Investment in Canadian Black Mines
In mining segment Canada plays the role of a global leader and mining companies in Canada provide immense investment opportunities in the sectors like energy, base and precious metals. Although the production takes place in Canada, but 45% of Canadian mining operation plays outside Canada, securing its position as a stronger global player. When the advantage of investment is being discussed the question should be raised that whether investing in mining companies is more profitable rather than purchasing gold itself.
From the year 2001, gold that is called “the yellow line” has risen from a low status of US$ 256 to a higher level of $ 730, a rise of 188% which is a splendid raise in the world of economics. HUI that is called “the blue line” is an index of 16 main mining companies dealing with gold rose by the rate of 996% during the same period. This indicates that the investment made in dollar might have returned 5.4 times more profit if instead it was invested in the HUI index than in physical gold over the past five years. This is the advantage of investing in mining shares, can provide the chance of immense profit as compared to investing in commodity of physical category.
Before the oil price hike, hardly any one bothered much about the oil sands of Canada. Extracting oil out of these is not very easy task: the sands are only accessed from certain open-pit mines and then hot water is added to it. The slurry produced is brought to an extraction plant through pipeline, where following a process of agitation comes out the oil, in the form of bitumen, and ultimately it is taken out by skimming off the top portion of the extraction.
The whole process was not cost effective. Extracting an amount of one barrel oil out of the ground either in Mexico or from the Middle East was as costly as $2. However, the entire process of extraction from tar sands runs to the cost like $12-$18, that means it was not at all a cost effective unless the oil price of oil reaches over $30 per barrel, and be stable in production. And even at $30 or $40 a barrel, need to be increased in quantity, so that it costs as $18 a barrel.
Today, Canada is taking out one million barrels of oil per day –almost one third of which is from the tar sands. But if oil prices remains high, and the companies keep upgrading the quality of oil sands, according to Canadian Association of Petroleum Producers, Canada is able to extract three million barrels of oil per day in by next ten years and six million barrels per day by 2030 – which is anytime more than the current produce of Iran, similar to the flow of Iraq in pre-war period.
But, considering the recent rise in oil prices, only 10% of the sands are considered to be processed with – speculation says it may come to 174 billion barrels worth of reserve oil and this fats highlight doubtlessly that this particular segment is a hot spot for investment.