Top 40 mining firms have returned to the heights of 2007, says the report
What's on the minds of industry CEOs? While views may differ, almost without exception the number one on the cards is the global economy. Fundamental to success in this industry will be the ability to understand the lead demand indicators, particularly obtaining a good read on the developing nations.
Today's CEO is more focussed on other macroeconomic factors, such as foreign exchange rates, the cost of energy and the impact potentially unsustainable government budget deficits will have on interest rates, tax regimes, and the global economy. However, cost remains a key value differentiator.
Industry CEOs have expressed concern that governments facing challenging budget deficits would look to the mining industry as a source of additional taxation. The industry has recently moved further up the political agenda, with focus on matters such as taxation, carbon and sovereign ownership. This poses a significant challenge to companies from the developing world, in particular India as the private sector has been at the forefront of overseas mining acquisitions.
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The mining labour market is starting to tighten again, particularly in certain hotspots where miners are competing with other resource companies and infrastructure projects for skilled labour and are losing younger experienced staff. There is a growing need to look at advanced and automated technologies to lower costs at mine sites and improve productivity in ways that would have been unheard of just a few years ago.
"The Indian mining industry, with growing entry of private and captive miners, needs to re-look and focus on the safety and health of its workers. It is desirable that proper regulatory framework develops that can facilitate new technologies but also ensure proper safeguards are taken," said Kameswara on the future of this industry.
Commodity prices Metal prices continued on a downward trend for the first six months of 2009, with a sharp recovery in the second half for most commodities. The upward trend in commodity prices continued to the year-end and beyond into 2010 in many cases. The turnaround in copper prices has been most notable, with the 2009 year-end spot price reaching $7,342 per tonne.
In both iron ore and metallurgical coal markets we have seen a recent trend towards short-term contracts, driven by the big miners. After a hiatus, the future is looking bright again for the industry. Although significant short-term volatility remains, the 2009 results show there was a dip and there may well be other dips (such as the impact of the sovereign debt contagion in Europe) – the long-term demand fundamentals will drive this cycle.
This has significant lessons from Indian power and mineral-based industries to more carefully evaluate geographies and assets, and appropriately structure the projects, so that they can fully extract the benefits of the global mining industry being back to the boom.
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