or limited
partnerships, trusts, sole proprietorships, co-operatives, and
Branch plant operations are the most common ones. For
international businesses, corporation is the most popular
method of entry into Canada. The Gold mining industries
can work jointly or separately according to the
memorandum signed . It is very fruitful for these type of
business as the risk is minimized in Joint ventures or any
other cooperatives .

 There are stringent policies and laws which are needed to

be followed for the smooth functioning of the mining
industries . Pursuant to the division of powers under the
constitution Act 1867, both the federal government and
provincial government regulates the mining activity in
Canada .

PAGE 18
 GOLD DEMAND - 2018

( Source : Government Of Canada )

CANADIAN GOLD PRODUCTION

2008- 2017
( Source : Government of Canada )

PAGE 19
 GOLD PRICES AVERAGE ( 2008-2017 )

(SOURCE : Government of Canada)

REFERENCES

 https://www.nrcan.gc.ca/our-natural-resources/minerals-
mining/minerals-metals-facts/gold-facts/20514

 https://www.howandwhat.net/pestel-analysis-canada/

 file:///C:/Users/hp/Desktop/mining_company_analysis

 https://www.businesswire.com/news/home/20160727005830/
en/PESTLE-Analysis-Canada-2016---Research-Markets

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