Gold at $3,000 per ounce, the loonie at 70 cents, softwood lumber duties at 30 per cent, American tariffs at 25 per cent, new governments in Ottawa and Washington and a struggling Chinese economy: The omens for B.C.’s resource economy in 2025 are both unsettled and unsettling.
On the geopolitical front, the Donald Trump administration could wreak havoc on Canada-U.S. trade with tariffs on all Canadian imports, and a sputtering Chinese economy could end up muting prices for key commodities, such as oil.
Jock Finlayson, chief economist for the Independent Contractors and Businesses Association (ICBA), said there are two scenarios for 2025: One with 25-per-cent tariffs on all Canadian exports to the U.S., and one without.
If Trump’s tariffs are a bluff, Finlayson agrees with the B.C. government’s forecast of 1.5 per cent GDP growth in 2025.
That is based on slightly improved global growth—which is good for commodity prices—and further interest rate cuts, which are good for real estate and construction.
That all goes out the window if Trump puts tariffs on $600 billion worth of Canadian exports.
“The Canadian economy will be catapulted into virtually an immediate recession, in my view,” Finlayson said.
Domestically, Canada seems likely to have a new Conservative government by the end of 2025, which would mean some major policy revisions that could benefit Canada’s fossil fuel sector, including a nascent LNG industry.
Provincially, there is some uncertainty, however, as the newly re-elected NDP government holds a tenuous majority and is once again reliant on the BC Greens for support through a co-operation agreement.
“If there’s a different government in Ottawa, I think the outlook for LNG development in B.C. will be much better than under the current regime,” Finlayson said.
“The fly in the ointment is B.C. government policy,” he added. “Is this a government that’s going to try and seriously advance more LNG projects? I think there’s a lot of uncertainty about that at the moment.”
B.C.’s resource sectors—mining, forestry and energy—accounted for 60 per cent of B.C.’s total export values in 2023, according to BC Stats trade data: $34 billion out of a total of $56 billion.
Metallurgical coal alone accounted for 18 per cent of the total value of exports from B.C. at $10.3 billion. Wood products (such as lumber, and pulp and paper) accounted for $7.7 billion, minerals represented $6.5 billion (with copper accounting for $3.7 billion) and energy was responsible for $5.9 billion. Natural gas alone accounted for $4.8 billion and electricity exports sat at $1.1 billion.
While the U.S. is B.C.’s main market for lumber, natural gas and electricity, Asia is the most important market for steelmaking coal, copper, and pulp and paper.
China, South Korea, Japan and India accounted for $6.7 billion worth of B.C.’s $10.3 billion in steelmaking coal exports in 2023. China and Japan also accounted for $2.7 billion in copper exports.
The outlook for these commodities is a mixed bag.
B.C. forestry sector faces crippling duties
Forestry—one of B.C.’s cornerstone industries—faces serious challenges in 2025, with provincial policies crimping timber supply and U.S. duties and tariffs restricting access to the B.C. forest sector’s largest market.
Global wood markets consultant Russ Taylor describes 2024 as a “disaster” year B.C.’s forestry sector, with lumber prices falling to near-historic lows.
While 2025 could see improved demand and prices for lumber, producers in B.C. face a host of other challenges in the form of American duties and tariffs, and provincial policies and regulations that are hamstringing sawmill and pulp industries.
Even if Trump’s threat of across-the-board tariffs turns out to be a bluff, B.C.’s forest sector could be in for more pain from softwood lumber duties, which could more than double.
The last softwood lumber agreement between Canada and the U.S. ended a decade ago, in 2015. The Justin Trudeau government failed to get a new agreement with either the Trump or Joe Biden administrations, and as a result, duties on Canadian softwood lumber exports now stand at around 14.5 per cent.
Canfor Corp. has projected that new duties following the sixth administrative review (AR6) in 2025 could result in duties as high as 35 per cent. With potential countervailing duties tacked on, that could add up to duties of more than 40 per cent on all lumber produced by Canfor in B.C. and exported to the U.S.
“That’s going to hurt,” Taylor said.
Lumber prices bottomed out in July 2024 at US$325 per thousand board feet, recovering to US$470 in December, which is still below the break-even level for some sawmills.
While interest rates in Canada have come down to 3.25 per cent, rates in the U.S. remain higher, at 4.75 per cent. Given that the U.S. accounts for 80 per cent of Canada’s lumber exports, interest rates in the U.S. need to come down before they translate into any kind of a stimulus for the American housing market.
