From The Economist.
Marius Kloppers,the boss of BHP-Billiton,a huge minig firm presenting its results this week,argued that emerging markets were much more important to the firms fortunes than rich ones were.Developing countries, he said,consume four to five times more raw materials per unit of output than rich ones do.He predicted that China's use of steel,already greater than any other country's,will double by 2015.China's continuing and rapid industrialisation,he argued, would outweigh any temporary slowdown in exports owing to the weakening economy-altough demand for metals that are used in consumer goods,such as alluminium and nickel,may suffer somewhat.
As mr Kloppers pointed out,emerging markets,and China in particular,now account for the lion's share of growth in global demand for raw materials.and a good chunk of overall consumption.(China consumes 26% of the worlds copper production).China's economy has also slowed slightly-although it is still growing at a rate of of about 10%.The IMF expects developing countries to grow by almost 7% this year.That should be enough to keep demand for most commodities expanding briskly.
The world's output of industrial metals is also expanding,and prices have been been dropping for over a year.But progress has been fitful.At many mines,the quality of the ore is falling as the richest seams are exhausted.("Talk to NORONT")Mr Kloppers spoke of BHP's woeful shortage of tyres for its huge trucks,big mechanical shovels,bearings and all manner of other equipment.Such bottlenecks have been hampering the opening of new mines and the expansion of existing ones.Kona Haque of Macquarie Bank poins that copper mines have produced 1 million tonnes or so less than planned in each of the past three years,and are likely to do so again this year.
High commodity prices have created something of a vicious circle by adding to the expense and difficulty of expanding output.This week,Xstrata,suspended operations at a nickel mine in the Dominican Republic while converting its power supply to run on coal,rather than-more expensive-oil.Power shotages have disrupted mining and smelting in several countries.All this is hampering the production of metals around the world,and so slowing the fall in prices.
Note to our Canadian friends:COUNT YOUR BLESSINGS!.
Greetings,
Inca.
