With the ongoing fallout of the sub prime crisis in the US, the impacts of high commodity prices themselves, oil in particular, on economic growth, and the recent strengthening of the dollar, commodities have lost some of their steam over the past few months.

Platinum is now some US$1,000 off its peak. Looking at how the landscape has changed from another angle, gold companies that factor in all the costs of doing business, including amortisation of capital spent on establishing projects, not just cash operating costs, find that very few of them make much money at a gold price of less than US$800/oz. Some juniors are finding it harder to get hold of funds to undertake projects.

However, for once, aside from those directly affected and shareholders alarmed at the sudden downward swing in commodity share prices, there is no real sense of foreboding in the mining sector as a result of the slowdown. In the big picture it is probably healthy, and brings some consolidation to what might have become a too heady unconstrained run. While increasingly each commodity follows its own path, the industry as a whole remains in good shape with demand for iron ore, coal, copper and various industrial minerals out of the large developing Asian markets unlikely to turn negative, or even – according to most industry watchers – show any particularly deep slowdown in growth.

Various suppliers who follow the mining sector in Africa talk about there being some six hundred new projects in various stages of feasibility onwards across the continent, a number that probably is at least a factor of ten higher than was the case some seven years ago. Many already existing mines have further phases in mind, expansions and upgrades, which means the industry across the continent remains upbeat and vibrant.

More than vibrant; for the past few years the demand for products and services by the mining industry, let alone the demand for certain mineral commodities has stretched supply to breaking point. At the moment it is still easier for a project company to find projects than for the mining industry to find people to do the job. Companies that serve the mining industry have also scoured the world, China in particular, to source the capacity they need to supply plant. The slowdown in the rate of growth releases some of the stresses on a sector that has been pushed very hard indeed.

In the mining industry, ensuring the operation is running reliably on time, is often more critical than how much this costs, up to a point. That point has been stretched. The mining industry, thanks in part to its own success in pricing commodities, has in recent projects experienced capital cost escalations of anything up to 100%. Operating cost escalations, when one considers fuel, electricity, parts, raw materials for explosives, and other input costs, have escalated just as sharply. Amidst the boom, both mining companies and suppliers have felt some pain, with the latter unable to pass on price increases without lags.

Thus, from the perspective of the mining sector, one may probably look back at the global economic slowdown as perhaps coming at the right time. It gives mining groups and investors time to more carefully assess supply demand dynamics, and it gives the suppliers a chance to get their supply chains up to speed. It is not often one can argue credibly that events reducing the rate of growth in the mining sector may have been a beneficial occurrence for the industry.