North American Metals & Minerals Survives Breakneck Construction in 2006 Looks to 2007

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Researched by Industrial Info Resources (Sugar Land, Texas). With major grassroot and expansion projects kicking off in mining (Phelps Dodge, Albian Sands), steel (SeverCorr, Nucor), and cement (TXI, Holcim), to name a few, 2006 will be remembered as a landmark year for Metals & Minerals Industry project spending in North America. Most of the project spending and construction activity for these projects will continue in 2007 and 2008. Project activity in 2006 stretched the capabilities of labor, equipment supply, and service providers, highlighting the need for proper planning and project execution discipline. Project owners are outsourcing more and more service requirements for engineering and equipment.

Also in 2006, major indicators such as Gap Measurement and Project Fallout trended positive for the Metals & Minerals Industry. As of November 2006, Gap Measurement analysis showed more than $24 billion worth of Metals & Minerals projects still active for construction starts in 2006. That’s a 70% increase in project spending activity when compared to the $14 billion equivalent 2005 Gap Measurement analysis. Project Fallout was down in 2006 as well, decreasing from 17% in 2005 to 15.6% in 2006. The less projects that fallout (projects that are deferred or cancelled), the healthier the industry is.

Click on the image at right to view a chart showing the Gap Measurement Chart comparing 2005 vs. 2006.

So what is in store for 2007? Will the industry see a slowdown in project starts in 2007? It depends on geography, Industrial Info is forecasting capital expenditures to increase in the U.S. and Mexico, but decrease in Canada, when compared to 2006 numbers. A decrease can be expected for new project starts in Canada, especially when two massive $10 billion each oil sands projects (Horizon and Muskeg River Expansion) that got underway in 2006 are taken into consideration. Although more than $6 billion in Canadian projects are under development with potential kick offs in 2007, this does not meet the record expenditures started in 2006.

Industrial Info Resources (IIR) is a Marketing Information Service company that has been doing business for over 23 years. IIR is respected as the leader in providing comprehensive market intelligence pertaining to the industrial processing, heavy manufacturing, and energy-related industries throughout the world.