Cape Town, South Africa — MININGREVIEW.COM — 19 January 2010 – Although the speed and extent of the global economic recovery remain uncertain, commodity prices are likely to put up a strong performance in 2010. This will boost the worldwide mining industry, although challenges particular to South Africa may dampen local prospects.
Making this prediction here, Frost & Sullivan metals and mining analyst Wonder Nyanjowa said: “The global mining industry is likely to be buoyed by growing physical demand for commodities, the strong possibility of speculative buying and rising prices. This is likely to encourage miners to expand production capacity.”
However, Nyanjowa warned that South Africa might not reap the full benefits of this rebound.
“Many of the local challenges that adversely impacted on production in 2009 “’ such as electricity supply shortages, a lack of skills and safety concerns “’ are likely to continue affecting the performance of the mining industry in 2010,” he said. “In addition, the prospect of higher commodity prices, particularly in the gold, platinum and coal sectors, is likely to lead to tough wage demands from unions.”
Nyanjowa expressed the belief that growing inflation fears in the developed world “’ particularly the United States “’ an unstable US Dollar, threats of another recession from expansionary fiscal and monetary policies and negative real interest rates pointed towards strengthening investment demand for gold.
“A price range of $1 300 to $1 500 per ounce in 2010 looks likely, supported by gold demand and supply fundamentals,” he said. “Investors are likely to continue turning to gold as a hedge against uncertainties in the global economy.”
However, South Africa’s gold production is likely to slip further this year to around 200 tonnes. This will see it drop to fourth place among the world’s gold producers behind China, the USA and Australia.
While platinum was one of the biggest casualties of the global recession, Nyanjowa expects things to be much rosier in 2010.
“Frost & Sullivan anticipates that the platinum industry will recover this year on the back of stronger prospects of recovery in the global automotive sector, particularly in China and India. The launch of two new platinum-based Exchange Traded Funds in the USA will also lead to strong investment demand,” he added.