“There is some good news in all this,” Taylor said.
On the supply side, lower demand and prices have resulted in curtailments and permanent sawmill closures, both in Canada and the U.S. In 2024, three billion board feet were taken out of production in North America, Taylor said.
“That’s huge. That’s five per cent of North American production. That’s permanent closures, not counting curtailments. So, coming into 2025, we’re going to have a lot leaner and meaner production base,” he said. “I’m optimistic. I think that prices are going to move higher, certainly in the first quarter.”
But while prices may be higher, the duties facing Canadian mills may mute returns, Taylor added.
“I think we’ll be better off than last year, because last year was absolutely brutal.”
Meanwhile, B.C. producers will remain constrained by provincial policies and regulations that have reduced access to timber.
“The [David] Eby government forest policies have just nailed the industry to the wall,” Taylor said.
“There’s still probably room for a few more mills to close, and possibly part of a pulp company and probably some pellet operations,” Taylor said. “There’s just not enough fiber around to keep everything going.”
B.C. will have new energy export market in 2025
Weak growth in China is expected to lead to an oversupply of oil in 2025 and dampen prices, which is good for consumers, since high oil prices can be a major contributor to inflation.
Whereas Brent crude prices averaged US$80 per barrel in 2024, prices are expected to be in the US$70-per-barrel range in 2025, said Kevin Birn chief analyst for Canadian oil markets at S&P Global.
The newly expanded Trans Mountain pipeline can be expected to benefit Alberta producers with better prices, however, something that will support production growth in Alberta.
“Canada’s one of those big growth stories in 2025,” Birn said. “It will continue to add sizeable volumes. And as it moves into 2026, that surplus capacity in the Western Canadian export system will start to be eaten away.
“By the end of [2026] … the demand for pipelines could once again be greater than capacity.”
As for one of Western Canada’s other major fossil fuel exports—natural gas—2024 was a dismal year, with Western Canadian AECO gas prices hitting historical lows of about US$1 per million British thermal units, said Ian Archer, associate director of natural gas, power and renewables for S&P Global.
He expects natural gas prices to increase in Canada and the U.S. in 2025 to between US$2.50 and US$3 per million British thermal units, driven largely by new North American LNG exports.
In 2025, B.C. will have a new export market for natural gas, when the new LNG Canada plant in Kitimat begins shipping its first cargoes of liquefied natural gas to Asia mid-year.
Archer said it’s expected that LNG Canada’s first “train” (processing unit) will be producing in the second quarter of 2025, with the second train producing towards the end of 2025.
“Perhaps around this time next year, we’re looking at full volumes for LNG Canada,” Archer said. “It is a prolonged process, but it will bring on more demand and tightening of the market for Western Canada, and it will lift prices.”
Natural gas exports from B.C. to the U.S. surpassed lumber in terms of export values in 2022 and 2023. With new markets in Asia opening through LNG exports, natural gas could well become B.C.’s single most valuable export commodity, surpassing even steelmaking coal.
“LNG, in a relatively short time, will probably become the single largest export,” Finlayson said.
In addition to the $18 billion LNG Canada project in Kitimat reaching completion, two other, smaller LNG projects—the $5.1 billion Woodfibre LNG project in Squamish and $5.7 billion Cedar LNG facility in Kitimat—are expected to start taking shape in 2025.
Work is ongoing with site preparation at the Woodfibre LNG site, and LNG processing equipment and modules are expected to arrive on site in 2025. Work is also underway in Kitimat, including preparation for the pipeline right-of-way, transmission line and substation. Work on Cedar LNG is expected to ramp up in 2025, with peak construction occurring in 2026.
The multibillion-dollar question for B.C. in 2025 will be whether LNG Canada’s five partners sanction a second phase expansion of the current plant from two processing trains to four. It’s not just a financial decision—it’s a political one, and the current political climate may introduce some uncertainties.
While the provincial NDP government has supported the development of the LNG in B.C., it has done so with caveats and restrictions. New LNG projects must meet stringent caps on greenhouse gas emissions, which could make investments in new projects in B.C. uneconomic.
“There’s not much point in looking at the business merits of it until you’ve got some policy certainty, and we don’t have that at the moment,” Finlayson said.
