Commodities demand set to continue, say experts
With commodity prices booming and demand soaring, this is an exciting time to be part of the mining industry. And as the global economy continues to rebound – particularly in resource-hungry regions such as Asia – mining firms can look forward to a prosperous future. That’s the message coming from leading mining industry experts in the wake of the recent commodities price wobble.“Mining companies have never had it so good,” Nick Hatch, a London-based analyst at Royal Bank of Scotland, said in a recent report. “Between FY11 and FY13, we estimate these three firms [Rio Tinto, BHP Billiton and Anglo American] could generate cumulative net cash of $161 billion, available to finance growth projects, acquisitions and shareholder returns, either via share buybacks or dividends.” Expansion projects will probably take preference, and acquisitions are likely to be limited to “strategic bolt-on deals,” added Hatch.
And it’s not just analysts who remain bullish. At the company’s annual meeting, Rio Tinto CEO Tom Albanese said his firm remained confident in the long-term demand outlook for iron ore and said growth in China and India, along with a greater focus on renewable sources of energy, should drive continued demand for copper.
“Looking to the future we see a world of strong global demand, in an environment of constrained supply,” he said. “As emerging markets like China and India continue to industrialize and urbanize, we expect a consequent increase in the level of demand for products that are made from our metals and minerals.”
Asia is a case in point. By the middle of this century, an additional three billion Asians could enjoy higher living standards if the region sustains its present growth momentum and addresses challenges associated with rapid development, according to a new report commissioned by the Asian Development Bank. And as the global economy’s centre of gravity shifts toward Asia, the region could account for about half of global output in 2050 (up from 27 percent today) as well as half of global trade and investment – provided it can avoid falling into the middle income trap of slowing growth rates and stagnating income levels.
“There is a growing population around the world who want to improve their standards of living,” confirmed Albanese. “They want better housing, cars, infrastructure, washing machines and mobile phones – and there are already five billion of those in the world. To put this in context, over the next 30 years it is projected that the world will consume as much iron ore as it has over the last 10,000 years.”
And given the unprecedented growth currently taking place in the mining sector, Albanese believes that financing is no longer the primary issue for raw materials firms. “The challenge for us now is about access to human and mineral resources,” he explained. “In our search for new employees, we not only face a shortage of skills, we are also in competition for the same skills with others in the mining industry, as well as with expanding sectors such as oil and gas.”
Joe Baker is media manager at GDS International. His company is organizing the Next Generation Mining North America Summit 2011 coming up in October. Visit www.ngminingna.com.
And it’s not just analysts who remain bullish. At the company’s annual meeting, Rio Tinto CEO Tom Albanese said his firm remained confident in the long-term demand outlook for iron ore and said growth in China and India, along with a greater focus on renewable sources of energy, should drive continued demand for copper.
“Looking to the future we see a world of strong global demand, in an environment of constrained supply,” he said. “As emerging markets like China and India continue to industrialize and urbanize, we expect a consequent increase in the level of demand for products that are made from our metals and minerals.”
Asia is a case in point. By the middle of this century, an additional three billion Asians could enjoy higher living standards if the region sustains its present growth momentum and addresses challenges associated with rapid development, according to a new report commissioned by the Asian Development Bank. And as the global economy’s centre of gravity shifts toward Asia, the region could account for about half of global output in 2050 (up from 27 percent today) as well as half of global trade and investment – provided it can avoid falling into the middle income trap of slowing growth rates and stagnating income levels.
“There is a growing population around the world who want to improve their standards of living,” confirmed Albanese. “They want better housing, cars, infrastructure, washing machines and mobile phones – and there are already five billion of those in the world. To put this in context, over the next 30 years it is projected that the world will consume as much iron ore as it has over the last 10,000 years.”
And given the unprecedented growth currently taking place in the mining sector, Albanese believes that financing is no longer the primary issue for raw materials firms. “The challenge for us now is about access to human and mineral resources,” he explained. “In our search for new employees, we not only face a shortage of skills, we are also in competition for the same skills with others in the mining industry, as well as with expanding sectors such as oil and gas.”
Joe Baker is media manager at GDS International. His company is organizing the Next Generation Mining North America Summit 2011 coming up in October. Visit www.ngminingna.com.
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