Mining Industry to Recover from Decline In Demand

Aug. 8, 2013

An increase in the need for consumables, infrastructure, and energy will help drive mining projects.

While the global mining industry hit one of its lows toward the end of 2013, there remains ample demand to sustain operational mines and the need for replacement capacity to offset declining ore grades, according to a report by Industrial Info Resources. Project spending will continue to be driven by these depleted resources, even during this down-cycle.

Industrial Info is tracking more than 5,500 mining projects worldwide representing $1.5 trillion in total investment value (TIV). The top 10 countries for active mining projects by value are Canada, Australia, China, Brazil, Chile, Russia, United States, Peru, South Africa, and India. These 10 countries account for 79 percent of the value of active mining projects around the world.

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2013 Market Hurt by Declining Demand
Commodity prices have fallen off as there is an oversupply in the market for such materials as coal and iron ore. In 2013 mining companies have cut capital expenditures and have accelerated cash-preserving actions.

Newmont Mining, Rio Tinto, and Cliffs Natural Resources are a few of the global mining companies that have recently announced layoffs, with Newmont Mining Corporation, one of the world’s largest gold producers, announcing plans to cut 30 percent of its Colorado workforce in 2013.

Future Looks Brighter
Looking further into the future, as urbanization continues a UN study says about 3 billion people will move to urban areas by 2050. As this happens the need for mined materials will increase significantly.

An increase in the need for consumables, infrastructure, and energy will help drive mining projects. In the near-term mining companies will continue with cash-preservation measures and strategic investments to position themselves to take advantage of the next up-cycle in late 2014 or 2015.

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