The Asia Miner

OCT-DEC 2018

The ASIA Miner - Reporting Important Issues to Mining Companies in the Asia Pacific Region

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the asia miner • volume 15 • issue 4 31 AROUND THE REGION As China remains a key driver of global commodity demand, India – the world's fastest growing economy – and Indonesia, Asia's emerging new powerhouse, could potenঞally add pressure on minerals supply. Owen Hegarty, EMR Capital Execuঞve Chairman, warns that future resources supply constraints will parallel the more than halving in minerals exploraঞon spend, parঞcularly for the global non-ferrous exploraঞon budget. "Investment in the sector remains at trough levels," Mr Hegarty said. "And this at a ঞme the global economy itself remains healthy." Mr Hegarty pointed to genuine fears about impacts on resources commodiঞes of a trade war between majors and the United States – with copper pundits pricing in a greater than 0.5 per cent drag on global growth due to uncertainty about economic policy within the resources powerhouses. "By any examinaঞon, however, the global economy is expected to double by 2050 and this will be led by the emerging seven top economies: China, India, Brazil, Mexico, Russia, Indonesia, and Turkey," Mr Hegarty said. "The United States will sঞll rank as the world's third largest economy by 2050 but the seven emerging economies will be those with the ঞller in their hand." Australia would miss the cut in the top 15 economies in 30 years' ঞme, those slots taken up by Japan, Germany, the UK, France, Saudi Arabia, Nigeria and Egypt. "You have to look at China – a country rebalancing, reforming and transforming – and that will make it the key driver of minerals commodity demand," Mr Hegarty said. He cited China's five-year-old Belt and Road iniঞaঞve as one such factor driving new resources demand centres for construcঞon and technology materials. "But it is not just China. India will derive 25 per cent of its GDP from manufacturing by 2022 and its Smart Ciঞes Mission has commied US$3 trillion to infrastructure spending to 2035," Mr Hegarty said. According to EMR Capital, Indonesia is another force to be contended with. Its stable economy and focus on infrastructure are generaঞng a solid plaorm for growth and with that, demand for raw and processed minerals. Yet capex investment in resources projects slumped to negligible levels last year compared to the highs of 2011 and 2012 with global exploraঞon spend following the same downward trajectory. The EMR Chairman – whose enঞty manages more than US$5 billion across 10 resources investments in seven countries – pointed to copper, gold, potash and coking coal as commodiঞes of focus. "The demand for copper has been robust for decades and there are emerging new uses but the exisঞng supply is already stretched and there are limited new supply opঞons," Mr Hegarty said. "There remains strong demand for gold as an alternaঞve currency but insufficient exploraঞon is limiঞng the producঞon pipeline. "Equally, potash has enjoyed solid demand growth and there is evidence of price recovery as new supply falters, so it is a sector offering strategic opportuniঞes. "Coking coal is benefiঞng from strong steel producঞon but supply shocks sঞll prevail and the strength in thermal coking coal markets is underpinning the stronger floor price." Minerals supply faces crunch time as economic powerhouses drive demand

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