Mining CEOs on Acquisition Trail as They Expect Strong Metal Prices

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Hugh Cameron, African Mining Leader at PWC said the sub prime crisis also carried a silver lining for big miners as it has led to lower stock prices, while it would now also be more difficult to finance projects owned by juniors.

CEOs of global mining companies are on the acquisition trail as they believe mining companies are still being undervalued by a market that has not fully grasped the story of China and other fast developing countries.

Hugh Cameron, African Mining Leader at PWC, said today the company's Review of global trends in the mining industry 2008 found a new generation of mining CEOs believe demand for metals will outstrip supply by far in the near future as they have learnt that bringing on new supply is difficult and costly.

The CEOs believe the market and analyst still don't fully comprehend the story of China and other fast developing countries that will lead to the increase in demand to occur over the next decade. The mining leaders believe the gap between supply and demand will continue and potentially grow, leading to high commodity prices over time.

"The CEO's believe that analysts haven't understood the China and India story and that the future prices they are using in their models are out of date," said Cameron.

He said the sub prime crisis also carried a silver lining for big miners as it has led to lower stock prices, while it would now also be more difficult to finance projects owned by juniors.

Against this background, the high level of cash generated at the top of the industry, implied that large companies did have the cash to make acquisitions.

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