TODAY it takes 10 years to discover, define, and determine the feasibility of a project and an additional 6 years or more until investors can expect returns from a greenfield mining construction project.
Markets have taken a volatile downward trend in recent months creating concern for host country governments and miners alike. Mineral prices have dropped over the last year. For example, iron ore and coal prices have fallen by half. The market correction has led to a sharp decline in foreign direct investment, forcing the governments of countries hosting new production to reassess their recent goals of extracting more benefit from the industry.
There is now a realization that governments must be more accommodating to remain competitive internationally. Lower export-related tax receipts are putting pressure on governments to adapt more austere budgetary measures.
Today, it takes six years or more until investors can expect returns from a greenfield mining construction project. It typically takes ten years to discover, define, and determine the feasibility of a project. Long lead times heighten a project’s overall risk profile, making it difficult for companies to achieve the level of return required to compete with alternative asset classes for investment.
Mining companies are facing difficult challenges adapting to softening markets as their
margins are squeezed and they dispose of non-core assets to conserve cash.
Minerals markets continue to react to robust supply and moderating demand while also being
negatively impacted in US Dollar terms by the relative strength of the currency. Political
and economic stability concerns in China and within the Russian sphere of influence are leading to changing perceptions and expectations for future mineral demand.
The Endurable Top Five: Canada, Australia, United States, Chile and Mexico
Reflecting on our past surveys, Canada, Australia, the United States, Chile, Mexico as
well as a few others, share a common high ranking. These countries (with the exception of the U.S.) rise to the occasion as their mining sectors represent a relatively large component of their overall economies. They have long-dated mining histories and they have leading expertise within both the private and government sectors.
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