Sponsored Content

Globally Aware

BDO Canada delivers honest and quality advising services to its natural resource sector clients around the world

Serving more than 1,400 clients across Canada’s natural resource sector, BDO Canada is tuned in to industry happenings both here and abroad giving the global accounting and advisory firm a unique perspective on the most important issues facing its clients today.
For BDO’s junior and mid-size mining-sector clients, the biggest challenge right now is raising capital, says Michael Madsen, managing partner for BDO’s Vancouver office, and national leader for the firm’s natural resources industry group.  Four years into an industry-wide slowdown, Madsen describes industry sentiment as being mixed, but hopeful that the end is near.
For his own part, he believes the industry will need to undergo a further shakedown (in addition to seeing higher commodity prices) before it experiences a reversal of fortunes. “There probably has to be some shrinkage in the number of publicly listed mining companies before investor confidence returns to the marketplace and can generate enough new financing for companies to get their projects back on the rails,” says Madsen. “Whether that happens in 2014, I don’t know.”
He observes that the B.C. government has been active in promoting the mining sector, reducing red tape around permitting, investing in job creation and offering incentives for companies to spend money. “But I think those are small steps – there’s more that needs to happen. There has to be more investor confidence in and around the mining sector than currently exists,” says Madsen. “Some of the major mining companies have money sitting on the sidelines waiting to invest in the right projects, but with the uncertainty in the sector, there’s less willingness to part with that money for venture-type investment.”
Over in the oil and gas sector, the situation is quite the reverse. “There is a lot of activity, no shortage of supply and plenty of money available for these companies to invest [in their operations],” says Madsen. But while cash is plentiful, BDO’s oil and gas clients are still facing obstacles. The first is securing labour – there’s plenty of work to be done, says Madsen, and never enough people to do it. The second is educating public sentiment. “It’s an industry that impacts the environment, so there will always be groups interested in issues around oil and gas extraction, and then transportation to where it will be refined,” says Madsen, referencing the Northern Gateway Pipeline as the example making the most headlines today.
Speculating on the prospects for liquefied natural gas (LNG) in B.C., Madsen is cautiously optimistic. “The provincial government has put a lot of weight on the LNG opportunity that exists in the north,” he says, adding that from a financial perspective, the industry is poised for success with several big investors already committed. “And if it does happen, the money spent and the jobs created to process and transport the LNG product would be massive,” says Madsen. “But it’s really too early to tell.”