JOHANNESBURG (miningweekly.com) – Mining and metals companies operating in Europe are set to remain in recovery mode, as a sluggish recovery in mineral prices keep investment activity subdued, while environmental regulations will pose headwinds for coal-producing countries.
BMI Research said on Thursday that mineral prices were unlikely to recover over the coming quarters, citing a drop in Chinese demand owing to an economic slowdown in that country. Poor short- to medium-term growth prospects in Europe’s two mining powerhouses, Ukraine and Russia, over the next five years would further hinder mining development in the region.
“As a result, mining companies will remain cautious moving forward and will focus on improving balance sheets and protecting themselves from potential price volatility, rather than investing in greenfield projects,” the Fitch Group company stated.
One of the greatest challenges for mining companies over the next couple of years is environmental regulations at EU level. BMI warned that the coal sector would particularly fare badly, owing to the industry’s large contribution to global carbon emissions and the growing role of renewable sources of energy generation.
The European Commission is keen to reduce regional reliance on coal-fired power plants in a bid to cut pollution levels – underpinned by EU-wide 2020 and 2030 emissions targets, as well as the climate commitments that were agreed to at the UN climate summit in Paris in 2015.
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