Global mineral prices rebound

Monday September 24 2018

Gold bars

There remains strong demand for gold as an alternative currency but insufficient exploration is limiting the production pipeline. PHOTO | FILE 

HALIMA ABDALLAH
By HALIMA ABDALLAH
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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.

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“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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