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Mining / Metals

As European and U.S. mining production has declined over the last century, developing countries such as China, South America, and Africa have seen increases — the shift of mining locations from developed to developing countries has been a continuing trend which began in the 1950’s.  Population growth, urbanization, and related service infrastructure development as modernization takes place have been major drivers.  Also during this time has been a shift from underground to open pit /strip mining techniques.  The use of large scale equipment and more efficient mineral processing have accompanied technological developments to make it possible to mine ores of lesser grades and more complex mineralogy, all without increasing costs.

Metals mining continues to be dominated by iron/copper/nickel/gold ores and bauxite, which together account for the majority of the total value of all metals produced globally.  In spite of recent volatility and weakness, metal prices are likely to remain at a high level compared to those seen in the 1990s and early 2000s.  The market remains vulnerable to cyclical fluctuations and competitive pressures.

Cost inflation in the sector is expected to be a challenge for Mining and Metals companies over the next several years, driven by a number of industry-related factors.  Global economic uncertainties, softening commodity prices, increased capital costs, and government regulatory actions are further stressing company margins.

To combat these negative influences, Mining and Metals companies consider consolidation strategies, automation technology, owner-operated mines, and investment in energy assets as steps to mitigate the impact of rising costs.  While volatility is likely to continue over the short term, long-term industry fundamentals, however, are expected to remain positive.

The trend of mine production moving to the emerging economies is expected to continue.  Latin America and Africa will expand more rapidly than China, as well as exploration will continue in other areas such as Australia and Canada.  For the future, the challenge of anticipating and meeting the increasing demand for mined products will continue as the industry evolves in step with an ever-changing operating environment.