FEB. 14: RIO TINTO. The miner is expected to report a 49-per-cent plunge in second-half profit to $3.93-billion (U.S.); analysts also expect more details on Rio’s stated goal of $5-billion in cost cuts by the end of 2014. In photo: Remotely controlled tipper trucks operate at a Rio Tinto iron ore mine in Western Australia.HANDOUT/Reuters
Canada's mining sector has for the first time in a decade failed to come up with even one initial public offering on the country's two major stock exchanges in the first quarter, says a report.
The survey by PwC Canada says no mining IPOs were recorded in the first quarter on either the Toronto Stock Exchange or the TSX Venture Exchange.
(There was one small, $250,000 mining issue on the Canadian National Stock Exchange in the first quarter.)
In stark contrast, there were 13 new issues on all Canadian exchanges with a combined value of $20-million in the first quarter of 2012, and 12 of them were from mining companies, PwC said on Monday.
"The complete lack of activity in mining, a sector that has been a pillar of Canada's equity market, is unprecedented," Dean Braunsteiner, PwC national IPO services leader, said in a news release.
"The TSX Venture usually generates some activity for junior mining companies. Not so this quarter, and it's been the same with London – another major market where mining companies raise equity."
Mining companies around the world have been struggling with several challenges, including slumping commodities demand from China, a still-uncertain outlook for the global economy and cost inflation.
Huge writedowns on assets are being booked and financing is drying up.
Teck Resources Ltd. said last fall it is deferring about $1.5-billion (U.S.) in capital spending over the next year.
Canada is ranked as one of the top markets for new issues of equity in mining companies.
Mr. Braunsteiner said some companies have recently been seeking debt financing, and there is anecdotal evidence that private equity firms are interested in the mining business.
"However, the availability of money for the costly construction phase of new mines still remains a question mark. Given the importance of the mining industry to our equity markets, this is a trend that bears watching."
Real estate was among the few industries showing signs of IPO life in the first quarter, with three IPOs on the TSX, according to PwC. All were real estate income trusts, or REITs.
In all, there were only four new issues on all Canadian exchanges in the first quarter, for total proceeds of $422-million (Canadian), says the report.
"It's a classic good news/bad news story. The interest in real estate is certainly encouraging, and has been since last year," said Mr. Braunsteiner.
"We believe there could be more to come as retail investors continue to seek yield through REITs."
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Bertrand Marotte