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The world is flooded with metals. Years of expensive expansions have left the market awash with iron ore, metallurgical coal and copper.
For more than a decade, China’s growing economy fuelled the bull market in commodities. Mining companies spent billions on acquisitions and new projects around the world, adding waves of new supply to keep the country’s steel mills and factories humming.
Then China’s economic growth slowed and the good times stopped. Now the mining industry around the globe is suffering amid a price collapse for some key metals.
Iron ore has lost more than half its value since the boom days, trading at $80 (U.S.) a tonne from a high of $190 in 2011. Metallurgical coal has sunk to $120 a tonne, down from $330 in 2011. Copper has retreated to $3.03 a pound, compared with a high of $4.50 in 2011.
“It will be a while before we see a boom again,” said Fabien Jurdant, chief operating officer with CRU Consulting, a global commodities adviser. “We are not seeing any kind of major upturn for some time. Unless there was some miracle, if India becomes the new China. But we are not predicting that,” Mr. Jurdant added.
Now entering the third year of the commodity slump, miners are still adjusting to the harsh realities. Projects have been shelved and jobs have been cut, as the fallout from sharply lower commodity prices is felt around the world.
In Canada, Labrador Iron Mines Holdings Ltd. suspended operations at its mines this summer. Cliffs Natural Resources Inc. stopped production at its iron ore pellet plant on Quebec’s north shore earlier this year. Baffinland Iron Mines Corp. sharply scaled back its Mary River iron ore project in Nunavut last year.
Also this year, Walter Energy Inc. suspended coal-mining operations and laid off workers in British Columbia, and Teck Resources Ltd. idled its Quintette coal property in the western province. Anglo American PLC will soon halt production at its coal mine in the same province.
China, which has became the world’s largest consumer of iron ore, copper and other metals, is growing at a slower pace.
“China is still growing. The question is ‘will it materially outpace supply?’ The answer is becoming no,” said Bart Melek, head of commodity strategy with Toronto-Dominion Bank.
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