The Saudi Ministry of Industry and Mineral Resources will organize on Jan. 11-13 in Riyadh, the International Mining Conference, which will be an opportunity for governments, companies and investors to discuss various issues and challenges facing the sector in the past two years.
Challenges of the Sector
In this context, the Global Mining Risk Survey 2021 report, issued by KPMG International, noted that the disruption of global supply chains posed a future challenge for the sector, adding that the cyclical fluctuations in global resource markets presented some difficulties for the mining sector.
With the market frequently unstable, the report said that mining companies must plan ahead, while boosting their use of scarce natural resources and pressing for cost solutions. It also stressed the need to increase focus on social responsibility programs.
According to the report, mining companies need to develop a more accurate view of the markets in which they operate, in order to chart the direction in which commodity prices are likely to head and make the right strategic decisions.
Sector Response
The reported noted that although the coronavirus pandemic has caused an economic recession in most countries of the world, it also led to higher stimulus spending in most key areas. This has increased demand for basic commodities, and prompted the mining sector to respond quickly to the unprecedented challenges posed by the pandemic, while ensuring the safety of employees and maintaining the security of supply chains.
The report indicated that commodity price fluctuations will force mining companies to constantly adjust their mine operations plans, in order to reach a much-needed value attraction, in the face of ever-changing market conditions.
Supply Chains
The problem of global supply chains continues to harm various industries, including mining, the report noted, which means that metal prices will rise in the next few months, and accordingly, the retail markets and the automobile industry will also be affected.
As for the means to solve the problem of supply chain disruptions, it will depend, to some extent, on the efforts to combat the spread of the coronavirus, especially with the emergence of the Omicron variant.
Nevertheless, the report pointed to signs of optimism as freight rates have decreased significantly in Asia and in freight lanes between the US West Coast, Asia and Europe.
Contrasting prices
According to Bloomberg’s analysis, in August 2021, the picture was not so bleak all the time for the mining sector, as iron was a big driver of profits for the largest producers, while the commodity hit a record level in the first half, at USD200 per ton.
Despite the recent decline in the prices of some commodities amid fears of a new surge of coronavirus cases, and with China’s move to limit the rise in costs, the prices of basic commodities for all categories are still registering record levels at the present time.
