New World

Taking a cautiously optimistic look at mining sustainability in the various emerging markets

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Growing optimism on the back of a successful year in the South African mining industry, coupled with fears of a looming credit ‘squeeze’, has created an outlook of cautious optimism in the mining industry for the year ahead. Mining expert, and Hatch Africa’s Mining and Minerals Processing Director, Lister Sinclair, shares his views on this important topic with Mining Prospectus.

“Even though South Africa’s mining industry has struggled to maintain its foothold against the significant growth in emerging countries like South America, we have still seen promising growth which should continue into 2012,” says Sinclair. 

According to him, 2011 was a successful year for many project houses in South Africa, with most seeing an upsurge in work from the large mining houses. 

Looking at Africa and its various commodities, there has been a large uptick in work related to iron-ore, gold, copper and coal. West Africa in particular is seeing a large amount of activity in gold and iron-ore in countries like Ghana, Ivory Coast, Sierra Leone and Mauritania, while the Democratic Republic of Congo and Zambia have come out very strong in copper. 

Sinclair has identified Tanzania as an area where a large amount of expansion is taking place and interest has increased dramatically. “Similarly, rising foreign investment in Mozambique’s mining industry is spurring large-scale coal mining and associated infrastructure projects,” explains Sinclair. 

Growth in emerging markets 
A recent report by Price Waterhouse Coopers cites how emerging markets, such as South America, continue to change the face of the mining industry. When looking at the average Total Shareholder Return of the top 40 mining companies from emerging markets, they have more than doubled their return compared to the ‘traditional’ mining countries over the past four years. 

Looking at Chile specifically, mining is considered to be one of the pillars of the Chilean economy, with copper making up more than a third of the government’s income. Sinclair says that the mining methodology and automation that is being applied to mining projects in emerging countries like Chile is innovation personified. 

“To give an example: we (Hatch) are currently working on a copper mining project in Chile with a production capacity of 140 kilotonnes per day. When compared to the South African monthly average of 180 tonnes per month, you realise the vast scale of the operation and the level of expertise being applied,” explains Sinclair.   
 
Outlook for 2012 
Sinclair points out that all eyes will be on China. “China’s target to increase its Gross Domestic Product (GDP) to 8% annually, as part of its 12th five year plan, is not likely to be sustainable. However, should this growth drop to below 6%, it will have a knock-on effect around the world when looking at commodities,” he explains. 

Global ratings agency Fitch recently announced that the first set of economies to be affected would be Australia, South Africa, Brazil, Chile and Peru. Should China experience a slow-down, it would only be temporary, and that there would be a quick recovery in 2013. 

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