Min­eral prices re­bound

The East African - - OUT­LOOK -

THE PRICES of min­eral com­modi­ties are re­bound­ing on the global mar­ket, with in­dus­try ex­perts pre­dict­ing the emer­gence of In­done­sia as a ma­jor player.

In­done­sia’s stable econ­omy and fo­cus on in­fra­struc­ture is gen­er­at­ing a solid plat­form for growth, and with that, de­mand for raw and pro­cessed min­er­als. China, fol­lowed by India, will re­main key driv­ers of the global com­mod­ity de­mand with more pres­sure ex­pected on the min­eral sup­ply side.

The prices of min­eral com­modi­ties have been in de­cline since 2014, forc­ing com­pa­nies to make de­ci­sive moves on cost re­duc­tion and prof­itabil­ity, with sev­eral min­ers clos­ing op­er­a­tions while new in­vestors hardly en­tered the sec­tor.

Gov­ern­ments de­pen­dent on min­eral rev­enues had to re­duce ex­pen­di­ture with strin­gent ad­just­ments on na­tional bud­gets.

EMR Cap­i­tal ex­ec­u­tive chair­man, Owen He­garty, while ad­dress­ing the 2018 Africa Down Un­der Min­ing Con­fer­ence in Perth, Aus­tralia, warned that fu­ture sup­ply could be con­strained.

“Fu­ture sup­ply con­straints will par­al­lel the more than halv­ing in min­er­als ex­plo­ration spend, par­tic­u­larly for the global non-fer­rous ex­plo­ration bud­get,” he said.

Com­modi­ties to watch in­clude: cop­per, gold, potash and coal.

“The de­mand for cop­per has been ro­bust for decades and there are emerg­ing new uses but the ex­ist­ing sup­ply is al­ready stretched,” said Mr He­garty.

There re­mains strong de­mand for gold as an al­ter­na­tive cur­rency but in­suf­fi­cient ex­plo­ration is lim­it­ing the pro­duc­tion pipe­line. Con­versely, potash has en­joyed solid de­mand growth with ev­i­dence of price re­cov­ery as new sup­ply fal­ters, so it is a sec­tor of­fer­ing strate­gic op­por­tu­ni­ties.

Mean­time, cok­ing coal is ben­e­fit­ing from strong steel pro­duc­tion but sup­ply shocks still pre­vail and the strength in ther­mal cok­ing coal mar­kets is un­der­pin­ning the stronger floor price.

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