Released February 11, 2021 | SUGAR LAND
en
Researched by Industrial Info Resources (Sugar Land, Texas)--Like many other industrial sectors, spending in the Metals & Minerals Industry dipped in 2020 because of the COVID-19 pandemic, due to both a drop in commodity demand and the necessity for safer practices at work sites. However, the market is now seeing a spike in commodities prices, and the rate of new demand growth is outpacing the growth in supply production capacity. In Industrial Info's recent webinar on the spending outlook for the industry, Joe Govreau, vice president of research for the Metals & Minerals, discussed the market drivers and trends affecting the industry in the coming years.
There are about $1.57 trillion of Metals & Minerals projects in play throughout the world. Industrial Info saw a relatively small number of outright project cancellations in 2020, but a lot of spending was deferred and pushed out to future dates. Industrial Info has identified more than 1,500 Metals & Minerals projects totaling more than $200 billion that have been impacted by COVID-19. Most of these were delayed, but not cancelled.
Govreau discussed some of the major drivers in the sector that he expected to see in 2021, such as growth in GDP. "Decarbonization is also very important," said Govreau. "According the International Energy Agency, three sectors in Metals & Minerals account for more than half of the industrial energy use and around 70% of direct CO2 emissions. These sectors are mining; smelting, which includes steel mills; and cement manufacturing. Not surprisingly, those are the sectors experiencing the most activity for decarbonization and electrification projects. Decarbonization is really a game changer, and it's reshaping the industry." Govreau said decarbonization was shifting fuel consumption away from fossil fuels, especially coal and diesel, to renewables and other fuels such as hydrogen, causing an increase in demand for energy transition metals such as copper and cobalt.
Govreau also said that geopolitical issues such as resource nationalism are having an effect on project activity, with many countries across the world enacting taxes, royalties or moratoriums on development to get a larger share of the mining and industrial project revenue.
Geographies
U.S & Canada
Construction activity in the U.S. and Canada is up about 9.5% from the middle of last year, mainly due to restarts after pandemic-related delays. Mining represents more than two-thirds of the project value. One of the hotspots is gold, and there are about 35 gold mining projects under construction in these countries.
Govreau talked about the impact of the new Biden administration on Metals & Minerals projects in the U.S., saying that as President Biden had made a moratorium on new leasing and drilling for oil and gas on federal lands, similar actions could be made for the mining sector. Biden's rejoining the Paris Climate Agreement also will help drive demand for energy transition metals.
Latin America
The pandemic and geopolitical issues continue to constrain mining activity in Latin America. There have been delays in many projects, including the $1.4 billion Tia Maria copper project in Peru, which has been delayed due to social conflicts. In Brazil, Vale (NYSE:VALE) (Rio de Janeiro, Brazil) has had a significant amount of iron ore production curtailed due to safety code closures stemming from both the Brumdinho tailings dam disaster in 2019 and the pandemic. For additional information, see January 29, 2019, article - Mining Disaster Strikes Vale, Again.
In Chile, Codelco (Santiago, Chile) has restarted several copper mines and projects that were shuttered due to the pandemic.
Industrial Info is tracking about $92 billion in Latin American Metals & Minerals projects, with mining being the dominant sector. There are also large investments in renewable energy projects, with several miners committing to lower carbon footprints.
Europe
Europe leads the way in carbon reduction, and activity in its Metals & Minerals Industry is showing this across various sectors. Govreau said, "In steel manufacturing, producers are looking at hydrogen or related direct-reduced iron production, which is being studied to replace coal-based technology."
Germany plans to increase to increase the number of electric vehicles on the road by sixfold, supporting battery and lithium demand.
Despite the phasing out of coal in Europe, coal extraction continues to be the top mining activity, largely due to development in Poland. The U.K. recently announced plans to close seven large coal-fired plants.
Asia
Asia leads the world in Metals & Minerals projects, largely due to the massive amount of activity in China, which has had a fairly quick recovery from the pandemic. Govreau said, "In order to reduce overcapacity, the Chinese government will continue to promote capacity replacement projects in steel, non-ferrous metals and the cement building materials industries at a rate of 1 to 1.5, meaning that for every 1 ton of new capacity, 1.5 tons of old capacity must be closed."
