Felix Lee: The Future of the Resource Sector and PDAC 2021


2021 written on a road

Despite the bleak economic landscape that COVID-19 has created, there is some light at the end of the tunnel.

As COVID-19 vaccines roll out across the world, the resource sector is starting to consider what the industry will look like beyond the pandemic.

There is little doubt that the long-term economic effects of COVID-19 will be felt well into 2021. The novel coronavirus, which ground the world to a halt this past March, is expected to cost the global economy between US$5 trillion and US$8 trillion.

National lockdowns, which stymied economic activity earlier in the year, will drive most economies into recession, with per capita income shrinking in the most countries worldwide since 1870.

This will be heightened by a 5.2 percent decline in global GDP.

“Advanced economies are projected to shrink 7 percent. That weakness will spill over to the outlook for emerging market and developing economies, who are forecast to contract by 2.5 percent as they cope with their own domestic outbreaks of the virus,” according to the World Bank.

Despite the bleak economic landscape COVID-19 has created, there is some light at the end of the tunnel.

Growth in China is helping to reignite demand for industrial metals, while precious metals continue to benefit from market uncertainty.

But the pandemic has not impacted all commodities in the resource space equally. Copper and gold hit all-time highs this year, while uranium entered a prolonged rally. Conversely, the oil and gas sector has been deeply affected by a dramatic reduction in demand and by transportation concerns.

Falling oil and gas prices have benefited miners and producers, which have been able to reduce some of their overhead energy costs. But these small benefits do not outweigh the pandemic’s toll.

The Investing News Network asked Felix Lee, president of the Prospectors and Developers Association of Canada (PDAC), how the group’s 7,200 global members are dealing with COVID-19 disruptions.

“The challenges related to ensuring the health and welfare of people working in the mineral industry have been tremendous, and many members have had to cease activities temporarily,” he said.

“However, the industry has remained resilient, and while Canadian mineral exploration activity is likely to decline slightly from 2019 levels, strong commodity prices and financing activity have helped mitigate some of the impacts of the pandemic.”

Lee remains optimistic about the potential for good mass-inoculation programs to buoy the economy and the resource space. “Once a vaccine is publicly available, it could have a positive impact on the ability for mineral exploration companies to operate and advance projects,” he said.

“It should balance some of the cost pressures small companies have faced with respect to travel restrictions, quarantines and protective equipment, and should improve efficiencies.”

Before Canada implemented lockdowns in March, much of the resource sector gathered in Toronto for the annual PDAC convention. The four day gathering was one of the few in-person conferences the resource space held in 2020. Lee and his team made the decision in September to hold the convention virtually in 2021 for the first time in its more than 85 year history.

“As COVID-19 continues to affect travel and major gatherings, we made the decision to move forward with a virtual event as a way to offer a safe and innovative solution for the industry to access the opportunities provided by the traditional in-person convention in Toronto,” Lee explained.

“We are excited to adapt the PDAC convention, as it plays a vital role in keeping the global mineral exploration and mining community connected, and right now that is more important than ever.”

The PDAC president offered assurance that the 2021 convention will deliver the “unrivaled programming, investment opportunities and chances to network” that participants are used to.

“We hope to reach an even greater number of international attendees who may not be able to attend our event in person,” he said.

PDAC’s 88th convention, held this past March, was attended by 23,144 sector participants.

Despite being focused on the 2021 event, Lee did comment on some trends that he expects to see emerge post-pandemic.

“As attention grows on emissions reductions and realizing a low-carbon future by governments and industries around the world, the strategic importance of the underlying raw materials that will support such a transition are being recognized,” he said. “This dynamic will likely have long-term implications on commodities, beyond the reach of COVID-19.”

Lee went on to point out some benefits that may be seen as a result of the widespread pandemic.

“Some positive trends may result from the pandemic as well, in that increased digital connectivity and working remotely could lead to greater efficiencies and opportunities for the sector in the future.”

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Securities Disclosure: I, Georgia Williams, hold no direct investment interest in any company mentioned in this article.

Editorial Disclosure: The Investing News Network does not guarantee the accuracy or thoroughness of the information reported in the interviews it conducts. The opinions expressed in these interviews do not reflect the opinions of the Investing News Network and do not constitute investment advice. All readers are encouraged to perform their own due diligence.

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