Mining
The mining sector has specific challenges that need appropriate expertise. Our know-how helps you achieve your international business and trade development goals. We offer you sector-specific knowledge, as well as our contacts and opportunities for networking.
Read more about the mining sector:
Mining background information
The mining sector is split into two categories. Extraction of energy producing materials (including coal, natural gas, crude petrolium and uranium), and non-energy producing materials mining and quarrying (including metal ores, minerals and stones)1. It is the development of the metal industry that is particularly important and has witnessed a great increase in demand and production over the last decade.
International trade is one of the main features of the mining industry, as developed countries with limited natural resources require imports of metals supplied by emerging economies. The mining industry is vastly capital intensive and requires substantial, long-term investments. Political power also plays a huge role, as licensing, joint-ventures and acquisitions often need to be approved at the state level, and imposing of excessive taxes and export quotas is an eternal threat2.
The largest consumers of metals are typically developing countries with expanding construction industry, and developed countries, including USA, Germany, UK, France, Italy and Japan, that own the know-how of metal processing and use metals in specialist industries3.
The largest producers are usually countries with larger surface areas, that are rich in natural resources, including China, India, Russia, Australia, Brazil, Chile, Peru, USA and countries with advanced and innovative facilities in metal processing that work imported metals, such as Germany3.
Current challenges in the mining sector
The mining sector has not been severely affected by the recent economic crisis, except for a slight decrease in 2009. Since 2000 the production of iron has doubled, aluminium has increased by 60%, zinc and nickel by approximately 30% and copper by 25%. This radical increase in demand is enhanced by construction and industry sectors from the emerging economies2.
Mining is a high risk, high return industry. The opportunity of huge profits is set against environmental, operational, safety and most recently political risks. Reserved supply of resources combined with skyrocketing demand frequently attracts governments' interference.
Today, possible export quotas and other restrictions on rare earth metals from China is a big threat, as China produces 97% of the global output. Between 2015 and 2010, the Chinese metals & mining industry is forecast to increase by 169.9%. This might cause difficulties to industries that rely on these metals in the development and production of new technologies, including electronics, glass, automotive, and healthcare2.
Opportunities in the mining sector
In order to keep pace with developments in the mining sector, it is important to have access to actual, accurate and complete information and in-depth expertise. We will help you to address all important issues, including trends, key success factors, advances and innovations, supply and demand development, operational and financial risks, benchmarking, as well as regulations and opportunities for funds and grants.
Some of the key opportunities and trends include2:
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Demand for iron and other metals
→ The demand for iron has not decreased during the economic crisis, as its growth has only slowed down. Other base metals will have fully recovered to pre-crisis levels by the end of 2011. The expected boost in the coming years will be driven by increasing demand on behalf of developing countries, notably China, which is already the world leader in metal consumption. -
Volatility of metal prices
→ An upward trend is generally forecasted for metal prices. However prices could remain volatile reflecting on-going economic and political uncertainty, thus offering an opportunity for investors speculating on commodity markets. -
Investments
→ The leading mining companies are expected to expand their share of global mining, as incresing metal prices and demand will necessitate substantial investments. If regulatory bodies are in favour of such plans, joint-ventures and acquisitions are likely. -
International demand and production
→ While BRIC countries are experiencing high growth rates and will continue to drive the global demand, North American and European countries with significant industrial presence will stimulate their post-crisis development and recovery by contributing to the global production. -
China
→ China is a mining superpower, as it has become the first world single market for all common industrial metals, including iron (45% of global consumption), zinc (35%), aluminium, copper, and nickel (25%). Even though China has reasonably large reserves (7200 million metric tons of iron ore, 30000 thousand metric tons of copper, 1900 metric tons of gold), they are not sufficient to meet the local demand, and China is increasingly dependent on its foreign partners. China's interest is to develop their mining presence globally, by making strategic partnerships and joint-ventures with other metal production world leaders.
Contact
If you would like to know more about our services, please contact us at client@ibtpartners.com
for additional information.
Services
IBT Partners provides financial, business and technical consultancy services.
