FOR IMMEDIATE RELEASE
China is driving the global iron ore and steel markets and it is a misconception that demand is slowing down, according to Sandy C. K. Chim, President and CEO, Century Iron Mines Corporation. Nevertheless, mining companies need to go back to focusing on profitability and improving cost efficiencies, as the old focus on expansion has resulted in lower profits, Bob Leshchyshen, VP Business Development and Investor Relations at the company has observed.
Speakers at the marcus evans Global Mining Summit 2014, taking place in Las Vegas, Nevada, March 17-18, Chim and Leshchyshen put the future of the mining industry under the spotlight.
What is your outlook on the iron ore industry? What will drive growth?
Chim: The industry will be driven by China, the largest iron ore consumer in the world. China buys 70 percent of the seaborne iron ore, purchasing 745 tons in 2012. It is the primary user, and in many cases the primary producer, of iron, steel and gold.
China is currently the second largest economy. It is still a poor country by per capita income comparison, but with 1.3 billion people, every additional USD 10 a person makes every year translates to a USD 13 billion increase.
Some claim that China’s growth rate is unsustainable and already slowing down. What do you say?
Chim: Advanced economies tend to look at quarterly and monthly statistics, so every slight fluctuation of economic indicators causes some concern. In growing economies, growth is not expected to go in a straight line. There will always be small fluctuations, but the long-term, even medium-term trend is growth. It is a misinterpretation of statistics that China is slowing down. When you look at long-term trends through a microscope, it will not be a straight line. This is sending unnecessary nervousness to the market.
China is expected to grow by 7.5 percent in 2013, which is less than its peak years, but if you look at the absolute quantum, add up all the peak years, China’s economic growth in 2012 alone was more than all the peak years combined. When we say fast or slow, we should recalibrate the way we look at economic indicators as drawing conclusions so simplistically is dangerous.
How could mining companies improve on efficiency and productivity?
Leshchyshen: Until recently, mining companies were increasing reserves and production without looking at underlying profitability, which led to acquisitions and expansions that were not profitable. Profits for the top 40 mining companies in 2012 dropped by 49 percent, although partly due to decreasing commodity prices.
Today shareholders are pushing companies to maximize value by looking at their operating costs, reducing their additional capital costs and improving cost efficiencies. Companies are closing down large unprofitable projects to focus on productive projects that have higher levels of resources. Shareholders are demanding better results, either through dividends or an increase in share value. As companies become more profitable again, they will look to buy out small companies with resources that are one to two years away from bringing them into production.
Mining has to go back to its basic profit-making proposition. It should go back to the basic fundamentals of profitability, return, capital intensity and de-risking. Rushing into production has been the cardinal sin of the mining sector.
Contact: Sarin Kouyoumdjian-Gurunlian, Press Manager, marcus evans, Summits Division
Tel: + 357 22 849 313
About the Global Mining Summit 2014
This unique forum will take place at the Red Rock Casino, Resort & Spa, Las Vegas, Nevada, March 17-18, 2014. Offering much more than any conference, exhibition or trade show, this exclusive meeting will bring together esteemed industry thought leaders and solution providers to a highly focused and interactive networking event. The Summit includes presentations on mine productivity, automation of the mining process, safety and how to retain a highly skilled and educated workforce.
The Mining Network –marcus evans Summits group delivers peer-to-peer information on strategic matters, professional trends and breakthrough innovations.
Please note that the Summit is a closed business event and the number of participants strictly limited.
About marcus evans Summits
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