Positive Outlook for the Global Mining Sector
Source: Mining Weekly, Lindsey Berry (1/22/10)
The 2010 outlook for the global mining sector is positive, says economic advisory company David Hale Global Economics founder and chairperson David Hale.
Hale’s keynote presentation on the mining industry at the 2010 Mining Indaba (Feb. 1- 4), in Cape Town, will focus on the beginnings of a recovery after the global financial downturn and the significant boost from China’s economic recovery in 2009, which produced a rally in base-metal prices.
However, China will not be solely responsible for the global recovery in the mining industry, as other countries also account for a significant portion of the demand for mined resources.
“The global recovery will broaden out during 2010 to include the U.S., Europe and Japan. Although China is now the largest single consumer of base metals, demand in the other Organisation for Economic Cooperation and Development countries still accounts for approximately 60% of global consumption,” says Hale.
Further to the positive indications for base metals, he says that the outlook for gold is also optimistic. . . He says that, despite the positive effect of Chinese demand, if the world economy suffers a relapse after the financial downturn or China adopts a more restrictive economic policy, base-metal prices could decline.
“The first major test of the market will probably come during the third quarter of 2010 when both the US Federal Reserve and the People’s Bank of China could be ready to tighten monetary policy. Neither central bank will want to jeopardise the global recovery, but they will want to dampen the risk of asset inflation and new speculative bubbles developing. As these central banks tighten, there could be a rally in both the dollar and the yuan, coupled with a correction in base metals and the Australian dollar,” says Hale.