Value of Canada’s natural resources drops 30 per cent: report

Anyone following the money in the commodities sector can tell you it has been a bad couple of years.

Copper prices have plummeted from records in 2011, oil prices have been volatile and trading well-below pre-recession highs around $145 per barrel, while natural gas has been depressed for years.

That’s good news if you’re filling up your car with gas or heating your home, but terrible if you’ve got your money tied up in resources on the stock market.

It’s also negative news for Canada’s resource-dependent economy. Lower commodity prices have been a drag on economic growth and have led to job losses across the mining and energy sectors, while forestry continues to struggle in the wake of the U.S. housing crash.

New Statistics Canada data released Friday shows just how much of a hit Canada has suffered as a result of lower commodity prices. The value of the country’s mining, energy and forestry resources dropped 30 per cent to $781 billion in 2012 compared to a year earlier.

That’s after a 29-per-cent increase between 2010 and 2011, when the price of many commodities surged following a crash during the global financial crisis.

In comparison, the value of Canada’s resources increased at an annual average rate of 3.4 per cent between 2002 and 2012, StatsCan says.

2013 isn’t expected to show any improvement.

Copper prices continue to hover around US$3.20 per pound, down from a record $4.60 in 2011, while coal prices are sitting at about $150 per tonne, less of half of where they were a couple of years ago when Asian demand booming.

Oil prices, at just under $100 per barrel, are similar to where they were at the start of 2012, but it has been a wild ride over the past couple of years. The price of oil was trading as high as $105 earlier this year, but had fallen close to $80 in the summer of 2012. Natural gas prices have been hovering between about $3 and $4, a far cry from the mid-teens where they traded prior to the last recession due to oversupply on the market.

Energy resources such as coal, oil and natural gas, accounted for 56 per cent of the value of all natural resource assets in 2012, according to StatsCan, followed by minerals such as copper and potash at 29 per cent and timber at 14 per cent.

Energy asset fell 35 per cent in 2012, after rising 31 per cent the year before. Minerals fell 28 per cent, following a 40-per-cent surge in 2011, while timber assets continued to fall by about 6 per cent in 2012.

While the forestry sector appears to be showing some improvement this year, mining, energy and potash continue to suffer.

Earlier this week, Potash Corp. of Saskatchewan Inc. said it was cutting hundreds of jobs, or about 18 per cent of its workforce, citing lower demand and prices for its namesake fertilizer product. Meantime, natural gas giant Encana Corp. said recently it would cut about 20 per cent of its staff, cut its shareholder dividend and refocus spending as a result of depressed prices for that commodity.

Investors have been feeling the pain. The S&P Global Mining Index has fallen 32 per cent since the start of 2012, while the S&P Capital Diversified Metals Index has dropped about 38 per cent and the S&P Capped Energy Index has slipped by about 5 per cent, with huge drops this past spring and in the summer of 2012.