The economic recovery from the COVID-19 pandemic continues apace in Canada, with Statistics Canada (StatCan) reporting Wednesday that the real gross domestic product (GDP) of the natural resources sector rose 2.9% in the first quarter of 2021. This represents the third consecutive quarterly increase starting with the third quarter of 2020.
While the rest of the country has been locked down and hit harder by restrictions, the energy industry has been able to maintain operations and production while keeping pandemic safety measures in place. The report clocked the mining sector’s rise as stronger than the economy-wide real GDP (+1.4%), proving that the growing demand for natural resource products has not slowed down even as the overall economy recovers from the pandemic.
The real GDP of the mineral and mining subsector rose by 5.1% as production increased following rising prices. Commodity prices around the world have been pushed higher on growing demand and a lack of supply, along with supply-chain disruptions and bottlenecks. Mining products like copper and gold have risen steadily since the middle of 2020, putting more profits on the balance sheets of Canadian mining companies and strengthening the sector overall.
Non-metallic minerals rebounded 8.8%, a strong recovery considering the 9.4% drop in real GDP in the previous quarter. Potash mine reopenings have sped up following the lifting of many COVID-19 restrictions, and potash prices and demand both rose in the first quarter of 2021. Real GDP for metallic minerals increased 5.8% in Q1 2021, driven by the strength of copper production. Copper has been the strongest story of all, with prices skyrocketing amid a demand supercycle attributed to the global electrification goals, particularly in the United States, Canada, and Europe.
The mining sector has also been driving solid job growth, with employment in the natural resources sector rising 2.1% in the first quarter, logging its own third consecutive quarterly increase. The rate passed the total employment rate rise for the country at just 1% from the fourth quarter of 2020 to the first quarter of 2021. The energy and mining sector has been a strong driver of economic growth as the country pulls out of the pandemic restrictions and launches a full-scale expansion. The industry is outpacing the rest of the economy; however, it is also pulling the rest of the country’s averages out of the pits hit early last year.
Job recovery in the energy sub-sector was the strongest, adding 5,900 jobs, and the minerals and mining subsector adding 4,600 jobs. 2021 is expected to be a good year for the industry, as demand for commodities and rising prices continue to be steady tailwinds for mining companies in Canada and around the world.