This year's Melbourne Mining Club dinner in London was the usual mixture of sideways cricket references (given that the venue is Lords) and serious commodities comment. The speaker, introduced after a lengthy hagiography, was Andrew Mackenzie, newly installed as chief executive of BHP Billiton.
He was just in from Beijing, where he had been involved in some high level and sometimes televised hobnobbing with some pretty big cheeses. One topic of hot debate, he disclosed, centred around who was getting the better bargain in the new commodities price environment – the (Chinese) buyers or the big company sellers.
The answer wasn't disclosed, but Mr Mackenzie did sound a pretty upbeat note about the commodities outlook for the next few years, trotting out all the usual statistics about rising populations moving to the cities and buying more white goods. The twist, in the case of BHP Billiton, which has a big exposure to potash, is that all these moving people will also need more food to eat.
But this is not new. In fact, it's so old as to be hackneyed. Still, in a sector starved of good news, media outlets picked up the positivity and ran with it for all they were worth.
There was no ray of light for the junior sector, though. At least not from this quarter. Mr Mackenzie said that new projects and acquisitions were not his priority. In fact, divestments were more likely.
Nevertheless, looking at this market from the bottom up, rather than from the BHP Billiton top-down perspective, Mr Mackenzie's optimism does seem to ring true. It may be no comfort to those suffering in the here and now, but there is now virtually nobody anywhere running serious multi-million dollar exploration programmes.
With China still growing and America recovering, that can't last forever. The new metal required for economic activity in the 21st century won't all come from existing deposits.
When the taps get switched back on, potentially later next year according to most unscientific punditry, expect the current trickle to turn into a flood very rapidly. As ever, Minesite will be there to cover all the ebbs and flows.
| 95th Minesite Forum - 11th September 2013 |
95th Minesite Forum
Wednesday 11th September 2013
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