1. Canadian Mining and the China Challenge FOCAL Canadian Foundation for the Americas February 10, 2006

2. Canada’s Minerals and Metals Value $41.8 billion – 4% of GDP 369,000 direct jobs $17 billion paid in wages 14% of total Canadian exports $333 million in R&D expenditures 60% of rail freight revenue 75% of port volumes Leading destination for exploration activity ($1 billion)

3. China’s Need for Resources 1.3 billion people Rapidly urbanizing Rapidly modernizing Not self-sufficient Infrastructure gap GDP growth: 9.5% (2004) and 9.9% (2005) Mineral imports valued at US$151.8 billion Mineral exports valued at US$89.4 billion

4. China – Some Mining Facts (2004) 42,589 mining licences 49 to foreign companies 12,793 exploration licences 202 mineral deposits discovered 51 Canadian mining companies with active interests

5. China Resource Needs (1) Iron Ore Production385 Mt Iron Ore Imports208 Mt Australia38% India24% Brazil22% Canada, Peru, South Africa Steel Production273 Mt

6. China Resource Needs (2) Copper Imports2.88 Mt Aluminum Imports7.0 Mt Alumina Imports5.9 MT Nickel Imports65,700 tonnes Both copper and aluminum production hindered by power shortages

7. China Resource Needs (3) …booming Chinese economy … good times roll for Latin America’s private mining sector (DJCS, Jan.27/06) Baosteel and nickel producer Jinchuan pledge $950 M (US) to revive nickel plant in Philippines (Reuters, Jan.30/06) Strong demand from China helped push copper prices to record levels last year (Globe and Mail, Jan.23/06) China’s ’grab’ for commodities to continue (NP, Jan.23/06)

8. China Resource Needs (4) China has become aggressive in establishing trade relations with resource-rich nations (NP, Jan.23/06) Metal prices hit record highs as China announces strong economic growth (CP, Jan.25/06) The base metal industry is enjoying great market fundamentals and should continue to do so for some time to come (Aaron Regent, CP, Jan.25/06)

9. Where the Deals Are Africa Brazil Canada (?) Chile Peru Philippines

10. Mineral Reserve Levels: Crisis Looms 1977-2003 How many years left? Copper  64% 10.5 Nickel  44% 21 Lead  92% 5.5 Zinc  77% 7 Silver  70% 7

11. Implications for Canada As Seller As Site for Investments As Investor in Chinese Capacity As Competitor