New Normality

Price slump hits mining industry hard

Summary: Low commodity prices are currently causing severe problems for mining companies. And it is not particularly likely that anything will happen to quickly change the situation, even though price developments in commodities, base metals and precious metals are different and are based on different conditions. This article deals with current developments and how the mining companies are responding to them.

1 End of a super-cycle

The rise in many commodity prices reached its peak in 2011 to 2012. After that, there were some serious price declines, like that recently seen in the case of crude oil. What happened? Since 2001, the rise in prices for commodities had become decoupled from the general economic growth. Within just a few years, commodity prices doubled and in some cases tripled. Not even the global economic downturn in the wake of the financial crisis of 2008 and 2009 could stop the upward trend (Fig. 1). This demand for raw materials was mainly driven by the appetite of China and other...

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