North American Metals & Minerals Industry on Track for $35 Billion of Construction Starts in 2012

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Researched by Industrial Info Resources (Sugar Land, Texas)--The value of construction starts for the Metals & Minerals Industry in North America is on pace to match the record-breaking numbers of 2011. In 2011, the value of construction starts more than doubled those in 2010, jumping from about $15 billion in 2010 to more than $35 billion. During this period, mining, steel manufacturing and proppant manufacturing projects led the wave of projects due to a number of factors, including global resource demand, record-breaking commodity prices, and double-digit gross domestic product growth in countries like China and India. Domestically, improvements in the automotive manufacturing sector and continued oil & gas development have translated into more Metals & Minerals projects.

At the beginning of the year, there were $37 billion worth of Metals & Minerals projects under construction in the U.S. and Canada. The wave has grown to $44 billion in projects under construction today.

In 2012, the Metals & Minerals Industry is on pace to again kick off the construction of about $35 billion, according to Industrial Info's North American Project Spending Index, which is currently showing growth of about 10% for the Metals & Minerals Industry in 2012. Industrial Info expects that number to drop by the end of the year, so that there is no growth or slightly lower growth than last year.

A decline in the price of some commodities, such as coal and iron ore, has impacted capital expenditures in 2012, and this will continue in 2013. U.S. coal mining companies, such as Peabody Energy (NYSE:BTU) (St. Louis, Missouri), CONSOL Energy Incorporated (NYSE:CNX) (Pittsburgh, Pennsylvania), and Arch Coal Incorporated (NYSE:ACI) (St. Louis), have all announced mine closures, production cutbacks, and reductions in capital expenditures in 2012.

Demand/consumption of coal has been down 10% to 20% in 2012. Inexpensive natural gas and harsh environmental regulations have essentially ceased all construction on coal-fired generation projects in the U.S., as companies turn to alternatives.

About 68% of the projects under construction are in Canada. Most of them are mining projects for iron ore, oil sands, and potash.

In the U.S., projects include steel mill expansions, new polysilicon plants and proppant manufacturing plants. Earlier this year, PyraMax Ceramics LLC (The Woodlands, Texas) began construction on a $140 million ceramic proppant manufacturing plant in Wrens, Georgia.

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