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CHARTS: Mining’s fattest margins

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A recent webinar by S&P Global Market Intelligence on the state of metals markets paints a picture of an industry in rude health. 

Jason Holden, Mining Research Analyst S&P Global Market Intelligence, says miners’ margins are expected to stay strong into next year even as metal and minerals prices begin to drift lower.

Gold mining companies are best positioned, as gold continues to trade around the $1,800 an ounce level. Indeed, the sector is set to enjoy its fattest margins on record in 2022 expanding from an expected 72% this year to 86%. 

Some of the better profitability and lower all-in sustaining costs for gold diggers will stem from richer head grades, which S&P GMI sees increasing slightly from 1.4g/t in 2021 to 1.42g/t in 2022.   

ALSO READ: Zinc jumps as Glencore cuts production in Italy]

Copper margins are expected to shrink as the price falls back to around $4/lbs or $8,820/t next year and mine site costs (Holden highlights rising labour costs as a factor) increase, but should remain above 100% for a second year in a row – the first time that’s happened in over a decade.

The margins of zinc miners are set to shrink in 2022, but remain robust compared to 2019 and 2020 when the sector was losing money while nickel’s 2022 will be much like this year. 

Lithium miners’ all-in costs are set to remain stable next year, but S&P GMI does not believe prices for the battery raw material will hold onto record highs in 2022. 

CHARTS: Mining's fattest margins

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