Investment declines 24% after a 12-year boom turned mining equipment into a $1 trillion market, but will rebound to due to technical and regulatory challenges, Lux Research says
BOSTON, MA – October 24, 2013 – Mining, famously slow to innovate, has embraced new technology over the past 12 years, driving capital spending up a whopping 600% to $100 billion in 2012. Spending will fall 24% to $76 billion this year on a cyclical downturn, but the long-term trend will remain up due to technical challenges of extraction and heightened environmental scrutiny, according to Lux Research.
“Long-term trends, including increasing scarcity of key minerals and wide-scale development of East Asia, point to the need for continued spending in mining,” said Brent Giles, a Lux Research Senior Analyst and the lead author of the report titled, “Digging for Opportunities in the Aftermath of Mining’s Explosive Growth.” “Unprecedented scrutiny from regulators and the need to extract resources from poorer ores in more isolated environments ensure there will be a huge opportunity for well-positioned companies.”
Lux Research analysts studied 18 mining sectors, their major players, processes, needs and value. Among their findings:
- “King Coal” needs technical breakthroughs. To meet stringent emission standards, the coal industry must partner with technology developers to lower the cost of carbon capture and sequestration technology. Global Thermostat, for example, is developing systems to capture carbon dioxide for reuse.
- China is a key player, both as a producer and a consumer. Massive infrastructure development in China has driven the latest unprecedented growth in the industry, and its recent slowdown has been a trigger for mining's decline. What the rising Asian giant does will continue to affect mining and economies worldwide.
- Water needs drive technology. Opportunities for water technologies exist throughout mining processes, from enabling water reuse and conservation to augmenting recovery from brines or other aqueous solutions. For example, phosphogypsum waste leaves brines rich in both phosphate and low-grade naturally occurring radioactivity (NORM); both problems could be resolved with more efficient and complete treatment of the brine before it is dried.
The report, titled “Digging for Opportunities in the Aftermath of Mining’s Explosive Growth,” is part of the Lux Research Exploration and Production Intelligence and Lux Research Water Intelligence services.