Mining in the capital market

Canadian exchanges have stood out as an important source of funds for companies in the sector 

By Sérgio Siscaro

More than ever, the need for Brazilian companies to have access to sources of investment is crucial for the maintenance or expansion of their operations. Given the current economic conditions in Brazil and around the globe, companies are looking for ways to obtain funding, and one of these alternatives is the Canadian capital markets.  

The largest stock exchange in the country is the Toronto Stock Exchange (TSX). Considered the 11th largest in the world and the third most important in North America, it is controlled by the TMX Group, and has in its portfolio companies from the most diverse Canadian economic sectors, and also operates in the investment fund markets, among others. It is the main channel for raising funds for the mining and oil & gas industries in Canada. 

Operating in global markets, the TMX Group also has under its control the TSX Venture Exchange, the TSX Alpha Exchange, The Canadian Depository for Securities, the Montréal Exchange, the Canadian Derivatives Clearing Corporation, and Trayport, which provides general financial services.

Attracting investments

Together, the TSX and TSXV are the largest fundraising channels for the mining industry in the world. As of April, this year, the two exchanges brought together paper from 1,170 mining companies, with a combined market capitalization of CAN$628 billion. In addition, the TSX and TSXV had registered a total of 1,464 transactions in the sector by the end of 2021, which represents about 42% of all financing for the activity worldwide. Currently, 43% of the world’s mining companies are listed on the TSX and TSXV.  

Two companies, of the 198 listed on the TSX, are from Brazil: Talon Metals and Verde Agritech. On the TSXV, which brings together 975 companies, another two are Brazilian: Bravo Mining and Sigma Lithium Corporation. 

This strong performance in the mining area makes the Canadian capital market very attractive to companies from other countries that operate in this area – including Brazilians. The potential for attracting investments and raising funds provided by these exchanges led the Brazilian Mining Institute (Ibram) to sign a memorandum of understanding with TSX and TSXV in March 2020, with the aim to increase investments by Canadian mining companies in the coming years and the greater participation of Brazilian companies in the sector in the Canadian capital market. 

With the aim of making the benefits of the Canadian capital market better known to mining companies in Brazil, the Chamber of Commerce Brazil-Canada (CCBC) supported, in the first half of this year, an initiative of the Brazilian Institute of Corporate Governance (IBGC), which took a group of companies to Canada to learn how governance issues are handled in that country. The mission included a visit to the TSX and TSXV, in which the participants were able to learn more about the operation of these exchanges and their role in encouraging the adoption of practices aligned with environmental, social and governance (ESG) criteria by mining companies.

TMX Group welcomed the Brazilian delegation that participated in PDAC 2022

Sustainable mining

This stance has even been increasingly pursued by mining companies – which, due to the very nature of the activity, have the potential to generate negative impacts on the environment and the populations living near the mines. Canada has a long experience in this regard: as early as 2004, the Mining Association of Canada (MAC) launched the Towards a Sustainable Mining (TSM) initiative, through which it sought to guide companies in the sector towards standards that are now known as ESG.  

One of the resources provided by TMX Group in this regard is ESG 101, a platform to help companies understand the complexities of sustainability reporting and seek best practices to meet ESG criteria in their operations. Reporting to prove that mining companies adhere to sustainable standards is essential, as investors are increasingly looking for companies that incorporate ESG into their activities.