Doctor Copper drives an EV
As a key industrial metal, copper has long been an economic bellwether. But it is increasingly also a bellwether for decarbonization and electrification, especially in transportation. B.C. is Canada’s largest copper producing province, with six operating copper-gold mines, and new copper mines and mine extensions in the works, so copper prices are important for B.C.’s mining sector.
The London Metal Exchange forecasts copper prices in 2025 to be in the US$4-per-pound range in 2025, which commodity market specialist Patricia Mohr said is well above the all-in sustaining costs price of US$2.70 per pound for Canadian copper miners.
Despite weakness in its economy, China continues to drive copper demand and prices because of its aggressive adoption and manufacturing of electric vehicles. Mohr noted that EVs accounted for 40 per cent of all passenger vehicle sales in China in 2024.
“The market share of EVs in China is expected to climb over 50 per cent in 2025,” she added.
U.S. tariffs could have an impact on demand for copper, Mohr said, but might be offset on the supply side by a slow ramp-up of new copper mine projects globally.
“While global economic uncertainty and geopolitical tensions may hold back copper prices near-term, the supply and demand balance for copper will likely be extremely tight later in the decade—lifting copper prices well over US$5 in the 2027-29 period,” Mohr said. “Prospects are good for further expansion in B.C.’s copper industry.”
One of the more curious trends for metals recently has been gold, which has shot through the roof to historic highs. That would normally coincide with a weaker U.S. dollar, but it hasn’t.
Gold went from US$1,800 per ounce in January 2023 to a recent historical high of US$2,700 per ounce.
Long considered a safe-haven investment, gold typically moves up when the U.S. dollar moves down.
“What was puzzling everyone is that the U.S. dollar is still strong,” said Randy Smallwood, CEO of Wheaton Precious Metals and former chair of the World Gold Council. “The two usually counter each other. For the first time ever, what we’re seeing is a strong gold and a strong U.S. dollar.”
Smallwood thinks the “politicization” of the American dollar has something to do with this trend.
Many central banks around the world hold substantial reserves in U.S. dollars. But after the U.S. began using the greenback as a cudgel against Russia, it became “politicized,” Smallwood said.
In response to Russia’s invasion of Ukraine, the U.S. restricted Russia’s access to the U.S. dollar via the Society for Worldwide Interbank Financial Telecommunication (SWIFT) system, Smallwood said.
“For the first time ever, the U.S. dollar had a political flavour to it,” he said. “If you want to have a store of value, you don’t want it to be subject to political influence.”
Central banks have responded by increasing their gold reserves, sending gold on a bull run. The high gold prices haven’t necessarily translated to gold mining stocks or exchange-traded funds (ETF).
“Why is the price of gold going up and yet ETFs are dropping?” Smallwood asked, rhetorically. “It’s because central banks from around the world … have now started shifting, and shifting dramatically, from U.S. dollars. They’re replacing U.S. dollars with gold.”
Gold prices can expect to continue breaking records in 2025, Smallwood predicts, which would obviously be good for B.C. mining companies.
“Some of the largest banks in the world—JP Morgan, Morgan-Stanley, HSBC—they’re all predicting gold to be over $3,000 an ounce by the end of this year,” Smallwood said. “I believe it will easily be over $3,000 by the end of next year.”
As for new gold mines in B.C., the new Artemis Gold Blackwater Mine is aiming to pour first gold in the first quarter of 2025, and it’s expected that Osisko Development will make a final investment decision sometime this year on the Cariboo Gold mine in Wells, B.C. Having received a substantial start designation in 2024, the massive $8 billion KSM mine project is expected to advance in 2025.
Mine expansions and extensions expected to advance in 2025 includes a block cave mining project at the Red Chris mine, and extensions of the Highland Valley and the Copper Mountain copper mines.
“These and several other promising critical mineral, gold and steelmaking coal projects under development this year will be vital to B.C.’s economic future,” said Michael Goehring, president of the Mining Association of BC. “It must be said, however, that our macroeconomic and geopolitical environment is fraught with risk. The Trump tariffs, rising resource nationalism and global economic uncertainty could impinge on what are solid long-term fundamentals in the global mining and metals sector.”
Goehring noted that, in 2022, seven per cent of the value of B.C. exports to the U.S. were critical minerals (aluminum, indium, gallium, germanium, lead and zinc) from B.C.’s two smelters—the Rio Tinto aluminum smelter in Kitimat and the Teck Resources smelter in Trail.
