Ninety-three percent of mining leaders are ‘not optimistic’ about their growth prospects for the next 12 months and more than four in five are not certain stalled largescale mining projects will resume in the same period.
According to the Mining Business Outlook Report, confidence in the mining sector has reached a five-year low. The report cites declining commodity prices, falling demand and a difficult regulatory environment as causes of the decline in confidence.
Stalled projects will take “at least 3-5 years” to resume according to the outlook.
“I don’t expect any major new mining projects to commence in the next few years,” said economist Saul Eslake. “There is wide consensus that commodity prices will continue to decline as more supply comes on stream globally, while the growth rate of demand for commodities slows. Economic growth will continue at a below-trend pace over the next 12 months, and unemployment will continue to rise.”
The disheartened outlook prevails despite business performance adjustments marked by cost-cutting, including dropping headcount.
“They’ve accepted the new lows hit by the sector and have embraced a government who will listen. However, they want action quickly: less red tape, more flexible IR laws and better infrastructure,” said David Hand, managing director of Newport Consulting, which publishes the report.
The sector demands a more friendly regulatory environment and flexible IR laws, as indicated by the 27% of leaders who marked this as a priority, followed by less red tape, which appealed to 18% of leaders as a top priority.
Download the report [PDF]