Re­sources rush for 2018 and be­yond

The Australian Mining Review - - NEWS - EL­IZ­A­BETH FABRI NA­TIONAL

AUS­TRALIA’S min­ing sec­tor is set to ac­cel­er­ate through 2018 as strength­ened global eco­nomics, par­tic­u­larly in China, sup­port com­mod­ity prices and un­der­write new in­vest­ment.

Ac­cord­ing to a re­cent re­port by S&P Global Mar­ket In­tel­li­gence, over the next 12 months China will drive con­tin­ued growth in end-use de­mand for most base me­tals through de­vel­op­ments such as the ‘One Belt One Road’ ini­tia­tive.

How­ever the re­port high­lighted fears sur­round­ing China’s debt and abil­ity to sus­tain GDP growth rates (a process that de­ter­mines the suc­cess of large in­fra­struc­ture spend­ing), but as­sured macroe­co­nomic im­prove­ments were still likely de­spite the risks.

“A key macroe­co­nomic area of sup­port for base me­tals prices will be through the US dol­lar, as it moves weaker rel­a­tive to pro­ducer cur­ren­cies,” S&P stated.

“It is likely that we could see a de­pre­ci­a­tion of the dol­lar in 2018 against its trade-weighted bas­ket.

“Fur­ther USD weak­en­ing will sup­port prices for me­tals as fi­nan­cial in­vestors look for a store of value out­side of the green­back.”

S&P added nickel and zinc were set to con­tinue to op­er­ate in deficit as end-use de­mand in stain­less steel and au­to­mo­tive pro­duc­tion re­main el­e­vated, while cop­per was pro­jected to move into deficit and iron ore would re­main in sur­plus in the near term.

Sim­i­larly, in­de­pen­dent eco­nomic fore­caster BIS Ox­ford Eco­nomics’ Min­ing in Aus­tralia

2017-2032 re­port said ro­bust growth in the Chi­nese and In­dian economies were “the key driv­ers that will sus­tain growth in Aus­tralia’s min­eral ex­ports and buoy prices”.

The re­port fore­cast min­ing ex­plo­ration, pro­duc­tion and main­te­nance to lift sig­nif­i­cantly in 2018, and rise fur­ther in the years to fol­low.

“Growth in min­ing pro­duc­tion will be roughly dou­ble the pace of the na­tional econ­omy over the next five years,” BIS Ox­ford Eco­nomics econ­o­mist Rub­hen Jeya said.

BIS Ox­ford Eco­nomics said pro­duc­tion growth was ex­pected to in­crease by 5.5 per cent in 2017/18, while ex­plo­ration ac­tiv­ity was fore­cast to rise 8.7 per cent in 2017/18 and al­most 40 per cent over the next five years.

Main­te­nance ac­tiv­ity was also pre­dicted to rise al­most 60 per cent over the next five years, open­ing up a wealth of op­por­tu­ni­ties for min­ing con­trac­tors.

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