Are mining green shoots emerging? [opinion]

Prices of most minerals have risen in the past six months (if only marginally in some cases).

Opinions of bank and other analysts about the outlook for mining are divided, but some analysts are cautiously optimistic.

For example, in its market outlook this month, Citibank says that “the outlook for commodities has notably improved in the past few months … Citi expects a better outlook for the second half of the year”.

In March, the ANZ’s global head of research, Richard Yetsenga, told journalists that, in his view, “the commodity bear market is over” and that “the decline in mining investment had come to an end” (reported by Australian Broadcasting Corporation, 18 March 2016).

SNL Metals & Mining, a global research firm, said last month that “the industry’s planned capital spending announced since January 2015 has risen to roughly US$108 billion from US$60 billion recorded in late 2015.”

At the height of the resources boom in 2011-12, there were over 200 mining projects in Australia that seemed then to have a reasonable-to-good chance of going ahead. Now, the number of such projects is much less. However, it is not negligible, as the following selection of current projects shows:

projects

Gone are many of the iron-ore, coal and base-metal projects that promised so much at the height of the boom.

But some of these projects will come back if prices continue to improve. And a few sectors are already doing well. This applies particularly to gold, for which a combination of steady prices and reduced costs has led to what some producers are calling a “sweet spot” for this sector.

No-one expects a return to the boom years. But a return to something better than the situation of the past two years is on the cards.

 

This article appears courtesy of Project Monitor.

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