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Germany Mining Report 2010
Market |
Agriculture, Farming & Raw Materials |
Report Type |
Market Research |
Country |
Germany |
Published |
21 July 2010 |
Number of Pages |
47 |
Download |
|
Immediate |
|
Publisher |
Business Monitor International |
The primary impact of the global financial crisis on the German mining industry has been to send it into a prolonged period of stagnation. Growth has been volatile in the sector for many years but the industry will remain flat in 2010-2014, as alternating years of sharp growth and contractions come to an end. We expect the sector to contract marginally by 0.6% in 2010 as the industry’s value edges down to EUR2.37bn (US$3.32bn).
The optimism for an economic rebound in Europe earlier in 2010 has been decidedly overshadowed by increasing concerns of double-dip recessions and recovery in jeopardy. Policy attitudes across Europe have turned from economic stimulation to deficit-reduction, as a number of governments – with Germany among them – introduce austerity measures. This shift threatens to extend the stagnation in Germany’s mining industry, as regional demand for ores, metals and minerals potentially sinks again. We do not see real growth exceeding 1.4% 2011, with growth declining thereafter. Indeed, in 2014, the sector should grow by just 0.2% reaching a value of EUR2.58bn (US$3.61bn).
Higher iron ore prices and the fundamental shift in contract pricing between producers and Asian buyers from an annual to quarterly basis has led steelmaker ThyssenKrupp to use ore derivative contracts. The company said that the price swing in iron ore cargoes was the motivation behind the use of swaps. ThyssenKrupp joins a wave of steelmakers that have sought greater price certainty recently by turning to the financial instruments, which allow companies to hedge against volatile price changes and agree cargo prices for future delivery.
Chile’s Minera local subsidiary Kupferschiefer Lausitz (KSL) disclosed in April 2010 that it would pursue the Lausitz copper project close to the East German city of Spremberg. The company has been engaged in exploratory drilling at the Spremberg-Graustein-Schleife site to a depth of up to 1,300 metres and is yet to produce an economic feasibility study. KSL is not expected to be able to obtain the required permits until 2016-2020, when the company anticipates operations to begin. KSL will commit US$1bn in developing the project after exploratory drilling indicated that around 2bn tonnes of copper may be recoverable from the deposit, which may promise a mine life of several decades. Existing drill cores at the site were the result of exploration in pre-unification years, after which the project was abandoned. Meanwhile, high energy costs were again highlighted as the Rheinwerk aluminium smelter in Neuss was facing imminent closure in December 2009, according to German metal federation WVM. The organisation said that the Norsk Hydro-owned smelter – Germany’s largest – would have little choice but to shut down immediately if state aid to offset high energy costs was not forthcoming. The plant was still running by April 2010, although output had been slashed by 90%.
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