Despite the likely weakening of China’s demand for iron-ore, owing to the continuing decline of its real estate market and overall lower pace of urbanisation, the country’s lower projected 2015 gross domestic product was still expected to increase its mineral-demand base by about $1-trillion, multinational professional services network PwC South Africa CEO Dion Shango said at the South Africa Junior Mining Indaba last month.

Shango put the amount into perspective by noting that $1-trillion is more than the combined market capitalisation of the global top 40 mining companies, adding that a significant percentage of this demand increase would comprise iron-ore.

His presentation covered the findings published in PwC’s ‘Mine 2015’ report – which deals with information regarding the top 40 largest mining entities – and focused on what the African junior mining industry could learn from mining economies that had developed thriving junior sectors.

Shango explained that China accounted for as much of 40% to 50% of global commodity demand and its slowing economic growth had significantly impacted on demand for key steelmaking commodities, especially iron-ore and metallurgical coal.

“A slowdown in Chinese economic growth to about 7%, from the double-digit growth that we have become accustomed to in recent years, is expected to weigh on the industry for many months to come, given that the eastern nation is a major commodities consumer.”

To aid local mining and reduce pollution, China has implemented protectionist measures, particularly targeting coal with a high sulphur and ash content, by changing import tariffs and quotas, placing additional pressure on seaborne demand.

PwC believes that the reforms, such as these tariffs and quotas, will put China in a good position to continue to grow, albeit at a slower pace.

Shango further noted that the commodity-price downturn had sparked a global wave of resource nationalism, as governments sought to maintain mining revenues, despite shrinking overall returns across the industry.

He argued that initiatives implemented to date had mainly been negative for the industry, including tax and/or royalty rate changes under the introduction of mandated beneficiation in-country, as was done in Indonesia.

There were some positive changes though, such as the decision of the Australian government not to increase taxes on iron-ore mining, added Shango .

Of all the commodities, iron-ore was affected the most in 2014, with prices dropping by half as a result of oversupply and limited short-term demand.

The general outlook for the global metals and mining market remains subdued, owing to a combination of slower global economic growth, particularly in emerging markets, and signs of oversupply in single commodities, including gold.

“When it comes to supply, expectations vary by commodity group,” Shango noted. Owing to their oversupply, iron-ore and coal would continue to be under pressure, partly because of marginal operations having been slow to close, he said. Shango added that there had been robust debate among iron-ore miners around supply strategies to deal with dropping demand.

Uneven global economic recovery and divergent monetary policies continue to create uncertainty around medium-term supply and demand across the mining indus- try.

Miners across all metals and minerals continued to focus on core operations, reducing costs and improving capital discipline to improve their relative position in the cost curve and remain positive during this prolonged period of low prices, he stated.

Further, lower crude oil prices and a stronger US dollar are proving beneficial for miners by helping to lower operating costs.

With few exceptions, the commodity price outlook remained dim, forcing miners to remain vigilant, as the old saying of survival of the fittest, could, particularly for miners, be said to extend to the leanest too, concluded Shango.