Mine 2011: The game has changed

We've called this year's edition of Mine "The game has changed", which points to an industry that is enjoying spectacular growth, but is also facing new and complex challenges. While we have seen miners deliver record earnings, CEOs have reported that it has been a year not without its challenges. Despite global demand being stoked by emerging and industrialising markets, both supply and cost management have become key challenges. This changing supply and demand landscape has catapulted the industry into a new era, with new rules.


In 2010, revenues for the world's 40 largest miners leapt 32 per cent to a record $435 billion from surging commodity prices and strong production output. The strong top-line results propelled the miners' net profits to a staggering $110 billion – a 156 per cent increase over last year. Emerging markets continue to change the face of the industry by driving demand and allowing companies to take definitive action on capital projects, mergers and acquisitions. As evidence, the Top 40 announced more than $300 billion of capital programs of which more than $120 billion is planned for 2011, doubling the capital expenditure of 2010.

Four Australian companies were among the Top 40: BHP Billiton, Fortescue Metals Group, Newcrest Mining and Rio Tinto. The story of supply vs demand, however, is very much alive in Australia. Rising costs have been highlighted by heightened "resource nationalism", which remains a top-of-mind issue. Aussie miners are still grappling with the continued uncertainty surrounding the Minerals Resource Rent Tax, the proposed carbon tax and the value of the Aussie dollar, which reached an unprecedented high against the USD in early May.

Indeed, these are interesting times for the mining industry. It has already achieved spectacular growth and will continue on this track for years to come. However, with a landscape that has become more complex to navigate, and with new rules, the mining game most definitely has changed.

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