With commodity prices and mining revenues returning to record 2007 levels, the global mining industry has essentially returned "back to the boom", a PricewaterhouseCoopers (PwC) executive said on Tuesday, highlighting that growth was largely driven by demand from the Asian powerhouse, China.

Speaking at the release of PwC's seventh mining survey ‘Mine - Back to the Boom' in Johannesburg, PwC mining director Hein Boegman said that the global mining industry should prepare itself for a "water-shed moment" where China would pass North America as the industry's largest customer in the "very near" future.

China is predicting an 8% growth for the year, on the back of the economic slump, and Boegman said that it appeared that the Asian country would be a driving force behind the global mining sector, with India, Brazil and Russia following its lead.

China has the world's largest population, with more than 1,2-billion people who are rapidly urbanising.

"To accommodate the rapid development of the country's economy and infrastructure, as well as several political promises that have to be kept by the Chinese government, the country will have to continue showing growth of between 8% and 10% and buying commodities by the heaps to support growth," said PwC's outgoing mining director Hugh Cameron.

"The way that the pricing of iron-ore and copper is currently being determined comes mostly from a big pushback of Chinese buyers, and it seems that the final word on pricing has not yet been spoken," he added.

Boegman noted that South Africa "luckily" had some of the world's best iron-ore, copper, and other resources and that it would be able to supply China with quality resources going forward, but cautioned that it had to stay competitive.

He pointed out that one of the main concerns for South African miners was growing costs.

"South Africa's mining industry is very labour intensive and it has to constantly deal with wage concerns. In addition, our mines are super-deep and about 50% of fixed costs goes just into cooling these mines. This means that Eskom's electricity tariff hikes will put further pressure on the country's operating costs."

Nevertheless, Boegman noted that mining and operating costs would most probably play a significant role in commodity prices going forward.

A concerning topic raised in PwC's latest survey was that the sector could lose some footing, owing to increased government interference.

Industry CEOs had expressed concern that governments facing challenging budget deficits were looking to the mining sector as a source of additional taxation.

The Australian government's recent announcement that it would implement a super profits tax on resources projects in 2012, as well as royalty increases flagged in several other jurisdictions, including South Africa, might have opened a debate on whether "mining is paying its fair share".

The Australian government is planning to introduce a 40% tax on super profits, which big mining companies, such as BHP Billiton, Rio Tinto and Xstrata, have slammed.

Boegman noted that countries should not "kill the goose that laid the golden eggs".

"Although 2009 saw overall revenues decline, a drop in net profit and a decrease in cash flow in the industry, none of the Top 40 companies were subject to bankruptcy or voluntary administration provisions, largely owing to their ability to remove or restructure debt overhang, strengthening commodity markets towards the second half of the year and the positive impact on demand partly resulting from government stimulus packages around the world."

Between the first half of 2009 and the second half of 2009, the mining industry was able to show a market capital rebound of 118% and reduce its debt levels by 21%.

"The global mining industry has shown strong long-term fundamentals during the recessionary period that supported a sharp recovery, and these fundamentals will remain the key driver of the industry going into the future," concluded Boegman.

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