2013-12-08 16:25:07 - New Materials market report from Business Monitor International: "United States Mining Report Q1 2014"
Emerging markets will continue to attract the bulk of mining investment, leading us to forecast slow growth across mineral products in the US over our forecast period. We forecast the value of the US mining industry to reach US$66.1bn in 2017, representing an average growth rate of 1.5% per annum. The US mining sector is likely to grow at a slower pace than many developed market peers, such as Canada and Australia, but promising opportunities for mine development still exist.
Metal price trends and lower rates of metal intensity per unit of economic growth will keep mining sector growth minimal. We forecast falling copper and gold prices in 2014, while seeing only nominal growth in zinc and lead prices. Thus, we
believe many mining firms will have little incentive to invest in expanding production or ore processing capabilities. While we expect copper mining operations to remain profitable, we note that gold producers, in particular, are coming under increasing pressure both from falling prices and rising costs. Thus, we expect capital expenditure to remain subdued over the coming quarters and expect consolidation among some junior miners. Weak market fundamentals for zinc and lead will keep price gains modest in the coming years and we do not expect domestic mining companies in the US to invest much in developing these resources.
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Solid Business Environment, But Long Wait Times
Despite weaker market fundamentals, we expect the US to attract mining investment due to its vast natural resources, well-developed industry and infrastructure, and stable political environment. The US's mature capital markets also allow junior firms to find financing opportunities, though credit remains tight. We expect US growth to pick up in the coming quarters, which should support end-use demand growth for metal products, although as we noted before developed world economic growth has become less metal-intensive over the past decade. Furthermore, we note that long mine permitting times raise development costs for firms. Given weak prices and reduced capital expenditure targets, such delays may limit the ability of firms to commit to projects in the coming quarters.
The US will also remain a major exporter of mined products, particularly to emerging markets. In particular, we forecast that US exports of coal to Asian economies will increase, as the region continues to rely on coal-fired power plants for electricity generation. Environmental and community opposition to infrastructure development in the Pacific Northwest will limit this export strategy though, particularly since the region's ports and rail links are best suited to enable exports to Asia. Though exports have still trended upward, we do not believe they can fully supplant waning growth in domestic demand. Thus, Asian and European demand for coal will not fully reverse the industry's declining fortunes.
Partial Table of Contents:
BMI Industry View
- Solid Business Environment, But Long Wait Times
- Industry Forecast
- Coal: Domestic Troubles Ahead
- Table: United States - Main Coal Projects
- Export Gains Unlikely To Solve Long-Term Woes
- Natural Gas Evening Out With Coal
- Coal Industry Facing Unfriendly Regulatory Environment
- Table: United States - Coal Production
- Copper: Production To Slow
- Long-Term Decline
- Table: United States - Copper Mine Projects
- Environmental Considerations Often Major Impediment
- Table: United States - Copper Production
- Gold: Tepid Production Growth, But Investment To Continue
- Barrick To Remain Sector Leader
- Table: Major Gold Projects In The United States
- Exploration & Capex Threatened By Weaker Prices
- Table: United States - Gold Production
- Lead: US To Lose Global Market Share
- Table: United States - Lead Production
Industry Risk Reward Ratings
- Americas - Q1 2014
- Table: Americas - Mining Risk/Reward Ratings
- Local Opposition Remains Potent
- Royalty Threat
- Country Highlights
- Chile: Despite Rating, Potential Vulnerabilities
- Canada: Solid Developed World Destination
- United States: Slow Growing Giant
- Peru: Strong Prospects But Protests Maintain Pressure
- Colombia: Coal Holds Promise
- Brazil: Complexities Abound
- Mexico: Domestic Fundamentals Favourable, For Now
- Argentina: Clear Potential Amid High Risks
- Central America: Frontier Market Opportunities?
- Obstacles To Constrain Sector Growth
- Slow Copper Expansion
- Precious Metals Maintain Interest
- Table: US - Select Mining Projects
- Coal Exports Help Underperforming Sector
- Zinc & Lead To Remain Subdued
- Table: United States: Mining Industry Value & Production
- Recent Developments
- Stable Regulatory Environment, But Permitting Remains Slow
- Table: Key US Mining Laws
- Long Permitting Times Weigh On Sector
- Carbon Limits To Affect Coal Producers & Utilities
- Tax Regime
- Corruption Minimal
- Table: US Political Overview
- Table: Regional Regulatory Table
- Iron Ore: Rally To Fade In Q413
- Steel: Supply Glut To Endure
Full Table of Contents is available at:
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