Govreau said that investment in grassroot coal-mining projects in China was expected to grow in 2021 as a three-year suspension ends this year.
Commodities
Steel
While China increased its steel production last year by 5.2%, the rest of world experienced a decline. China's steel manufacturers are planning about $35 billion in projects over the next two years, representing about 45% of the value of total global activity.
In North America, steel demand took a hit last year, with a drop in demand from sectors such as automotive, which saw a 15% decline in sales. However, several projects placed on hold were restarted in the second half of 2020. E-commerce projects also are driving demand for steel. For example, Amazon.com Incorporated (NASDAQ:AMZN) has announced plans to build 1,500 small delivery hubs of 200,000 square feet each in the U.S., which will require a minimum of 3.3 million tons of structural steel and steel joists. Industrial Info is tracking $41 billion worth of distribution center and warehousing projects in North America, driving the demand for steel.
Worldwide, grassroot project activity, which represents about 34% of steel projects, has slowed as more and more expansions and additions at operational facilities are developed.
Cement
This sector has largely been supported by government infrastructure activity. Demand for cement is expected to grow about 4% this year, but this will probably still come in below 2019 demand.
Energy Transition Metals
Govreau explained some of the key drivers of this sector: "Governments are mandating carbon-reduction goals, and corporations are developing environmental, social and governance programs to become carbon-neutral or significantly reduce carbon emissions in order to meet specific reduction targets and satisfy investors." The move to electric vehicles, which are expected to increase by 50% this year, rechargeable batteries and fuel cells are increasing the drive for energy transition metals across the board.
Copper, the largest energy transition metal, accounts for about half the projects tracked by Industrial Info in this sector. Electric vehicles are expected to need about four times as much copper content as conventional automobiles. According to Glencore Chief Executive Officer Ivan Glasenberg, the world currently consumes about 29.2 million tons of copper per year, but with the move to zero-carbon emissions, demand is expected to rise to 60 million tons by 2050. Demand for other energy transition materials such as cobalt and rare earths, used in wind turbines, is growing accordingly.
Click here to watch the full webinar.
Industrial Info Resources (IIR), with global headquarters in Sugar Land, Texas, six offices in North America and 12 international offices, is the leading provider of global market intelligence specializing in the industrial process, heavy manufacturing and energy markets. Industrial Info'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. Follow IIR on: Facebook - Twitter - LinkedIn. For more information on our coverage, send inquiries to info@industrialinfo.com or visit us online at http://www.industrialinfo.com.
There are about $1.57 trillion of Metals & Minerals projects in play throughout the world. Industrial Info saw a relatively small number of outright project cancellations in 2020, but a lot of spending was deferred and pushed out to future dates. Industrial Info has identified more than 1,500 Metals & Minerals projects totaling more than $200 billion that have been impacted by COVID-19. Most of these were delayed, but not cancelled.
Govreau discussed some of the major drivers in the sector that he expected to see in 2021, such as growth in GDP. "Decarbonization is also very important," said Govreau. "According the International Energy Agency, three sectors in Metals & Minerals account for more than half of the industrial energy use and around 70% of direct CO2 emissions. These sectors are mining; smelting, which includes steel mills; and cement manufacturing. Not surprisingly, those are the sectors experiencing the most activity for decarbonization and electrification projects. Decarbonization is really a game changer, and it's reshaping the industry." Govreau said decarbonization was shifting fuel consumption away from fossil fuels, especially coal and diesel, to renewables and other fuels such as hydrogen, causing an increase in demand for energy transition metals such as copper and cobalt.
Govreau also said that geopolitical issues such as resource nationalism are having an effect on project activity, with many countries across the world enacting taxes, royalties or moratoriums on development to get a larger share of the mining and industrial project revenue.
Geographies
U.S & Canada
Construction activity in the U.S. and Canada is up about 9.5% from the middle of last year, mainly due to restarts after pandemic-related delays. Mining represents more than two-thirds of the project value. One of the hotspots is gold, and there are about 35 gold mining projects under construction in these countries.
Govreau talked about the impact of the new Biden administration on Metals & Minerals projects in the U.S., saying that as President Biden had made a moratorium on new leasing and drilling for oil and gas on federal lands, similar actions could be made for the mining sector. Biden's rejoining the Paris Climate Agreement also will help drive demand for energy transition metals.
