Trump has been good news for miners — Callinex CEO
US President Donald Trump highlighted this week some “big stories” about the mining sector as proof that his energy policies are working, but not all experts seem to agree with his view.
The official numbers say the US mining industry had its first profitable quarter in two years in the first three months of this year. They also show the country has created about 50,000 new coal jobs since the fourth quarter of 2016.
For some analysts, such as Mark Muro, senior fellow at the Brookings Institution’s Metropolitan Policy Program, reality is far from what those figures indicate.
“People think of coal mining as some 1890s, colourful, populous frontier activity, but it’s much better to think of it as a high-tech industry with far fewer miners and more engineers and coders,” Muro told The New York Times in March.
“The regulatory changes are entirely outweighed by these technological changes, not to mention the price of natural gas or renewables,” he noted. “Even if you brought back demand for coal, you wouldn’t bring back the same number of workers.”
“The decline in U.S. coal production is the result of powerful technological and market trends that are unlikely to change anytime soon,” Jonathan Koomey, an earth systems and energy lecturer at Stanford University told Salon.com earlier this month. “Cheap natural gas, the rapid decline in the cost of solar and wind generation, and continued flat electricity demand make it next to impossible that US coal production will significantly increase in coming years.”
But others, such as Max Porterfield, chief executive of Callinex Mines, a Canadian junior focused on zinc and copper, believe that Trump’s measures to revitalize the mining industry are steps on the right direction.
In a recent interview with MINING.com, Porterfield acknowledged that several factors including falling coal demand, a global glut, international efforts to reduce carbon emissions, and the surge of alternative, cheaper energy sources, are likely to keep dragging the coal sector down.
But he also believes that Trump’s push for infrastructure and more beneficial taxes for miners, will offset the impact of a declining coal sector in favour of the whole industry, even beyond the US.
“If you look at current figures, you see that the US imports roughly 80% of the refined zinc it consumes a year. About 31% of that comes from Mexico and 69% of from Canada (…) [It shows that] neighbouring countries will also benefit from more demand of metals.”
The executive also applauded a recent push from Western states and mining companies to get a ban on uranium mining close to the Grand Canyon revoked.
If that happens, he said, Canada will once again benefit from the measure, as very little of the uranium consumed in the US comes from domestic production.
“I think that’s in function of prices, more than anything, but the US administration wants security power generation and, to shoot for that, they’ll to have to boost domestic production. But they will also have to look at Canada, where the province of Saskatchewan has very large, high grade uranium deposits ready to be mined,” Porterfield said.
Zinc, copper, the markets to be on
Being the CEO of a company with zinc and copper assets, is not surprising Porterfield believes those are the commodities likely to pay more dividends in the short and medium term.
He notes that zinc fundamentals favours higher prices for the next 12 months. Inventories have been declining for the last five years and there is a clear lack of supply in the market. In addition, China’s ongoing crackdown on pollution means it will need to import more.
On the demand side, Porterfield notes, there’s a steady global growth, including the potential boost coming from Trump’s trillion-dollar infrastructure policy. “Given how tight the market already is, base metals' increased demand will make them an exciting market to be in.”