London, England — MININGREVIEW.COM — 28 October 2008 – Mining companies across the globe may defer development projects worth more than US$50 billion (R525 billion) for a year, as credit continues to tighten and commodity prices keep falling.
Making this revelation here, Jeremy Gray – London-based analyst at Credit Suisse Group AG – said in a note sent to clients that this could represent some 66% of next year’s spending plans.
Bloomberg News reports that commodity prices have slumped on expectations that slowing global economic growth will sap demand for raw materials. It pointed out that African Rainbow Minerals (ARM) had announced that it would close two ferrochrome furnaces, and Anglo Platinum – the world’s biggest producer of the metal – had said it would review the cost and timing of all its expansion projects.
The possible delay of additional capacity may stall the introduction of 300 million metric tonnes of iron ore, 5 million tonnes of copper, 10 million tonnes of aluminium and more than 1 million ounces of platinum, according to Credit Suisse.
“Survival is now more important than planning for the next bull market,” Gray wrote. “Xstrata – the world’s fourth- biggest nickel producer – and smaller mining companies with excessive debt would likely be the most affected,” he said.