Deloitte CEO Glenn Ives says that increased costs and regulatory burdens alongside robust Asian demand will push the mining sector into a "revolution" of cleaner, cheaper energy inputs over the next 10-15 years. Ives spoke to Proactiveinvestors at the PDAC 2013 Conference in Toronto Canada last week, highlighting the trends that 50 Deloitte partners around the world have identified for the mining sector going forward.
As all miners well know, exploding operating and capital costs have diminished profits and sent handfuls of CEOs packing over the past year. Higher costs coupled with volatility in prices are increasingly threatening, and are causing big companies to pull back from new projects and acquisitions. More pressure on the sector from waves of resource nationalism, stringent environmental and safety regulations, taxes and political and community activism all amount to a longer, tougher road to production.
"We used to say five years from discovery to production," Ives noted, "now it's 15 plus."
Meanwhile demand remains strong and is expected to stay strong, particularly in Asia. Ives pointed out that 8% GDP growth today in China actually represents higher total consumption than 15% GDP growth in 2000 because the size of the Chinese economy is so much larger now than it was 10-15 years ago. Because of these factors, Ives sees a growing gap between production capacity and demand that needs to be addressed.
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