Mining industry to continue flying high through 2022

Mining industry to continue flying high through 2022

Published in www.mining.com

Global miners can continue to expect an “exceptional year of earnings”through 2022 as a broad commodity price rally underpins strong financial results for most actors, according to a new report from Fitch Solutions.

Major mining companies could weather the covid-19 pandemic better, primarily thanks to higher metal prices following the first quarter of 2020. For example, Rio Tinto’s net profit grew by 22% year on year in 2020 compared with a 41% year on year decline in 2019, while Anglo American, Freeport-McMoRan, Norilsk Nickel and Vale registered net profits.

Fitch expects these financial results to be even stronger in FY2021-FY2022.

Going forward, Fitch expects miners to increase investments in copper, lithium and nickel projects owing to the rising demand for these metals from the renewable energy, battery and electric vehicle sectors.

Miners and metals companies are also likely to try and extract value out of the sustainability trends, Fitch says, as there will be pressure on mining companies to decarbonise, reduce their environmental impact and improve transparency.

Mining capex will continue to target advanced technology that enables further efficiency gains, as industry leaders prioritise technology to remain competitive and better withstand price volatility.

Fitch expects the acceleration of technological integration in the mining industry will widen the gap between the top low-cost producers and junior miners and improve the competitiveness of developed markets compared with underdeveloped markets.

Fitch asserts that Rio Tinto will remain the leader, as the company has made investments in innovation and cutting-edge technologies in operations that have not been matched by other miners.