Miners To Opt For Risk-Sharing Partnerships - BMI

Anna Golubova  Tuesday June 27, 2017 20:26

Even though commodity prices posted a moderate recovery, mining companies will still be zeroing in on debt reduction and efficiency for the next year, while trying to share risks, this according to a research firm BMI.

BMI released its ‘Mining Mid-Year Update: Key Themes For 2017’ report on Tuesday, in which the firm said that miners will be very interested in sharing the risks as well as keeping up with capital and supply discipline.

“In terms of financing, improving market conditions will see a return of commercial bank lending to the mining industry. Nevertheless, private equity will continue to play a growing role in mining project finance, and mining companies will increasingly turn to joint venture partnerships to share risk,” BMI noted.

Overall, the report pointed out that it expects miners to do better this year than during the 2015/2016 period.

One of the remaining concerns for the sector will be capital expenditure, with many companies following more strict capital discipline to ensure greater free cash flows when needed.

In terms of future investments, BMI projects interest in technology that would help improve efficiencies.

“There will be minimal investment in greenfield projects and we expect miners to invest less in commodities such as coal, iron-ore and steel, while investment in copper and tin will hold up,” BMI said.

The report also expressed a conservative outlook for industrial metals’ prices. “Looking on a multiquarter horizon, we expect nonferrous metals to be on an uptrend in the medium term, while ferrous metals will head lower,” BMI said.

By Anna Golubova

For Kitco News