As analysts forecast the future for the mining industry, most are in agreement that the outlook is positive and the upward trends from the last two years will continue.
Both small mining companies and large corporate giants such as Rio Tinto, Freeport-McMoRan and Anglo-American reported solid earnings, increasing positive profit margins and improved cash flow for FY2018. This is a continuation of the trend we’ve seen over the last couple years where robust macroeconomic fundamentals, large reserves and deregulation under President Trump jump started the mining industry from its previous slump.
Although mining appears to be back, and healthy, the landscape is different than it was just a few decades ago. Now, mining companies are focused on copper, nickel, lead, tin and gold as opposed to traditional materials such as iron and coal; resources that have dipped due to political pressure to move to alternative sources of energy.
President Trump campaigned on the promise to save coal, and his administration has taken action over the past couple years to bring coal back from the dead, and his attempts have helped stabilize the demand for coal. Natural gas continues to increase in demand and be considered the bridge fuel as North America transitions to alternative energy sources. What that means for the coal market remains to be seen.
Mining equipment market experiences simultaneous growth.
The expected growing in the mining industry is also having an effect on the Mining Equipment Market. It wasn’t too long ago that the global mining equipment market size was valued at USD 120.82 billion; however, with analysts anticipating CAGR of 11.7%, the global mining equipment market is expected to jump to USD 284.93 billion by 2025 per Grand View Research.
As the mining industry forges ahead with its recovery, we are seeing companies both large and small position themselves to take advantage of future profits coming their way. Mining companies are purchasing new and used mining equipment and retrofitting their current fleets while they have the cash flow to do so. The recent improvements in the mining space is now attracting more capital and mining equipment finance companies are looking to deploy capital to help facilitate the continued mining industry recovery.
Positive yet cautious.
Although the mining industry in Canada and The United states appears to be trending up, mining companies are still cautious about the potential risks that always threaten their operations. Issues such as tension over water usage from local communities, political unrest that impacts their operations across the globe and the general public’s preference to move toward clean and renewable energy and sustainable business practices. These threats are always present, but if managed, we don’t anticipate they will negatively impact the projected recovery.
Mining in The United States and Canada is back for now.
Even though there are risks the mining industry will need to overcome over the next few years, the overall forecast for the industry looks positive. Improving on a recovery that started a few years ago, the mining industry and the mining equipment market will continue to see significant growth for at least the next year, and most likely experience multiple years of continued success.
*This article was originally posted on our Medium Blog on June 1, 2019
