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Metals markets poised
Exploration is driven, ultimately, by metals prices,
or at least the expectation of them
THE World Economic Forum
(WEF) recently published a frightening
report on the risks faced by the
global community during the next
ten years.
In its seventh Global Risks report, WEF presented
what it describes as a ‘snapshot’ of how 469 industry
leaders and experts perceive the evolving, interconnected,
risks that cut across society, the economy,
the environment, geopolitics and technology.
Chronic fiscal imbalances and severe income
disparity are the risks seen as most prevalent over the
next decade. Acting in tandem, these risks threaten
global growth as they are drivers of nationalism,
populism and protectionism at a time when the world
remains vulnerable to systemic financial shocks, as well
as possible food and water crises.
WEF’s Risk Response Network, and its four
partners (Marsh & McLennan, Swiss Reinsurance,
Wharton Center for Risk Management and Zurich
Financial Services) concluded that there were three
distinct ‘constellations’ of risk that present a “very
serious threat to our future prosperity and security”.
The first, entitled ‘Seeds of dystopia’, is the risk
associated with a world where a large youth
population contends with chronic levels of unemployment
while a large population of retirees becomes
increasingly dependent on heavily indebted
governments.
The second constellation of risk, entitled ‘How safe
are our safeguards?’, is linked to a diminishing capacity
to manage the systems that underpin our prosperity
and safety.
Third, entitled ‘The dark side of connectivity’,
reflects fears of an increase in virtual crime, with daily
life becoming more vulnerable to cyber threats and
digital disruption.
Deloitte has also recently published an annual
report on global trends in the resources sector.
The financial services company’s global mining
leader, Philip Hopwood, noted: “It could be argued
that the burning issues facing the mining industry tend
to remain largely unchanged over time. While this
may be factually correct, it fails to take into account
the extent to which shifting social, economic and
political trends affect the sector.
February 2012
“Looked at in isolation, each challenge may seem
familiar. Looked at through a macroeconomic and
geopolitical lens, however, it becomes clear that the
difficulties afflicting the industry are rapidly reaching
an unprecedented level of extremity.”
Deloitte’s ‘Tracking the trends’ report lists the ten
most important trends. Cost inflation is not new, but
it is higher. Changes to fiscal and government policy
have been occurring for years, but their volume,
unpredictability and associated costs are on the rise.
Commodity price volatility is now greater than
EXPLORATION SPECIAL
Marius Kloppers: BHP
Billiton expects copper
and iron ore to remain
supported by their
compelling supplydemand
fundamentals
ever, driven in part by market uncertainty and the
unparalleled demands of Asian governments and
consumers.
Issues around sustainability, the environment and
human rights have escalated into more frequent
episodes of community activism and social unrest.
Labour shortages continue to mount. Corporate cash
holdings have risen, resulting in spiralling shareholder
expectations. Capital project portfolios are bulking
up. And through it all, the regulatory environment
continues to tighten.
We see an additional 100,000
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Mining Journal special publication – PDAC
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