Attending this year's MINExpo mining equipment exhibition and conference in Las Vegas, no-one would think that there are global economic worries and that prices of some mined commodities have been suffering as a result – or that in some sectors of the worldwide mining industry there are workforce layoffs.
The giant mining equipment show, thought to be the world's largest, attracted close on 50,000 visitors and there were some 1,800 exhibitors taking up 80,000 square metres (over 850,000 sq ft) of exhibit space in the huge Las Vegas Convention Centre and in an external exhibit area – although interestingly most of the really big equipment from companies like Caterpillar, Liebherr, Hitachi, Joy/P&H/Le Tourneau, Sandvik, Atlas Copco etc. was displayed indoors.
The halls were extremely busy throughout the three-day event – reduced in length from four days from the previous MINexpo.
However, despite the seeming strength of the industry there were some signs of underlying concern about the state of mining worldwide.
Not so much that there will be a serious long term decline in mining, but that global economic recovery still seems elusive and this obviously will impact the industry in the short to medium term. Indeed, memories remain strong that the last MINExpo in September 2008, when all seemed rosy, was almost immediately followed by the global market crash that pulled commodity prices sharply lower and very quickly hit sales of capital equipment to the mining sector very hard.
Could history repeat itself again this year?
As a pointer to some of the underlying worries, at the start of the show, in a presentation to media and analysts, Caterpillar President Doug Oberholman presented what, on the face of things, was strong forecast for growth ahead with a prediction of earnings of $12 to $18 a share in 2015 – but this represented a pretty large cut from an earlier forecast of $15-$20 a share.
"We've seen a slowing in economic growth more than we expected," said Oberhelman. "We expect fairly anaemic and modest growth through 2015."
Caterpillar is not the first major U.S. company to cut its growth forecasts due to poor economic growth in the U.S. and abroad – and perhaps particularly in China which has been the big growth diver in recent years – but is one of the most significant in terms of a global overview with its prime market areas in mining and construction.
Falling prices, particularly in respect of bulk mined commodities like iron ore and coal, key markets for a heavy equipment manufacturer like Caterpillar, are seen as likely to reduce prospective sales as new projects and expansions are deferred and equipment replacement programmes are postponed.
Gold and silver mining though may provide a bit of a counter with most analysts expecting precious metals prices to continue to rise.
Indeed at a CEO forum on the opening day of MINExpo Newmont's Richard O'Brien pointed out that gold was behaving more like a commodity than a currency (see On-going currency weakness makes gold's long-term future even brighter-Newmont CEO) and that the gold price would continue to trade higher.
With the trend towards mining lower grade ores there is hope here for increased equipment demand as the gold mining majors in particular battle to try and maintain and increase output.
This article appears courtesy of Mineweb. To read more daily global mining fainance news click here.