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The operating environment might be rough, but the global mining industry remains optimistic that the commodity boom is going to run for years to come.
The annual Prospectors and Developers Association of Canada (PDAC) conference, the industry’s largest event, began Sunday in Toronto with a commodity outlook. A crowd of 28,000 to 30,000 people is expected to attend this year, the most ever.
The conference, which serves as a barometer for the mining industry, comes during a challenging period for most companies.
Producers are facing enormous cost escalation at their operations and development projects, while junior companies (which dominate the conference) are still struggling to raise money.
Rising political risks are affecting companies of all sizes, and metal prices are well off their highs as investors fear slowing growth in Asia.
Not surprisingly, the mood on the floor is a bit less positive than last year, when commodities and equity markets were in the midst of a broad rally. However, industry insiders at the show see a silver lining to all the challenges: namely, that they should keep commodity markets tight for the foreseeable future.
“The world is going to need new mine projects brought into production, and they’re going to have to overcome major hurdles,” said Andy Roebuck, market research manager at Teck Resources Ltd., who said that developing a mine in a relatively short period of time is “impossible.” He spoke about the zinc market, which he thinks will move from a surplus to a deficit next year as large mines close and production is not replaced by new operations.
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