Mining supply sector will continue to grow – by David Robinson (Sudbury Mining Solutions Journal – December 2016)

In a world where everything is changing, it can be hard to keep track of the currents that matter most. It is especially hard in the mining supply industry, which depends on a mining sector that flaps around like a kite on a string. Falling metal prices can seem like the end of the world for mining companies and their suppliers.

Prices have certainly slumped as ballooning supply met slowing demand, but despite the short-term pain, talk of the end of the supercycle for metals is just misguided. Metal production will continue to grow because demand will grow.

Forecasts still show three billion more people will be looking for new homes in cities by 2050. Furthermore, the British Geological Society reports that the world’s output of smelter copper increased by 22 per cent between 2013 and 2014 alone. Bismuth output jumped by 21 per cent and mercury by just under 21 per cent.

For the five-year period 2010 to 2014, global output of mercury increased by 38 per cent, smelter copper by nearly 32 per cent, alumina by 27 per cent, iron by 28 per cent, phosphate rock and tungsten by 35 per cent, refined nickel by nearly 33 per cent and potash by 30 per cent.

These growth rates are significantly higher than the 15.6 per cent growth of the world economy for the period. They are a clear indication that there is still a boom underway.

Low and uncertain prices were not a result of low demand growth. They were the result of wild swings in investment — irrational exuberance combined with long lags to get new mines into production.

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