The Richwood Report

Excellent sales and shipments in belt cleaners and other conveyor accessories indicates very healthy conditions in the mining business. Just how healthy is summarized in this article from mineweb.net. As you might have heard, Chinese business has a lot to do with it:

According to data from the China Statistical Yearbook contained in mine*, Chinese demand for things like iron ore and steel has grown by 168% and 150%, while demand for raw materials like coal and alumina, have risen by an even more dramatic 544% and 246% respectively.

“Imagine a scene: hundreds of ships, fully loaded with a variety of minerals, heading towards the bustling Middle Kingdom every day. This is a snapshot of what is happening in the ancient country.”

The result? The profits of 40 mining companies, making up 80% of global market capitalisation, have doubled for the second year in a row. While net operating cash flows have also almost doubled to $41 billion in 2004.

In addition, the increased income has the mining industry looking to the future, particularly to exploration, since present reserves are limited:

"Much of the market value of reserves is derived from reserves and resources that are not recorded on the balance sheet.”

Canada’s Metals Economics Group (MEG) reported that in 2004 the budgeted worldwide exploration spend was 62% higher year-on-year at $3.6 billion.

“This significant increase, in part a result of currency movements, reflects the general boom in the industry coupled with the recovery from a low base of exploration expenditure back in 2002,” says PWC.