Global Mine Project Development Explodes to $240 Billion, a Feature of "Navigating the Currents of Change" on Industrialinfo.com

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Researched by Industrial Info Resources (Sugar Land, Texas)--When it comes to mine project spending, the global mining industry has experienced a multiyear growth trend that is peaking and really is showing no sign of slowing down for the next two to three years. Rising demand for raw materials from both established markets and emerging markets like China and India are driving mine projects worldwide, especially in resource-rich countries like Australia, Brazil, Canada, Chile and Russia, to name a few.

Consumption is up for most metals and minerals, and commodity prices are at historic highs, having doubled and tripled, fueling new mine construction. Lately, there has been some weakness in commodity prices, which is of concern but at this point not enough to stop the momentum. Of greater concern to mining companies these days are skyrocketing development costs, which have led to some project cancellations and delays, but the amount of projects moving forward has been much greater than those falling out. Even with project development costs rising in some cases two to three times original forecast, mining firms are pushing ahead with expansions and grassroot mine construction. A prime example of this is the $1 billion El Boleo polymetallic project on the Baja Peninsula in Mexico. Developed by majority owner Baja Mining Corporation (Vancouver, Canada), project costs have more than doubled since Industrial Info began tracking it in 2001. El Boleo will be an underground mine producing copper, cobalt, and zinc. It will also feature a hydrometallurgical process plant, a sulfuric acid plant, three desalination plants and a 46-megawatt cogeneration plant. This is a huge project and typical of the grand scope of mines that are being developed worldwide. AMEC, Bateman Engineering, FL Schmidt, and TIC are a few of the service providers involved with engineering and construction of the project.

Historically, the mining sector makes up about 50% of the total spending in the Metals & Minerals Industry. Currently, Industrial Info is monitoring more than 730 mining projects globally scheduled to begin construction in 2008 or beyond. These projects total almost $240 billion. Projects range from grassroot copper mines in Chile to oil sands mines in Alberta, Canada, to concentrator expansions in Asia. One of the larger projects that we are tracking is the $10 billion Grassroot Serra Sul Iron Ore mine project being developed by Vale Incorporated in Brazil. In addition to the mine and iron pelletizing plants, the project involves 650 kilometers of railway and an iron ore terminal at a port in Ponta da Medeira. Iron ore is one of a number of metals that is experiencing tremendous growth worldwide. In the case of iron ore this growth can be attributed to demand for steel. New iron ore mines are being developed in Canada, South America, Australia and the Middle East. Growth in demand is coming from nations like China, which is consuming a lot of steel. China spent about $44 billion on facilities for the Olympics.

In addition to iron ore mining, some of the other mining sectors receiving most of the development dollars these days are coal, oil sands, potash, copper, molybdenum and uranium, mainly because of rising demand and commodity prices. Take for example oil sands. Demand and the price for crude oil are skyrocketing. Crude oil resources are limited. There will be no end to this trend until viable, inexpensive alternative fuels are developed. For North America, one of the prime resources for future crude oil supply is Alberta's oil sands. Companies are planning billions of dollars worth of projects to extract, process, upgrade, refine, store and distribute oil sands. Industrial Info is tracking $170 billion in project spending in Alberta, most of which is for oil-sands-related work. The majority is for mining-related projects. Industrial Info is tracking $50 billion worth of mining projects in Alberta alone.

The main concerns of the mining industry today are mine safety, environmental/regulatory/permitting issues, workforce availability, availability of construction materials, long-lead equipment deliveries and cost escalations. These are all major considerations and constraints to mine project development.

All of the activity in mine development worldwide is putting a strain on resources, such as raw materials, logistics, engineering expertise, labor and so on. After safety issues, cost escalations are the most important factors affecting mining projects these days. Price escalations to engineer and construct new mines and processing plants are common and many projects are not feasible as a result. Project planning is of the utmost importance and lining up resources ahead of schedule is a necessity.

Industrial Info Resources (IIR) is a marketing information service specializing in industrial process, energy and financial related markets with products and services ranging from industry news, analytics, forecasting, plant and project databases, as well as multimedia services.