Interview: Commodity ‘Super-cycle’ Suspended, Not Ending: Head Of Global Mining Group Fasken Martineau – by Alex Létourneau (Kitco News – June 26, 2013)

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(Kitco News) – Another tough day at the office for metals continues to fuel questions about whether or not the “commodity super-cycle” over the last decade is coming to an end.

Driven largely by Chinese appetite for commodities, the 2000s saw a commodities boom with both precious and base metals prices rising to record highs.

With sharp drops across the metals board in the last three months, some analysts have begun to believe this commodities boom, dubbed the “commodities super-cycle,” is at an end.

John Turner, partner and head of Global Mining Group with international business law firm Fasken Martineau, does not believe the super-cycle is over, but simply stalled.

“I don’t think it’s come to an end — there’s obviously a big suspension but China’s still buying,” Turner said to Kitco News in a telephone interview. “In a sense you’re taking a view on China and a lot of the commodities, maybe slightly less so on the gold side, but I do think there’s still a lot of demand in China, India and other places.

“I think it definitely will come back. I just wouldn’t want to be on record saying when and I don’t think it’ll necessarily be a comeback in a way where the tide raises all ships, I think it may be kind of selected,” he said.
A suspension in this super-cycle would severely affect the mining sector, which is currently navigating its way through choppy waters.

After Wednesday’s sharp gold drop, spot gold was at $1,231 at press time, many gold miners will be wondering where this bottom is and can they stay afloat.

“A few weeks ago, people were saying in the gold industry that you better have cash costs below $1,250 and now you see this morning that it’s gone below that,” Turner said. “That may be temporary, but at some point the marginal costs of production probably stops at going too much lower, although, I could certainly see it spike down for a period of time but I don’t think it’s sustainable below $1,250.”

This puts gold miners in a tough spot. The companies that are producing gold and generating cash flow don’t have to ring the alarm bells just yet, but if these current prices are here to stay for a period of time, miners will need to make big decisions.

“I think you’ll see a combination of some (juniors) folding and some distressed mergers and acquisition, as well as some (seniors and intermediates) that do have cash will be at a premium and do some sort of M&A deals with some of the juniors that they like the assets who are virtually out of cash,” Turner said. “It’s an industry where people are kind of expert, the ones that have been around for a while anyway, at conserving things, stop doing work and wait for a better day.”

For the rest of this interview, click here: http://www.kitco.com/news/2013-06-26/KitcoNews20130626AL_fasken_martineau.html