News . . .

Mixed Mining Fortunes Predicted in 2009

10 February 2009

An Australian resources analyst has predicted mixed fortunes for the Australian mining industry during 2009 with a tough first six months and an improving second half. ANZ Bank’s head of commodities research Mark Pervan was quoted in various media reports saying almost half of all Australia’s mining companies are currently operating at a loss.

In focusing on coal, which has been a major growth sector for many Australian companies in recent years, he says contract prices have dropped significantly since last year and further drops are forecast when contracts are renegotiated in early 2009.

Mark Pervan says the smaller miners will be hardest hit and that coal is the most vulnerable resource.

“It has been held up very strongly by some very tight supply issues, but also some very strong demand out of Asia, so it does look vulnerable to corrections.

“The base metals have sort of taken their medicine now and basically on a spot market they know the price straight away, whereas there's a looming downside issue coming for the coal industry.

“I think that coal doesn't look too good in this current environment.” However, Mark Pervan believes conditions should improve from mid-2009.

“There's a supply issue looming, in a sense that there isn't a lot of supply about and if you start to see some sign of life on the demand side, then that could actually see prices recover.”

“I think 2010 will be a much better year than 2009. If producers can hold out through the next six to nine months, on the other side of this are some pretty encouraging conditions,” he said.

Yolanda Torrisi

Managing Editor

The ASIA Miner