The Canadian #Oil Boom: #Infographic | Visual Capitalist

The Canadian Oil Boom: 
Introduction to the Alberta oil sands








The Canadian Oil Boom: Infographic | Visual Capitalist

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Fear Miners Set to Fall Off 'Supercycle' - Business News - CNBC

Fear Miners Set to Fall Off 'Supercycle'

Published: Thursday, 10 May 2012 | 4:30 AM ET

By: Jack Farchy and Helen Thoma

For a decade, life has been kind to miners. Perhaps more than any other, the mining industry has ridden the Chinese boom – or “supercycle” – in commodity prices.

But now investors are asking whether the sector’s best days are behind it. After the boom, they say, surely must come a bust. With metals prices down more than 20 percent from last year’s highs, could the supercycle be over?

The answer has profound implications for investors of all stripes, and particularly in the UK.

Following a surge in share prices and a string of listings, the mining sector now accounts for about an eighth of the market value of the FTSE 100[.FTSE  5495.99    -34.06  (-0.62%)   ], and so a large chunk of many British pensioners’ savings.

“We believe that the tail wind of ever-higher commodity prices, which has been the principal driver of share prices, is now over,” says Heath Jansen, head of metals and mining research at Citigroup, in a note entitled “Super-Cycle Sunset”.

The bears’ argument is two-pronged. First, Chinese growth is slowing, and becoming less commodity-intensive.

China is the main driver of demand for commodities such as iron ore, coal and copper [HGCV1  3.6545    -0.005  (-0.14%)   ], accounting for as much as three-quarters of forecast consumption growth.

But Beijing has lowered its growth target to 7.5 percent, the lowest since 2004. Put that together with the prospect of rising supplies as miners’ investments begin to kick in and, some investors argue, metals pricesare unlikely to rally much from current levels.

“We are looking at an inflection point in terms of China’s growth rate, which should slow gradually over the next decade after the pulsating growth of the last decade,” says Robert Lind, chief economist at Anglo American. “That has triggered a debate about whether commodity prices can return to their previous cyclical peaks.”

At the same time, the costs of running and building mines is rising rapidly.Kazakhmys [KAZ-LN  768.00    9.00  (+1.19%)], the London-listed copper miner, reported inflation of 18 percent in its production costs last year. Analysts at Deutsche Bank estimate that cost inflation across the industry was 10-15 percent in 2011 and predict it will slow only slightly in 2012.

The obvious conclusion is that margins will fall—and, with them, share prices. Indeed, the FTSE All-World mining index has already dropped 31.8 percent from its peak in April 2011. “This is usually the point at which the demand cycle finally matures and the supply response kicks in,” says Andrew Keen at HSBC, noting that stock valuations are already starting to discount a shift.

“If this is the case, it won’t be a repeat of the 2008/09 downturn, which turned out to be a brief intermission, but the start of a long, unwinding and normalisation of margins.”

Not everyone believes the supercycle is dead. Commodities prices could stay robust should China’s slowing growth be counterbalanced by difficulties bringing new supply to the market, as companies brave ever more tricky geological challenges and difficult jurisdictions in search of promising deposits.

“Exchange inventories are relatively low still despite this trough in demand currently affecting China and Europe,” says Simon Collins, head of bulk commodities at Trafigura, the second-largest metals trader. ”There’s not that much available material.”

Nonetheless, the idea of a shift in momentum for the mining sector is gaining greater credence among investors and executives alike.

BHP Billiton, the world’s largest miner by market value and a bellwether for the industry, acknowledged that growing caution among investors last week, when it said it would slow development of its big projects to match expectations for earnings.

Other miners are likely to follow suit, executives say, turning their focus from reinvesting profits to returning them to shareholders.

The result is likely to be a fundamental shift in mining as an investment prospect: putting money into the sector will no longer be a one-way bet.

“In the last 10 years as long as you got ‘long’ the right thing it didn’t matter,” says George Cheveley, natural resources portfolio manager at Investec Asset Management.

“That has not been the case since the middle of last year—we have seen much more differentiation in performance between companies and between commodities.”

Moreover, rising costs may not be entirely negative for mining equities.

In markets from iron ore to copper, the highest cost producers are seeing the most dramatic inflation in costs, meaning that even if prices fall, they are unlikely to return to pre-boom levels. That may help cushion margins for other producers—those at the lower end of the industry “cost curve”—even if their costs are rising too.

Those companies that are able to differentiate themselves – either by controlling costs and delivering projects on time, or by returning larger chunks of their profits to shareholders through buybacks and dividends – are likely to outperform, analysts and investors say.

“In an environment where metal prices remain elevated but range-bound, investors would have to pick winners and losers based on who can execute and manage cost pressures, as well as their policies on shareholder returns,” says Jeff Largey, analyst at Macquarie. “It could become a stockpickers’ industry again.”

Copyright 2011 The Financial Times Limited

Fear Miners Set to Fall Off 'Supercycle' - Business News - CNBC

The MasterMetals Blog

Opinion: Buying gold on the ‘Roubini Dip` - #GOLD ANALYSIS - Mineweb.com

Opinion: Buying gold on the ‘Roubini Dip'

Doom and gloom economist Nouriel Roubini appears to be more than a little fallible in his predictions in the past three years, so should one take his latest twitter anti-gold gibe as a buying indicator?

Author: Lawrence Williams
Posted:  Wednesday , 09 May 2012 

LONDON (MINEWEB) - 

U.S. economist, Nouriel Roubini, has gained a great, largely self-promoted, following from his prediction of the 2007/8 global market and U.S. housing crash.  In this he was hardly alone, but somehow seems to have cornered the market in accolades for his supposedly remarkable prescience!  But, since then many of his prognostications have been so far from reality that he is perceived by some as more of a laughing stock than a great seer.  His saving grace though is, that given time - maybe a decade or so - some of these predictions will undoubtedly come true.  The stock market will crash again, gold will find itself in a bubble - and he'll be able to say ‘I told you so' if it actually happens in his lifetime!

Take this article from website Seeking Alpha a couple of years ago - The 'Great' Roubini: Wrong Again and Again - which implies grievous losses for investors if they had followed his advice - and he is at it again on gold - one of his perennial bêtes noires - as Dublin-based gold website GoldCore points out today: "Nouriel Roubini has again taken to Twitter to engage in his semiannual bout of name calling and frequent suggestions that gold is a bubble and that gold will fall in price. He has been doing so since gold rose above $1,000/oz in 2008.

From a contrarian perspective, Roubini is a gift as his name calling and anti-gold comments almost always coincide with an intermediate low in the gold price."

Now maybe it's tempting fate to put your faith in buying the Roubini dip as GoldCore suggests - both gold and silver were off their bottoms at the time of writing - but in these markets prices can move fast, up or down, and there's still no clear direction apparent.  At the moment the impetus appears to be with the bears, but the ongoing global economic turmoil and Central Bank money printing does suggest the movement should revert to the other direction - at least eventually, but who knows where it will land first!

Its also easy to be critical of Roubini - he's a bit of a hate figure among gold bulls and a number of other economists and commentators.  While some of his utterances are probably not unreasonable from an economist's perspective, but things just haven't worked out that way in reality. 
Opinion: Buying gold on the ‘Roubini Dip` - GOLD ANALYSIS - Mineweb.com | The world's premier mining and mining investment website Mineweb

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