Capital Expenditures

Capital Expenditures Information Bulletin

(published in July 2024)

Mining is a capital-intensive industry with large-scale projects that are often valued in billions of dollars and can span multiple years.

A capital expenditure^{Footnote 1} (CAPEX) is money spent to buy, build or upgrade assets, such as mines, machinery and equipment, that benefit a mining company over an extended period. Because these assets contribute to sustaining or growing future mineral and metal production, information on capital spending can be a useful indicator of how industry views future market demand in relation to present supply capacity.

Find out about Canada’s minerals sector CAPEX and its spending intentions:

• Overview
• Capital expenditures in the upstream mining industry
• Capital expenditures in the metals, non-metals and coal mining subsectors
• Capital expenditures in the downstream mineral-processing industries
• Spending breakdown by province and territory
• Gross fixed capital formation

Overview

In 2023, CAPEX in Canada’s minerals sector^{Footnote 2} surged by 16% to $22.9 billion. This growth coincided with persistently high inflation rates (Figure 1) and declining base metal prices due to global economic uncertainties. The rising cost of materials and equipment has inflated expenses associated with establishing and expanding operations within the minerals sector.

Looking ahead to 2024, spending intentions indicate continued, but slowing growth in CAPEX, projected to increase by only 3% to $23.6 billion. This uptick is primarily driven by significant investments in potash mining.

Trends in CAPEX for the minerals sector are determined largely by those of the upstream mining industry, which is by far the most capital-intensive industry within the minerals sector, as shown in Figure 2.

Demand for critical minerals is anticipated to grow rapidly to meet the needs of the clean energy transition. This surge in demand will continue to put upward pressure on critical minerals prices and require mining companies to make substantial investments to support the transition to clean energy.

Capital expenditures in the upstream mining industry

In 2023, Canada’s mining industry experienced a notable 17% increase in CAPEX, reaching $16.9 billion. However, the projection for 2024 indicates a slight decline, with anticipated CAPEX decreasing by 3% to $16.5 billion.

Mineral and metal prices serve as crucial indicators of market demand and supply dynamics, influencing CAPEX decisions within the mining industry, as depicted in Figure 3. During periods of unfavourable market conditions and limited financing options, companies tend to prioritize capital preservation. Conversely, when the outlook for demand and prices improves, firms are inclined to accelerate investment plans, aiming to bolster production capacity and capitalize on opportunities to enhance their cash flow and profitability.

Since reaching a peak at the start of the last decade, capital spending in the mining industry experienced a downward trajectory, plummeting to a 10-year low of $9.0 billion in 2017. It recovered over the following two years, only to face a decline amid the COVID-19 pandemic in 2020. However, since 2021, mining industry CAPEX has resumed its pre-pandemic growth trajectory (Figure 3).

The peak at the start of the last decade was largely driven by surging demand in China and other emerging economies. Supply eventually caught up with demand, causing mineral and metal prices, as well as CAPEX, to decline. Commodity prices rose again after 2016, albeit much more gradually than earlier in the decade, and mining industry CAPEX also rose until 2019.

In 2020, the onset of the COVID-19 pandemic precipitated a swift decline of the prices of many minerals and metals, attributed to global consumption constraints resulting from pandemic-related measures. Prices later recovered and surpassed pre-pandemic levels as demand initially returned in China and pandemic-induced supply constraints plagued parts of global production.

In early 2022, the prices of several metals reached record highs following Russia’s invasion of Ukraine. Russia’s significant role as a producer and trader of various metals, coupled with supply chain disruptions, economic sanctions and retaliatory measures, contributed to notable price hikes across commodities such as palladium, nickel, aluminum and potash. Since then, commodity prices have generally decreased, notably for nickel and lithium, which experienced a collapse from their early 2022 highs as financing conditions tightened and a wave of supply hit the market.

The ongoing clean energy transition is expected to sustain heightened demand for critical minerals, particularly those used in electric vehicle batteries, including cobalt, graphite, lithium and nickel.

Learn about major natural resource projects currently under construction or planned within the next 10 years.

Capital expenditures in the metals, non-metals and coal mining subsectors

In 2023, CAPEX in the metal mining subsector saw an 8% increase to $11.7 billion, with varied outcomes across individual metals, as displayed in Figure 4.

Spending intentions for 2024 indicate a 14% decrease to $10.1 billion.

• Gold and silver mining and nickel-copper mining are expected to decrease by 33% and 11% respectively.
• Iron ore mining and copper-zinc mining are anticipated to increase by 12% and 69% respectively.

