Metals & Minerals Industry Benefitting From, and Driving, North American Economic Growth

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Written by John Egan for Industrial Info Resources (Sugar Land, Texas)--The North American Metals & Minerals Industry is off to a promising start in 2010, and early signs point to an even strong stronger 2011 and 2012, Joseph Govreau, Industrial Info's vice president of research for Metals & Minerals, told about 200 attendees at IIR's Twenty-Ten Industrial Market Outlook briefing in Atlanta last week.

Industrial Info is tracking 1,168 active Metals & Minerals projects in North America. These projects have a combined total investment value (TIV) of $223 billion, Govreau said. The TIV sum includes about $35 billion of projects that are scheduled to kick off in 2010, a 33% increase in value from the $26.2 billion in projects that kicked off in 2009.

Western Canada, Ontario, the Great Lakes, and the Rocky Mountains will be the North American regions with the largest year-over-year increases in project spending for this industry, according to Industrial Info's data.

"There are several major trends driving new Metals & Minerals project development in the U.S. & Canada," Govreau told the Outlook attendees. "First is oil & gas development. The oil sands business is very active right now. Most of the oil sands development in Alberta is being done in large open-pit mines. Industrial Info is currently tracking 18 oils sands projects, totaling about $41 billion in TIV."

Technological advancements in shale formation developments is another factor driving project spending for Metals & Minerals companies, the IIR vice president said. Demand is rising for materials used in shale-drilling, including ceramic proppants, fracturing sand, line pipe and drill pipe; and companies are investing in facilities to manufacture these materials, he said.

The slow recovery of the steel industry is a third factor driving spending in the Metals & Minerals market, as steelmakers are increasing their demand for metallurgical coal, Govreau said. Met coal mined domestically is being used in the U.S. and by overseas steelmakers. Right now, U.S. steel mills are running at slightly above 70% of capacity, up from less than 50% capacity utilization last year, he said.

"We see steady improvement in this market during 2010, and greater strength in 2011 and 2012," Govreau told the Outlook attendees. About 60% of the projects Industrial Info is tracking in the North American Metals & Minerals segment are not scheduled to kick off until 2011 or beyond, he said, "which bodes well for 2011 and 2012."

Relatively high commodity prices for gold, silver, and copper have greatly strengthened the industry over the last six months. And increased signs that the U.S. economy is growing again should further boost demand for metals and minerals. The U.S. economy grew at a 3.2% annualized rate for the first quarter of 2010, according to data released by the U.S. government. During the fourth quarter of 2009, the U.S. economy grew at a 5.6% annualized rate.

"The $223 billion in project spending for the North America Metals & Minerals business represents a big opportunity for equipment and service providers," Govreau said. However, an even greater opportunity lies outside of North America: Latin America, Australia, Africa, and Asia all report strong growth in their respective Metals & Minerals businesses. On a global basis, Industrial Info is tracking 2,351 active projects with a TIV of $839 billion.

Industrial Info Resources (IIR) is the leading provider of global market intelligence specializing in the industrial process, heavy manufacturing and energy markets. IIR's quality-assurance philosophy, the Living Forward Reporting Principle™, provides up-to-the-minute intelligence on what's happening now, while constantly keeping track of future opportunities.