The short-term financial outlook for the international mining industry is somewhat pessimistic, as borrowed funds are likely to become difficult to access and a more expensive means of funding projects.

This will be the result of banks deleveraging in Europe and other advanced countries, which will tighten emerging markets and lower commodity prices, says international monetary historian Dr Barry Eichengreen, who will be a keynote speaker at this year’s Investing in African Mining Indaba.

“However, the present challenging economic climate will not continue forever. The question is whether we will see recovery in the near future – say, this year or in 2013 – or whether more patience will be required,” he states.

At the Indaba, Eichengreen will discuss the future of international currencies, with a special focus on issues such as whether the dollar will retain its “exorbitant privilege” as the only “true” global currency, or if it will have to share that status in years to come and, if so, with which rivals in particular.

This topic relates to his book Exorbitant Privilege that was released in January last year. In the book, Eichengreen traces the rise and decline of the dollar to international prominence over the course of the twentieth century.

He argues that while there is room for only one “true” inter- national currency, in future, the dollar and a handful of rivals, such as the euro and the Chinese yuan, will share international currency status. This reflects the relative economic decline in the US economy and changes in the technology of international finance.

“The implication is that the US and the dollar will only be one of many sources of foreign investment. “But that trend has been under way for some time,” Eichengreen notes.

However, he writes that this does not necessarily mean that the coming changes will be sudden and dire, or that the dollar is condemned to lose its international status.

“At the Indaba, I will also discuss whether gold will play a growing role in the international monetary system of the future, which will be of interest to visitors.

“My aim is to paint a picture of how the larger trends that are affecting the global economy will impact on the industry,” he notes.

Looking forward, Eichengreen says the greatest short-term potential in the global mining industry lies in established commodities, such as coal and gold.

“Although, in our high-tech world, commodities, such as palladium, platinum, gallium, and cadmium, which are used in consumer electronics, solar cells and the like, also hold significant potential.”

However, he believes that Africa, and South Africa, in particular, will face a number of significant challenges in capitalising on the undoubtedly strong demand for coal and other minerals going forward.

These challenges include infra- structure constraints, such as road and railway bottlenecks, meeting the demand for the abate- ment of pollution and climate change problems, addressing safety concerns and overcoming human capital shortages and constraints.

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