In 2023, CAPEX in the coal and non-metals mining subsector saw a significant increase, soaring by 44% to $5.3 billion. This increase was fuelled primarily by investments in potash mining.

• Potash mining, which comprised 69% of the subsector’s CAPEX in 2023, experienced a remarkable surge of 65% to $3.6 billion. Notably, in 2021, the BHP mining company greenlit the $7.5 billion Jansen Stage 1 potash project in Saskatchewan, with production anticipated to start in late 2026.
• Coal mining, which represented 15% of the subsector’s CAPEX in 2023, also saw a notable increase, rising by 27% to $783 million.

Coal and non-metals mining CAPEX is expected to rise by 22% to $6.4 billion in 2024, once again due to the potash mining industry (up by 28% to $4.7 billion). Canada is the leading global producer of potash.

Capital expenditures in the downstream mineral-processing industries

In 2023, CAPEX in Canada’s downstream mineral-processing industries^{Footnote 2} rose by 9% to $5.4 billion.

Primary metal manufacturing industry CAPEX, which constituted 59% of this subsector’s CAPEX in 2023, increased by 11% to $3.2 billion. This industry comprises establishments primarily engaged in smelting and refining ferrous and non-ferrous metals such as aluminum, copper, nickel and gold.

The other two downstream industries showed mixed results: fabricated metal products manufacturing increased by 13% to $1.4 billion, while non-metallic mineral products manufacturing decreased by 1% to $785 million. These industries comprise establishments primarily engaged in forging, stamping, forming, turning, and joining processes that produce ferrous and non-ferrous metal products.

Spending intentions for 2024 in the downstream mineral-processing industries indicate a 22% rise in CAPEX to $6.5 billion. This growth is driven by expected increases across all three industries: primary metal manufacturing industry (+22%), fabricated metal products manufacturing industry (+28%) and non-metallic mineral products manufacturing industry (+13%).

Spending breakdown by province and territory

Investment in CAPEX across provinces and territories, as depicted in Figure 7, can exhibit volatility from year to year as it is largely influenced by the number of active and developing mines. Jurisdictions with fewer mines often experience greater volatility as the construction of a single mine can consume a substantial portion of overall spending.

The distribution of CAPEX is concentrated in some of Canada’s largest mining jurisdictions^{Footnote 3} . In 2023, 84% of the mining industry’s CAPEX was in Ontario (36%), Saskatchewan (27%) and Quebec (20%). High levels of CAPEX in Saskatchewan are associated with the potash mining industry as all of Canada’s potash mines are in that province.

Year-over-year changes in mining sector CAPEX in 2023 across provinces and territories were mostly positive. Saskatchewan and British Columbia experienced substantial increases of 56% and 26% respectively. Ontario and Quebec saw more moderate increases of 7% and 3% respectively. Levels of expenditures in Newfoundland and Labrador declined 10%. Comparative data for all other provinces and for all territories were not available.

Spending intentions for 2024 reveal varied results across jurisdictions. Some jurisdictions anticipate ramping up their CAPEX, with notable increases expected in Manitoba (+169%), Saskatchewan (+28%), British Columbia (+16%) and Quebec (+8%). Conversely, several jurisdictions are forecasting a decrease in CAPEX, including Ontario (-38%), Alberta (-29%), Newfoundland and Labrador (-12%), Nunavut (-12%) and Nova Scotia (-9%).

Gross fixed capital formation

In 2022, gross fixed capital formation, also known as capital investment, within Canada’s mining sector rose 8.1% compared to the previous year, reaching $12.1 billion (based on the most recent data available). Gross fixed capital formation encompasses tangible and lasting investments (e.g., construction, machinery and equipment) and intellectual property (e.g., mineral exploration for the mining sector).

Foreign multinational enterprises (MNEs), which are firms in Canada controlled by a foreign parent, contributed significantly to this increase; they represented 43% of the total. Meanwhile, Canadian MNEs, representing domestically controlled companies with international operations, constituted 51% of the investment. The remaining 6% was attributed to non-MNEs, encompassing Canadian enterprises without activities abroad.

Data regarding foreign MNEs provides valuable insights into the impact of foreign direct investment in Canada, while data on Canadian MNEs offers a deeper understanding of the domestic activities of globally oriented Canadian firms. Together, aggregate data on MNEs serves as a valuable tool for measuring the extent of the globalization within the Canadian economy.

Find out more

• View principal producing mines in Canada on our interactive map
• Learn facts about minerals and metals