Measured by almost any popular yardstick, 2010 has been a good year for the global mining industry. Market prices for precious metals, certain base metals and some industrial minerals settled into a zone that extended from comfortably profitable at one end of the spectrum to vertigo inducing at the other, and there are few economic indicators pointing to any immediate change in the status quo.
Following the economic collapse of late 2008-2009, the mining industry has embarked on a steady, if unspectacular recovery cycle largely driven by commodity demand from sources other than OECD nations. Rising from a foundation based on emerging BRIC nation economies—Brazil, Russia, India and of course, China—this expanding appetite for metals and minerals is unlikely to abate.
If that scenario holds true, mining may once again find itself drawn into prosperity—a word and a concept that have mostly disappeared from popular usage. There’s been ample evidence of this trend in every issue we’ve published this year, and this month is no exception. Caterpillar, finding itself sitting on a pile of cash, is buying Bucyrus International for $7.6 billion, after Bucyrus bought Terex Mining a year ago for $1.3 billion (see p. 108), and this is only one of a dozen acquisitions that Cat initiated in 2010. BHP Billiton mounted a hostile $40-billion takeover bid for Canada’s PotashCorp; although BHPB ultimately withdrew the offer due to opposition from the Canadian government, the Australian miner apparently isn’t through playing—its chairman was recently quoted as saying “we’re not going to change our strategy from looking at large, tier-one assets” (see p. 42). And another Australian mining company, Fortescue Metals, plans to invest $8.4 billion to expand its iron ore production capacity (see p. 4).
However, the face of mining prosperity may look a little different this time around. There are perhaps a dozen major global trends, issues, economic initiatives and other factors in play now that weren’t significant influences on mining policy or strategy 10—or in some cases—five years ago. The “Green” movement, sustainability, carbon-footprint reduction, to name a few, are all worthy objectives but require expenditures of time, resources and investment that weren’t quite as demanding in the past. Nations with swiftly developing economies are no longer content to merely buy mineral imports to satisfy domestic needs; China, for one, is aggressively negotiating for mining rights as well as both full- and joint-venture participation in mining ventures far beyond its borders. Mineral-rich but mostly undeveloped nations such as Kazakhstan (see p. 55) have long-term potential to become mining powerhouses, but with a few timely investment, legislative and infrastructure improvements their arrival on the world stage could occur much earlier than expected.
One of the most influential factors in shaping the face of mining prosperity, according to a recent report published by Deloitte Canada, will be government intervention. In its annual Tracking the Trends summary, Deloitte states government intercession, influence and involvement is on the rise in the form of new taxes and royalties, more stringent anti-corruption legislation and rising expectations related to environmental protection. An up-to-the minute example of this trend is described on p. 30, involving permit delays that recently prompted a company to abruptly shut down a promising mine project in Turkey and move its focus to another region.
Given these developments, 2011 may hold more than just the promise of prosperity to miners, but it may be a prosperity shaded by tones of the oft-quoted, double-edged “Chinese Curse”:
May you live in interesting times. May you find what you are looking for. May you come to the attention of those in authority.
Russell A. Carter, E&MJ Managing Editor,