Pierre Lassonde and Frank Giustra, business titans, advocate for more investment from Canadian pension funds into domestic mining. Recent data from Letko Brosseau indicates a minuscule percentage of the top eight Canadian pension funds’ C$2.1 trillion assets were invested within the country.
According to Lassonde, these pension funds investing more into Canada’s resources would stimulate economic growth and diversify portfolios. Giustra states that leveraging local knowledge can benefit Canadian businesses and offer better returns for investors.
The duo call for a review of the pension funds’ investment strategies, suggesting a more balanced allocation between domestic and international investments. Lassonde and Giustra argue that this adjustment could also increase the overall value of the funds, enhancing the financial security of retirees.
Regrettably, Lassonde observes insufficient investment in the Canadian mining industry from pensions funds. He declares that 75% of these investments are made in foreign companies. Lassonde believes redirecting pension funds into local mining companies could spur national economic growth.
A point of concern for them is Swiss company Glencore’s recent acquisition of most of Teck Resources’ coking coal assets, made possible by overseas investment. Lassonde and Giustra state that if local pension funds had invested in these assets, they might have remained within Canadian ownership.
Giustra emphasizes the gravity of the situation, remarking, “We’re talking about very large companies, mining giants that we lost to foreigners. These aren’t risky companies. This was the backbone of our mining industry in this country.”
Notwithstanding the current situation, Giustra remains hopeful, “This is not a lost cause. We still have opportunities to adapt and regain control of our mining assets. There is so much potential, we just need to harness it correctly and take operations into our own hands,” he said.
In the wake of changing federal regulations, the proportion of domestic assets in Canadian pension funds fluctuates significantly. However, domestic investments remain crucial for several funds. The International Energy Agency advises that a substantial $450 billion investment will be needed within the next three years for sufficient extraction of battery metals to realize a carbon-neutral future by 2050.
The financial plan for 2022, drafted by Ottawa, allocates nearly C$4 billion for essential minerals expenditure by 2030. Albeit, details on how pension funds will support these future projects remain ambiguous. Discussions are underway regarding the role pension funds could play in backing the expansion in the essential minerals sector.
