COPPER
OBSERVATION
Expected Recovery in Copper reflected by Finances To get a concept of where mining executives are allocating their capital, we've combed through the past five years of reports from the eight major diversified miners that have a real choice of where they invest their cash — BHP Group, Rio Tinto Group, Vale S.A, Anglo American Plc, Glencore Plc, South32 Ltd., Vedanta Resources Plc and Teck Resources Ltd.
A
lt h o u g h m i n e r s ' ov e r a l l capital spending has shrunk, base metals copper, zinc and
aluminum form a larger share of the budgets .
H owever ,
the enforced diet
doesn't apply equally to all commodities.
Copper
signs of recovery. Mining executives continue to be ridding the sackclothand-ashes of "disciplined capital allocation," which they took up to atone to the vast amounts of wasted money throughout the market's last peak.
is currently eating up an outsize
share of budgets right now, with just shy
$8 billion invested by our group of companies over the 12 months through June.
of
The tendency underlying all this is the manner capital spending dropped following the boom in the early part of the decade and is yet to show strong
12 | SKILLINGS MINING REVIEW March 2019
Ask mining companies that which of the mineral resources will see good long-term demand and they will naturally answer, "Everything." However, a closer look at spending can give the lie to this outlook - and emphasize the times when they're putting their money where their mouths are. Right now, “This Base” indicates that
the recent gloomy prognosis for copper might not survive. Over a third of capital spending by large diversified miners is being dedicated to the metal at the moment, up from levels of 20 percent or less early in the decade. That represents a substantial wager that forecast shortages for copper over the next decade will materialize. Zinc, aluminum, and platinum-group metals are currently running red-hot, also — but fertilizers, petroleum and iron ore seem to be fatally out of vogue. The flip in zinc and aluminum is much more conspicuous. These two elements are running more or less the exact same degree in dollar terms, despite the fact that capex as a whole is about a third of what it had been in 2013, whereas spending on copper is still well down from five years ago. Platinum-group alloys are in a similar scenario, suggesting that the recent
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