This week we look at the best and worst performing mining stocks of last year as the top ten mining trends of this year are revealed. CommSec’s Chief Economist, Craig James shares why he believes the mining sector is set to perform this year and we re-cap the week’s biggest project milestones among the miners.
Mining Trends
The top ten trends for mining companies this year have been assembled and cost cutting is at the top of this list. Deloitte’s Tracking the Trends of 2013 report says in the face of rising costs, falling commodity prices and other challenges, companies will be able to thrive into the future if they can set solid strategic direction and hold that course amidst shifting industry realities. According to Deloitte this year’s biggest themes will be: Counting the costs, managing demand uncertainty, capital project deceleration, preparing for the M&A storm, governments getting greedier, combating corruption, climbing the social ladder, plugging the talent gap, playing it safe and getting the most out of technology.
Commodity movements
The benchmark iron ore price has this week lifted to 15-month highs of about $US153 per tonne, rebounding from a three year low of about $US87 in September 2012. However, Rio Tinto Limited’s (ASX:RIO) iron ore chief Sam Walsh cautioned the current strength in prices for the steel making commodity will not last and the recent price spike is due to short term considerations including restocking and the impending cyclone season in Western Australia.
Resources figures
Australia has recorded its largest trade deficit in almost five years. The Australian Bureau of Statistics has reported the deficit widened more than expected to $2.64 billion in November, with exports up 1 per cent and imports up 2 per cent.
2012 Best & Worst performing mining stocks
Only one miner made it in the top ten best performers of 2012: Maverick Drilling and Exploration Limited’s (ASX:MAD) stock surged 227 per cent with the oil and gas explorer and producer climbing into the top 200 index by the end of the year. However, the top ten worst performing stocks in 2012 were dominated by miners amid falling commodity prices and funding pressures: Aquila Resources Limited (ASX:AQA) came in as the second worst performing stock over last year, down 56 per cent. Mirabela Nickel Limited’s (ASX:MBN) stock lost 55 per cent, Gryphon Minerals Limited (ASX:GRY) shed 55 per cent over last year, Coalspur Mines Limited (ASX:CPL) fell 53 per cent, Alacer Gold Corporation (ASX:AQG) fell 53 per cent, Gindalbie Metals Limited (ASX:GBG) fell 52 per cent, Saracen Mineral Holdings Limited (ASX:SAR) fell 50 per cent and Energy World Corporation Limited (ASX:EWC) fell 47 per cent.
Commentary
FNN spoke to Craig James, Chief Economist Commonwealth Bank of Australia’s (ASX:CBA) broking arm CommSec about why he believes the mining sector is set to perform this year:
“Well I think the miners are going to be successful in getting their costs down. So, they’re attacking that at present and I think over this year we are going to see the miners achieving some success; we’ve already seen some of the wage costs coming down. We’re going to see investment and production moving at more sustainable rates and that’s going to be encouraging as well. We do look for the Chinese economy to recover further over this year. I think maybe there’s a bit of a surprise, we may see some upward pressure in terms of prices.”
To watch more of the interview click
here.
Project updates
Lynas Corporation Limited (ASX:LYC) expects rare earths products will be ready for sale within weeks and production ramp up will continue over the next three months.
Iron ore producer Atlas Iron Limited (ASX:AGO) says it’s progressing towards its near term Horizon 1 production target of 12 million tonnes per annum.
Linc Energy Limited (ASX:LNC) has hit an oil production milestone of 6,000 barrels per day and forecast significant oil growth from the Gulf Coast region.
Gindalbie Metals Limited (ASX:GBG) has delivered the first magnetite concentrate shipment from its Karara Iron Ore Project in Western Australia.