Resources rush for 2018 and beyond

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.