By Sam Quest
Bidness Etc.
The average capital expenditure by the top ten mining companies is estimated to fall globally over the next two years. Total estimated capital expenditure for the top ten companies is $95 million for this year, $81 million for 2015, and $72 million for 2016.
The global mining industry is not expected to increase investments in operations due to a soft outlook for underlying commodities such as coal, copper, and gold. These three being the most mined commodities in the industry.
The super-cycle of commodities, triggered by the unprecedented economic growth in China, peaked in 2011. The prices of copper, measured by the S&P GSCI Copper Index, were down 60% from the beginning of 2011 till March 2014. The prices of gold, measured by the CBOE Gold Index, were down 59.2% over the same period.
Prices of coal have decreased the most, with a 72% drop in the Dow Jones US Coal Index since 2011. This resulted in a decline of capital investments by the mining companies. Coal demand has declined the most, primarily on the back of coal-inventory buildup in China, as well as the switch from coal to natural gas in the US.