A cautious welcome to 2016

This time last year (posting of January 1st 2015) I looked forward to the year ahead with optimism, after a year where all metal prices had suffered to some degree, but knowing from past experiences that the fortunes of the industry are cyclic.

Unfortunately my optimism was ill-founded as what lay ahead was one of the worst years that I can remember for the mining industry, with metal prices sinking to all-time lows, mines being forced to shut down and many jobs being lost around the world, Anglo American alone cutting a massive 98,000 of its workforce. Much of these cuts will affect the already beleaguered South African mining industry, and it will be interesting to gauge the atmosphere in next month's African Mining Indaba in Cape Town, the world's largest mining investment conference.

One of the keynote speakers will be international financier Robert M. Friedland, founder, chairman and President of Ivanhoe Mines Ltd, Canada. Delegates will be hanging on to his every word as they did at Indaba 2004 where he stressed that China was driving the world's economy, being the world's largest producer of steel, despite being a net importer! Its insatiable demand for copper, nickel, platinum, gold and other metals was, according to Mr. Friedland, creating an unprecedented growth in the minerals industry, which should last for decades. "This is not just a bubble, but a reality!" he said.

Well less than a decade later the bubble did burst, the Chinese economy slowed, causing a glut of metals on the world's markets due to existing mines ramping up their production and new mines coming on-stream to take advantage of the good times ahead.

Mike Battersby of Maelgwyn Minerals attended Indaba 2011 shortly before the downturn and noted in his blog "The 2011 Indaba was one of the biggest with over 5000 registered delegates. As for outcomes; you couldn’t fail to notice the huge potential for new gold and iron ore operations in West Africa. From the economists what we could gather was that high metals prices were here for the foreseeable future. One Keynote Address we attended given by James Turk of GoldMoney claimed that gold was again going to be the standard that all currency was based on (without government’s ability to just print more) and that gold would be USD8000/oz in the near future. I had to check with others that I heard that number correctly! He had all the historical charts and figures to back up his predictions. Now that would be an interesting price. I think we will be out mining for gold in Wales again". I'm pleased that you didn't Mike, as the table right shows the real story. 



More recently at last year's Nickel Processing '15 in May, Andrew Mitchell of Wood Mackenzie, UK, set the scene by looking at the future of nickel production, particularly in relation to the outlook for nickel sulphide and laterite resource development. He forecast that nickel stocks should move into deficit by the end of the year, pushing prices higher. The reality is shown left.

I suppose the moral is never try to predict. Even the experts get it wrong and we can only hope that metal prices recover this year (as many analysts are already predicting!).

Interestingly with all the talk of falling metal prices, there have been few mentions of the falling oil price and its effect on the mining industry. It is well know that mining is one of the most energy intensive industries, so it would be good to hear from operators on how the collapse of the oil price has offset falling metal prices in terms of production costs.

Anyway, enough of gloom. There are some interesting events to look forward to this year, and the recession seems to have had little effect on attendance at quality conferences- maybe the need to network is more urgent during times of need? Next month I will be at two huge conferences, Indaba in Cape Town and the SME Annual Meeting in Phoenix, always well attended as they are great meeting places.

Then in April Comminution '16 in Cape Town is the first in the 2016-17 series of MEI Conferences.

The big event for mineral processing this year is the IMPC in Quebec City in September, for which MEI is a media partner, and we will be there in force, and will also be in attendance at other major events during the year.

So a lot to look forward to this year, and on behalf of all of us at MEI have a great 2016, with fingers crossed rather than trying to predict what may be.