Snapshot: State of the Market - Mining

The March quarter presented mixed signals as positive prices and equities contrasted with bearish exploration metrics.


The first quarter of 2019 was positive for metal prices, though after the malaise of the fourth quarter of 2018, a short corrective rally was perhaps overdue. By the end of March, metals like copper, zinc and nickel were up quarter over quarter by 11%, 22% and 25%, respectively. Correspondingly, the mining industry's aggregate market cap also rose strongly in the period after four bearish quarters, by 12%. The S&P 500 rose to levels last seen in early October 2018, and indicators such as the S&P/ASX 200 Metals & Mining (Industry) subindex and the S&P/TSX Global Mining Index recovered all their losses from the fourth quarter of 2018. Given the poor performance by prices in the December 2018 quarter, it is understandable why many of our exploration activity pipeline metrics pulled back in the following months. 


EXPLORATION & DEVELOPMENT


mining-industry-pipeline-activity

The exploration sector faced even more challenges in the availability of financing since the beginning of 2019. Sector activity contracted in the Q1-2019, with a decline in announcements of drill results dragging S&P Global Market Intelligence's Pipeline Activity Index, or PAI, down by 31% quarter over quarter, to its lowest point since the Q1-2016.



PRICE & MARKETS


Metals prices improved in Q1- 2019, and S&P Global Market Intelligence's Exploration Price Index moved upward for a second consecutive quarter, to 120 from 116. The largest gains quarter over quarter were by nickel at 8%, silver at 7%, gold at 6% and zinc at 3%. Copper and molybdenum rose slightly, platinum remain the same and cobalt plunged 39% to average US$15.65/lb, a nine-quarter low.




S&P Global Market Intelligence's aggregate market value of the industry's listed companies, based on 2,428 firms, rose 12% to US$1.43 trillion from US$1.28 trillion in the December 2018 quarter, although the total was still 5% less than the year-ago quarter.



 

The fall in drill results from a seven-year high in the December 2018 quarter reflects the significant declines in the number of junior and intermediate company financings announced since the Q2-2018 quarter and through the first two months of the March 2019 quarter.





 
mining-sector-financing-activity

Funds raised in Q1-2019 totaled US$3.25 billion, down 15% from the US$3.85 billion raised in the prior quarter and marking a second consecutive quarter with the lowest amount raised since we began compiling these statistics at the beginning of 2013.





mining-sector-mergers-and-acqusitions

The total deal value of US$12.89 billion represented a sharp increase compared with just US$2.52 billion in the year-ago period. However, the Newmont Mining-Goldcorp deal alone accounted for 78% of the March quarter deal value. The number of deals, however, remained depressed; there were 30 deals with at least US$5 million in deal value, only five more than the 25 deals recorded in the March 2016 quarter, which was the lowest recorded level of transaction activity.


Stay ahead of the global mining sector
with essential data, news and research.

Request a demo to our Metals & Mining solution



While resurgent prices in the first quarter of 2019 could lead to a lagged rebound in the second quarter for the Pipeline Activity Index components from positive momentum, it is important to remember that metal price performance has been, since April, locked in a general downtrend. Furthermore, there is increasing concern that sentiment for global commodity demand growth is cooling, particularly as the U.S.-China trade dispute refuses to calm. These factors are bearish for the year as a whole and highlight the fragility and cautious speed of the recovery in health of the mining market in recent years. We are still in the recovery phase of the cycle, yet headwinds stubbornly persist.


mining-industry-pipeline-activity


Definitions

The Pipeline Activity Index, or PAI, measures the level and direction of overall activity in the commodity supply pipeline by incorporating significant drill results, initial resource announcements, significant financings and positive project development milestones into a single comparable index.

The Exploration Price Index, or EPI, measures the relative change in precious and base metals prices, weighted by the percentage of overall exploration spending for each metal as a proxy of its relative importance to the industry at a given time.


--- THE END ---


By: Mark Ferguson, June 5, 2019. Original title of article: State of the Market: Mining March Quarter - Mixed signals to start year





Copyright © 2019 by S&P Global Market Intelligence, a division of S&P Global Inc. All rights reserved. No content may be reproduced or distributed without the prior written permission of S&P Global Market Intelligence or its affiliates. The content is provided on an “as is” basis.

 
Facebook LinkedIn You Tube

Copyright © 2025 S&P Global Market Intelligence Inc. All rights reserved.
Privacy Policy | Cookie Notice | Terms of Use | Disclosures | Do Not Sell My Personal Information