Latin America
The pandemic and geopolitical issues continue to constrain mining activity in Latin America. There have been delays in many projects, including the $1.4 billion Tia Maria copper project in Peru, which has been delayed due to social conflicts. In Brazil, Vale (NYSE:VALE) (Rio de Janeiro, Brazil) has had a significant amount of iron ore production curtailed due to safety code closures stemming from both the Brumdinho tailings dam disaster in 2019 and the pandemic. For additional information, see January 29, 2019, article - Mining Disaster Strikes Vale, Again.
In Chile, Codelco (Santiago, Chile) has restarted several copper mines and projects that were shuttered due to the pandemic.
Industrial Info is tracking about $92 billion in Latin American Metals & Minerals projects, with mining being the dominant sector. There are also large investments in renewable energy projects, with several miners committing to lower carbon footprints.
Europe
Europe leads the way in carbon reduction, and activity in its Metals & Minerals Industry is showing this across various sectors. Govreau said, "In steel manufacturing, producers are looking at hydrogen or related direct-reduced iron production, which is being studied to replace coal-based technology."
Germany plans to increase to increase the number of electric vehicles on the road by sixfold, supporting battery and lithium demand.
Despite the phasing out of coal in Europe, coal extraction continues to be the top mining activity, largely due to development in Poland. The U.K. recently announced plans to close seven large coal-fired plants.
Asia
Asia leads the world in Metals & Minerals projects, largely due to the massive amount of activity in China, which has had a fairly quick recovery from the pandemic. Govreau said, "In order to reduce overcapacity, the Chinese government will continue to promote capacity replacement projects in steel, non-ferrous metals and the cement building materials industries at a rate of 1 to 1.5, meaning that for every 1 ton of new capacity, 1.5 tons of old capacity must be closed."
Govreau said that investment in grassroot coal-mining projects in China was expected to grow in 2021 as a three-year suspension ends this year.
Commodities
Steel
While China increased its steel production last year by 5.2%, the rest of world experienced a decline. China's steel manufacturers are planning about $35 billion in projects over the next two years, representing about 45% of the value of total global activity.
In North America, steel demand took a hit last year, with a drop in demand from sectors such as automotive, which saw a 15% decline in sales. However, several projects placed on hold were restarted in the second half of 2020. E-commerce projects also are driving demand for steel. For example, Amazon.com Incorporated (NASDAQ:AMZN) has announced plans to build 1,500 small delivery hubs of 200,000 square feet each in the U.S., which will require a minimum of 3.3 million tons of structural steel and steel joists. Industrial Info is tracking $41 billion worth of distribution center and warehousing projects in North America, driving the demand for steel.
Worldwide, grassroot project activity, which represents about 34% of steel projects, has slowed as more and more expansions and additions at operational facilities are developed.
Cement
This sector has largely been supported by government infrastructure activity. Demand for cement is expected to grow about 4% this year, but this will probably still come in below 2019 demand.
Energy Transition Metals
Govreau explained some of the key drivers of this sector: "Governments are mandating carbon-reduction goals, and corporations are developing environmental, social and governance programs to become carbon-neutral or significantly reduce carbon emissions in order to meet specific reduction targets and satisfy investors." The move to electric vehicles, which are expected to increase by 50% this year, rechargeable batteries and fuel cells are increasing the drive for energy transition metals across the board.
Copper, the largest energy transition metal, accounts for about half the projects tracked by Industrial Info in this sector. Electric vehicles are expected to need about four times as much copper content as conventional automobiles. According to Glencore Chief Executive Officer Ivan Glasenberg, the world currently consumes about 29.2 million tons of copper per year, but with the move to zero-carbon emissions, demand is expected to rise to 60 million tons by 2050. Demand for other energy transition materials such as cobalt and rare earths, used in wind turbines, is growing accordingly.
Click here to watch the full webinar.
Industrial Info Resources (IIR), with global headquarters in Sugar Land, Texas, six offices in North America and 12 international offices, is the leading provider of global market intelligence specializing in the industrial process, heavy manufacturing and energy markets. Industrial Info'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. Follow IIR on: Facebook - Twitter - LinkedIn. For more information on our coverage, send inquiries to info@industrialinfo.com or visit us online at http://www.industrialinfo.com.
