The Mining Boom is Over

[sinner]

It'll never be the same again as the last 100 years without another massive influx of essentially free energy and huge jumps in technology.

EROEI is going down for all energy sources, this will have a huge impact, everyone assumes they can keep running their diggers and drillers for free forever. Exploration itself is massively energy intensive.

Plus

The USD is screwing with everything, including the global competetivenes of Australian good and services priced in AUD. Chinese demand might go up, or whatever, doesn't mean they have to buy from us. Plenty of sellers out there, not to mention the Chinese have been investing vast amounts of paper money into real resource assets in African and Sth America for at least a decade now.

My experience is that most people talking about the mining boom really have never researched Australias 'composition of trade', even cursorarily.



You can see that for example, gold has replaced Education as our #3 in 2011. You can also see just how reliant on Iron-ore demand we really are.

 

[MrBurns]

I think it's certainly over at the level we're used to which means trouble for us.

I feel like our future will be a bit like our performance in the Olympics right now....

 

[qldfrog]

also want to add that we(Australia) have been providing a lot of the gap offer/supply for iron/coal in china, even a small decline in growth in China will see the Chinese able to turn into self sufficient, or just buy at low price:
many miners will loose money and send at loss to the chinese mills but it will be less expensive than writing off the billions of capital invested;
we might end up having worse than a no export situation, one where every export will actually cost us....
scenario explained in the AFR of this week end and similar to situation seen in the past;
as mentioned above, China has bought Africa which is in a mineral point of view a much luckier country than us so there is competition even if the boom continues: the new mines/expansions all over the world will be up and running in a matter of months and start a glut IMO
Time will tell

 

[DB008]

'Boom' could be over.

==However==

China/India still need 'iron ore/alumina/nickel' to build 'stuff' (buildings, rail, stainless steel products, etc..etc..)

The 'growth' sector in mining will slow down, no doubt, but demand will still be there after the 'slack/excess' has been sucked up. Might take a year or so, but iron ore will be in demand for a while. China still growing at 8% + is still pretty big, compared to the rest of the world.

Also, look at other mining assets/metals like R.E.E./R.E.Metals which are needed in iPads/iPods//Laptops/Missiles etc etc.....

Only iron ore miner l own is WPI.
Digging up iron ore in Africa, which happens to be in a huge down-trend....sell sell sell....

DYOR - my thoughts are all BS anyways....

 

[Smurf1976]

Markets are made at the margin.

Add 10% to supply whilst demand only grows 3% and that in itself will send the price through the floor unless there's some form of withholding of production in order to prop prices up. It only needs a fairly minor shift in balance to greatly alter the price - that's what sent them up in the first place and it works the other way around too.

Look at oil in 2008. Demand fell just a few % but price crashed 75% or so top to bottom. And oil's a far scarcer commodity than iron ore or coal in terms of reserves in the ground etc.

 

[So_Cynical]

Only iron ore miner l own is WPI.
Digging up iron ore in Africa, which happens to be in a huge down-trend....sell sell sell....

I hate to be picky Danny but

Miners mine stuff and sell it...prospectors/explorers look for stuff and after they find it they spend lots of money developing etc.

WPI is a prospector and as such digs up very very little, NOT a miner.

 

[Glen48]

Steel production is down 96% in China which could have slight impact on OZ.

 

[wayneL]

Steel production is down 96% in China which could have slight impact on OZ.

Not quite.

Steel production PROFIT is down 96%. However still some concern for Aus producers http://online.wsj.com/article/SB10000872396390443545504577562883129133806.html

 

[DB008]

I hate to be picky Danny but

Miners mine stuff and sell it...prospectors/explorers look for stuff and after they find it they spend lots of money developing etc.

WPI is a prospector and as such digs up very very little, NOT a miner.

Your right So_Cynical, l should have written 'prospector, looking to become a miner *maybe* in the future', LOL.

 

[DB008]

2 Data points.

 

[brty]

If you want to know what is booming and what is in the bust phase, the simplest place to look is in the rolling year records of the ASX. It is available from the AFR website here...

http://www.afr.com/share_tables/;jsessionid=C0C71ADE39F69BE3792821A50DEDEDFA

A simple look at rolling year records this week shows new highs in such issues as CMJ, WBC, WOW, TLS, TTS, WDC etc.
Just yesterday the new yearly lows was full of names that had Resources, Res, Min, Energy, metals and coal in them.

There is always plenty to learn about the state of the market from those rolling year records.