Boart Longyear backtracks on mining outlook

Boart Longyear CEO Craig Kipp has revised previous comments on the strength of the mining industry, and says the sector is now in a "state of flux".

In Boart's first half results Kipp, who heads the world's largest drilling company, said the outlook for mining exploration was mixed and Boart was making preparations "for any short-term downturn in demand".

"We are seeing a mining industry in a state of flux," he said.

"Global uncertainties like the European debt, decreasing growth in China, restrictive financing conditions, and the upcoming US elections are driving our mining customers to be more cautious with their capital and direct it to their higher quality assets."

Earlier this year Kipp told journalists he had not witnessed any weakening in the mining industry.

"We haven't heard from a lot of the majors outside of Australia that there is a change in their plans, budgets, or that there is a massive realignment of their expectations going on. We just haven't heard that," he said.

"We still see very strong demand, particularly from the majors. We are continuing to get requests for drill rigs."

Despite lifting first half net profit by 32 per cent Boart revised its forecast for capital expenditure for the rest of 2012, and said it expected capex of $US275 million, down eight per cent from the original figure.

But Kipp said despite market uncertainty commodity prices were still historically strong and ore stockpiles relatively low.

"Overall, we remain very optimistic about the long-term fundamentals for the business and our growth prospects for the industry," he said.

Image: Boart Longyear

To keep up to date with Australian Mining, subscribe to our free email newsletters delivered straight to your inbox. Click here.