LONDON, March 6, 2019
LONDON, March 6, 2019 /PRNewswire/ -- CRU's Paul Robinson presented at the 28th BMO Metals & Mining Conference in Florida. As hundreds of mining companies and analysts attend the event, sentiment on the day serves as a bellwether for the industry.
Our main takeaway from the conference was the industry is in good health, with the main themes being the positive outlook for copper, a meaningful response from the industry to the Brumadinho tailings dam failure, project development and cost control.
Commodity industry is positioned for growth
CRU presented, alongside Fitch, our view that prices will increase from 4Q 2018 lows. We are forecasting the industry to deliver another year of positive free cashflow in 2019 and the industry is well positioned, financially, should credit markets weaken.
In the meantime, miners have the cash, balance sheets and options to pursue disciplined growth options should they choose to.
M&A, projects, and capex high on the agenda
Unsurprisingly, Barrick's takeover bid for Newmont featured high on the agenda and both presented at the BMO. Beyond this headline M&A, there were plenty of other positive signs from the mining presentations.
Significant airtime was given to discuss new project partners, updates on development progress and on highlighting options for future growth.
CRU believes development is now necessary to fill medium-term supply gaps in a number of commodity markets. Although CRU expects industry free cashflow to remain positive, these opportunities make balancing competing demands of dividend payments to shareholders, capital expenditure on development projects, and debt reduction more difficult. Future capital allocation decisions will be a real opportunity for miners to demonstrate their "value over volume" approach.
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