|
RENO (MINEWEB) - A key threat to the stable outlook of the mining sectors is a risein inputs costs," Standard & Poor's credit analysts warned in arecent industry report card on Asia-Pacific metals and miningcompanies. "A tighter labor supply and likely higher energy prices willpressure the profitability of many commodity producers. Metalproducers will also be wrestling with more expensive rawmaterials," the analysts advised." "For Asia-Pacific steel and aluminum companies, we forecast anegative outlook. Margins in this subsector will struggle withsoftening demand due to a global slowdown and abundant supply." "On the other hand, we expect the credit prospects of producers ofcopper, high grade minerals sands, seaborne iron ore, and cokingcoal to remain steady," the analysts predicted. "Although prices ofthese commodities have come down, producers still enjoy reasonablemargins. In addition we believe prices of these commodities havebottomed out because growing, albeit slower, demand and supply-sideconstraints will underpin prices at current levels." S&P analysts say they believe prices of coking coal, copper andseaborne iron ore likely bottomed in the first quarter of thisyear. Meanwhile, further industrial actions, delays in productionramp-up and the impact of weather events could disrupt supply. Nevertheless, S&P believes thermal coal prices could furthersoften, especially if exports from the U.S. to Asia due to asluggish domestic market consolidate its momentum. Meanwhile, S&P warns, "Further bouts of weakness could alsomaterialize for nickel because of the metal's demand sensitivity toindustrial usage and substitution risks." Australia, in particular, is facing risks in the persistence ofincreased input costs. "The country's tight labor and contractormarket, as well as the strong Australian dollar have pushed up thecash production costs of local miners," the analysts observed. "Indonesian and Mongolian miners are also feeling the heat fromsteep fuel costs," they added. In their report, the credit analysts said mining regulatory ortaxation changes have no immediate rating impact. However, theyadded, "We believe the mining sector is braced for increasinglynegative regulatory developments throughout Asia Pacific over the18-24 months. Still, we do not expect the adverse regulatoryrulings to immediately affect our ratings on mining companies inthe region." "Increasing regulation in the mining sector is not specific to AsiaPacific," the analysts observed. "Peru and Chile in South Americahave temporarily or permanently increased royalties or income taxesin 2011 and South Africa is considering the application of asuper-profit tax. Environmental regulation is also becomingincreasingly costly in the U.S." Despite the aforementioned risks, S&P foresees capital spendingremaining firm within the next two years for commodities with amore favorable supply-demand balance, including iron ore cokingcoal and gold. Meanwhile, S&P analysts observed, "Large producers andstate-owned enterprises will continue to have strong access tocapital markets in 2012, in our view. This is despite increasingcommodity price volatility and an uncertain global environment." "We believe smaller miners with undeveloped assets, significantcapital spending requirements or a marginal cost position will facea tougher time raising financing," they suggested. Currently, 17 or 63% of the Asia-Pacific metals and miningcompanies rated by S&P have stable outlooks, nine (33%) havenegative outlooks, and one company (4%) with a positive outlook. SUBSCRIBE to Mineweb.com's free daily newsletter now. We are high quality suppliers, our products such as Cosmetology Equipment , Mesotherapy Machine Manufacturer for oversee buyer. To know more, please visits Needle Derma Roller.
Related Articles -
Cosmetology Equipment, Mesotherapy Machine Manufacturer,
|
