Aside from Coal, Outlook is Bright for Metals & Minerals Companies

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Written by John Egan for Industrial Info Resources (Sugar Land, Texas)--With the exception of coal, the outlook for the Metals & Minerals Industry is more positive now than it has been in a few years, according to attendees and exhibitors at the annual conference of the Society for Mining, Metallurgy & Exploration (SME) (Englewood, Colorado), held in Denver, Colorado, February 25-27.

"Two or three years ago, all we were hearing was 'no,' " said a representative of Kiewit Mining Group Incorporated (Englewood, Colorado). "Now, we're seeing more requests for qualifications (RFQs) and requests for proposals (RFPs). There's been a definite uptick in interest in North America. Gold and industrial minerals are particularly hot for us right now," he said in a booth-side interview on the exhibitor floor.

Representatives from Emerson Electric Company (St. Louis, Missouri) echoed Kiewit's upbeat assessment. The Valves division had a strong year in 2018, and that division has hit its 2019 sales goals so far, a company official told Industrial Info. A representative from another Emerson division, its Reliability Solutions group, said mining companies are increasing spending on predictive and preventative maintenance compared to earlier years. "Twenty years ago, mining companies would run equipment until it failed. Now, there is more support for predictive and preventative maintenance using sensors and other digital technology."

An official from Andritz AG (Graz, Austria) said the best results were being posted in the company's automation and separation lines. Demand growth was strongest from companies mining copper, gold and iron ore. "Although prices for those minerals have come down a bit over the last year, they remain relatively high and, more importantly, stable," he said in an exhibit hall interview.

Interviewees and speakers consistently gave two reasons for the improved outlook for minerals, aside from coal: relatively strong global demand, which has led to comparatively high prices for several mined commodities, and the Trump administration's push to reduce regulations on extractive industries.

Although sales of pumps at Weir Group Plc (LSE:WEIR) (Glasgow, Scotland) are flat, a company representative told Industrial Info, "flat is better than what we had in 2016 and 2017." Permitting obstacles continue to slow the development of greenfield mining sites, so the company is focusing on redevelopment of brownfield sites. The official said its process improvement solutions could significantly increase a mine's production, perhaps even doubling it.

A number of exhibitors at the SME event, and several speakers, said customer interest was strong for digitization and process improvements that would increase production. One official from Steinert (Walton, Kentucky) said increased use of sensors could produce double-digit gains in a mine's grinding and pulverizing process.

Officials from Liebherr USA (Bulle, Switzerland), a privately held maker of heavy equipment for industrial markets, said their business' best prospects were in Australia, South America and Africa. Heavy-handed environmental regulation in the U.S. has diminished its prospects in the U.S., one of them said, but "with the ending of the war on coal, and the expected growth of demand for lithium, we expect prospects in the U.S. to pick up." A major lithium mine is planned for Nevada, commented a colleague. In the meantime, copper and gold are the company's hottest commodities.

There were about a dozen collegiate mining programs with booths at the SME event, and one major mining company, Freeport-McMoRan Incorporated (NYSE:FCX) (Phoenix, Arizona), staffed its SME booth with seven recruiters. A company official said the mining giant was mainly looking to hire summer interns, but was also taking resumes from experienced mining professionals.

One of the colleges exhibiting at the SME event, the Colorado School of Mines (Golden, Colorado), said enrollments were up and the school was building a new dorm to accommodate future enrollees.

Several speakers at the SME conference, which also was co-located with the 121st National Western Mining Conference organized by the Colorado Mining Association (CMA) (Englewood, Colorado), noted that strong global demand for copper had drained inventories and likely would boost future prices. Gold and silver prices also were expected to rise in the coming years, though not as dramatically as they did in recent years.

Several speakers at the CMA event spoke of a possible shortage of copper. Also discussed was the potential negative impact that trade wars could have on demand for copper, steel, aluminum and zinc. But most speakers seemed to think global trade wars could be averted.

Assuming trade wars can be averted, the world will need about 5 million tons per year of new copper production capacity by 2028, but only about 1.5 million tons are under development in the U.S. now, according to David Sferra of Freeport-McMoRan. He noted that electric vehicles contain three to four times more copper than cars powered by an internal combustion engine. "Less gas means more copper," he said.

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