Volume 9 Edition 2 2012 - The ASIA Miner

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Project Survey 2012
Mine Investments by Region, 2011
Investment Share Share Trend
(US$ billion) (Percent) (2010 to 2011)
Africa 099 015
÷
Asia 073 011
Europe 075 011
÷
Latin America 192 028
North America 124 018
Oceania 113 017
TOTAL 676 100
case for Latin America in 2010. North America’s share grew to 18%
and Oceania’s to 17%.
Africa also increased its share of total world investments to 15%
while Europe maintained its position and Asia dropped from 13%
to 11%, continuing a decline that began after reaching a high of
14% in 2009. The investment pipeline in North America grew by
$38 billion in 2011, and in Oceania by $32 billion. This represents
44% and 40% for these regions, respectively; much higher than
the global average of 20%.
Latin America’s project pipeline includes many more very large
projects than any other region; for example, 56 Latin American-based
projects involve investments of more than $1 billion, compared with
33 projects in Oceania, 20 each in Africa and Asia, and 17 in Europe
(12 of which are located in Russia and the Ukraine, with the rest in
Sweden and Greenland).
Europe has continued to move up and has passed Asia as the
least favored region, but its relative share remains 11% of the total at
$75 billion. The rising investment trend there, with more new projects
in Finland, Sweden, Greenland and in 2011 also in Norway, has
strengthened. The European Commission continues to follow the development
of the local mining sector closely and although the new
Raw Materials Initiative has not, to date, resulted in any major new
support initiatives for the European mining sector, the conditions for
the mining industry have not deteriorated.
In Africa, the African Union has continued work on the African Mining
Vision, which aims to create conditions for mining investment in
Africa that enable both the host countries and the investors to benefit
from them. The African countries want to take advantage of strong demand
from China to create a competitive situation between traditional
investors from Europe and North America and new Chinese investors.
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U.S. as a Fading Player Not so Fast…
The growing trend toward resource nationalism has manifested itself
in various ways in both emerging and developed mining countries.
Demand for increased royalties or taxes on “super profits” have been
widespread, including established mining nations such as Australia.
Calls for increased state ownership or at least increased ownership by
domestic owners have not been limited to emerging economies such
as Zimbabwe and Namibia; in Finland, the idea of establishing a new
state mining company has been discussed among politicians.
Total investment share attracted by the top 10 countries increased
in 2011 to 71%, passing the previous high of 68% in 2008. The trends
mentioned above could be the explanation for a strong growth of projects
in North America and Oceania during 2011. Australia, Canada
and the U.S. together accounted for only 26% of the total project
pipeline at the end of 2010. In December 2011, their combined share
was 34%, with total value up from $150 billion to $223 billion, an increase
of almost 50% in one year. In our 2010 analysis we wrote off
the U.S. as a mining nation and that proved premature.
Australia maintained its position as the number one nation for mining
investments. The iron ore boom continues there and of the top
20 projects in Australia, 13 are in iron ore and 11 of them require investment
of more than US$1 billion. Canada, in second place, has a
much wider mix of projects, including several gold and base metal
projects among the top 20, along with five iron ore projects, six gold
projects and two copper projects on the list.
The combined announced investment value of projects in those
two nations is slightly less than $100 billion. The rest of the Top 10 list
changed considerably in 2011. Chile moved up to rank third, with a
total of $54 billion. Brazilian mining investments fell in 2011 and only
accounted for 7% of the total or $46 billion. Russia recaptured fifth
place in 2011, and even though the number of Russia-based projects
decreased, the investment volume increased by 18%. The United
States showed the strongest growth over 2011, up by 38% and rising
from eighth place to seventh. Mexico dropped out of the Top 10
and was replaced by Guinea, where three giant iron ore projects involve
a total investment of $16 billion.
Following the Top 10 in descending order are Mexico, Argentina,
Papua New Guinea, China, Indonesia, Sweden, Democratic Republic
of Congo and Kazakhstan, each with a portfolio of projects between
$8-$13 billion. It should be noted that some projects are much
bigger than others, and one new project announced or one major
project completed in a small country can make a big difference in the
position of this country relative to others. Thus, not too much importance
should be put on relative positions outside the Top 10.
The figure for China is most certainly an underestimate, since
many of the projects run by state-owned companies are never reported
in such a way that they reach the international mining press.
With comparable reporting from China there is no doubt that the
country would be high up among the top 10 countries. Chinese
projects are mostly small, with an average investment value of $170
million per project, compared with Canada where the average project
is currently valued at $695 million.
Chinese mining investment activity outside China is still marginal.
China’s scramble for resources in Australia, Africa and elsewhere,
which has come into clearer political focus, still represents minimal investment
values despite rapid growth in recent years—but it is growth
from an almost zero start position. It will take years before Chinese
companies become powerful global players in the mining industry,
but it will eventually happen.
Top 10 Countries for Mining Investment, 2011
Investment Share Rank in
(US$ billion) (Percent) 2010
01. Australia 099 15 01
02. Canada 092 14 02
03. Chile 054 08 04
04. Brazil 046 07 03
05. Russia 046 07 06
06. Peru 044 06 05
07. United States 032 05 08
08. South Africa 025 04 07
09. Philippines 017 03 09
10. Guinea 016 02 11
TOTAL 471 71
22 | ASIA Miner | March/April 2012