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Prices of commodities such as copper and oil have slumped about 15 percent this year as investors shun risk assets and demand fell amid a moribund global economy , but a demise of the mining industry is “greatly exaggerated,” says HSBC.
“To paraphrase Mark Twain, reports of the mining boom’s death are greatly exaggerated,” HSBC’s economists Bloxham and Hartigan wrote in a report on Thursday. “True, commodity prices have peaked. But there is still substantial investment yet to be completed. Plus, resource exports are yet to ramp up as a result of the added capacity that has been built.”
This new investment should provide support for global mining, including in Australia, where investment in the industry will contribute about 10 percent to GDP by 2013, up from just 4 percent in 2010, a sign that “the mining boom is not over,” HSBC said.
Metal prices have declined year to date as investors, spooked by worries that Europe’s two–year debt crisis will worsen and China’s economy will grind to a halt. Copper, , used in industries including autos, construction and consumer electronics, has declined about 15 percent this year and is now trading at $3.3935 per pound while iron ore, the main material in steel, has plunged to a nine-month low of $118.60 a metric ton.
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