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Roadblocks ahead for world metals, mining sector: AMEC

Keywords: Tags  Journal of Commerce, Breakbulk Americas, mining, nationalization, export ban, iron ore, Peter Jessup, AMEC Catherine Ngai

HOUSTON — The global metals and mining sector likely will encounter a number of hurdles as it moves forward, according to Peter Jessup, vice president of supply chain management at London-based consultancy group AMEC Plc.

Challenges include resource nationalization in certain countries, Jessup said at the Journal of Commerce’s Breakbulk Americas Conference in Houston, citing Indonesia’s export ban on copper concentrate, nickel ore, tin and zinc set to go into effect in 2014.

Inflation remains an issue in the copper markets, especially as capital expenditures increased some 28 percent in 2011 compared with operating expenditure increases of 24 percent. "We’re seeing a slowdown in expansion of China’s smelting and refining capability," he said. "We’re expecting to see a refined copper surplus move to a balance by 2014."

Looking at iron ore, Jessup noted that steel mills worldwide are continuing to reduce production capacity, pointing to China’s slowdown in buying. "Steel prices could fall up to 30 percent more, with no sign that consumption will rebound anytime soon," he said. "There has also been major selling off of iron ore."

With demand seemingly dragging its feet, some mining companies may choose to become more cautious in procurement patterns, Jessup said.

"Many mining companies are slowing down their capital spending in 2013. This past April, only 58 percent of North American mining companies expected to increase procurement over the coming 12 months," he said. "Ultimately, capital expenditures will take place, but it is heavily dependent on political situations and the global economy."

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