Strong metals prices offset Canadian currency in mining
sector
Winnipeg (Platts)--8May2006
High commodity prices more than offset any negative impact a strong
Canadian dollar may be having on Canadian mining companies, said an analyst.
The Canadian currency recently hit 28-year highs relative to its US
counterpart above 90 cents (US). The Canadian dollar has appreciated by more
than 40% in the past four years. A strong currency is detrimental to exporters
in the country who are paid in US dollars, cutting into their returns.
While a strong domestic currency should be bad news for Canadian-based
metals and mining companies, commodity prices have seen an even sharper
increase over the past few years, offsetting any impact the currency may be
having on the sector, said Patricia Mohr, vice president of industry and
commodity market research with ScotiaBank in Toronto. "The strength in metal
prices is just so spectacular," said Mohr.
With commodity prices at record highs, particularly in copper and zinc,
she said Canadian mining companies should be making large profits, regardless
of the strong currency.
--Phil Franz-Warkentin; newsdesk@platts.com
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