Canada’s Top 40 by Revenue

Noranda Inc. has done it again, earning over $6 billion and crowning CMJ’s list of Top 40 Canadian Mining Companies. It seems Noranda is at the top every year in recent memory, but this merely reflects the company’s continuing importance not only in Canada, but on the global stage. This powerhouse is one of the world’s largest zinc and nickel producers and ranks high among the copper, aluminum, lead, silver, gold, sulphuric acid and cobalt sectors. But perhaps it is Noranda’s growing recycling business that will keep it among the most important players on our scene.

Second place in our ranking goes to Newmont Mining Corp., which generated $4.3 billion in revenues last year. The company is fond of gold deposits in Canada; it has interests in the Golden Giant, Holloway, Musselwhite, and New Britannia mines. These properties contribute to the bottom line just as Newmont’s larger operations around the world do.

Dofasco Inc. holds down third spot by virtue of its 50% interest in Quebec Cartier Mining. This interest is a good fit for Dofasco: how better to be a profitable steelmaker than to have a say in the supply of iron ore? Dofasco’s revenues, from all sources, totalled $3.58 billion in 2002, up very nicely from the year earlier. The other steelmaker on our list, Stelco Inc., ranks seventh, having revenues last year of $2.78 billion.

Potash and fertilizer specialist Agrium Inc. made it to fourth spot, slipping slightly from third last year. Earning revenues of $3.45 billion in 2002, the company has every reason to be proud of its ranking.

Inco Ltd., which earned $3.39 billion last year, completes the top five miners. It is interesting to note that the base metal producers ranked No.1 and No.5 on our survey both lost money in 2002 despite their multi-billion-dollar revenues. This situation reflects low metal prices more than it does any management deficiency. Both Noranda and Inco are leaders in product quality, technical innovation and productivity.

Rounding out the top 10 companies are Barrick Gold Corp. ($3.09 billion), Stelco Inc. ($2.78 billion), Suncor Energy Inc. ($2.66 billion), Falconbridge Ltd. ($2.39 billion), and Teck Cominco Ltd. ($2.19 billion).

The surprising new entry in our survey is Dynatec Corp., which ranks 28th with 2002 revenues of $133 million. The Canadian mining industry knows it as a mining contractor and shaft sinker par excellence. While maintaining that business segment, Dynatec is determined to turn itself into this country’s next major mining company. It has a good start with the Sudbury Joint Venture (50% FNX Mining) that has recently reopened the McCreedy West nickel-copper-PGE mine near Sudbury, Ont.

The coal sector has seen a shake-up over the last year. Fording Canadian Coal Trust and Sherritt International Corp. fought over who would be the biggest coal producer in the country with Fording winning the metallurgical coal mines and Sherritt picking up the thermal side. Both companies appear to have come out winners; they rank 14th and 15th respectively.

Kinross Gold Corp. swallowed up both Echo Bay Mines and TVX Gold early in 2003, and the latter, familiar names have been dropped. With the added gold producing assets and the merger costs behind it, we hope Kinross will move upwards from its middle ranking next year.

A word is in order about how we at CMJ select the Top 40. First, we look at a list of companies that own operating mines in Canada. Our choices need not hold 100% of a mine, but should have a significant share, considered to be around 25%. Then we check to determine whether the companies are “Canadian” by determining whether they are traded on one or more Canadian stock exchange. The verification comes from filings with the Canadian Depository for Securities as available on the Internet at www.sedar.ca. Sedar is also the source of annual reports and financial statements from which our numbers are taken. When figures are reported in foreign currencies, we use the Bank of Canada’s 2002 average exchange rate to convert them to Canadian dollars.

The above listing criteria allowed us to include Newmont (headquartered in the United States) and Boliden AB (of Sweden).

The same criteria prevented us from topping the list with BHP Billiton Ltd. of Australia. It seems a real shame to exclude the 80% owner of the Ekati diamond mine (Canada’s first). If we hadn’t, the company’s revenues of $26.79 billion would have dwarfed all others. However, if BHP Billiton stock were to be traded in this country and the company file with the Canadian Depository for Securities, we would be happy to add it. Also excluded were IMC Global (a US potash and fertilizer producer), Hudson Bay Mining & Smelting (a South African-owned private base metal producer), and Highland Valley Copper (also privately owned).

Not making the cut, but notable nonetheless are many recognizable corporations. Aber Diamond Corp. is not quite there yet, but with the Diavik diamond mine in production, we bet it will be on next year’s list. Western Oil Sands Inc. holds 40% of Albian Sands Energy Inc., but Western’s contribution to the partnership in 2002 appeared to be pouring money in rather than receiving revenues from the newest bitumen miner. After considerable searching, we could find no indications of the revenue generated by Syncrude Canada Ltd. However, if they were in line with the 2001 figure of $3.2 billion, the company should have been included, and we regret not being able to list it.

Every year some readers take exception to the companies we have rated, and their comments are welcome. We try hard, but if you feel your enterprise deserves to be included, please tell us why. In the meantime, congratulations to Canada’s Top 40 Mining Companies.

CANADA’S TOP 40 BY REVENUE

*Amounts reported in US dollars were converted at the rate of US$1 = Cdn$1.57

**Amounts reported in Swedish krona were converted at the rate of K1 = Cdn$0.162