TORONTO (miningweekly.com) – Global economic challenges, the strengthening US economy and an imbalance of supply and demand have had a devastating impact on the commodities market, a new report by professional services firm PwC has found.

PwC’s 'Gold, silver and copper price report 2015’ noted that low prices had led to widespread cuts across the sector from exploration to production and for both operating and capital expenses. Write-downs had been the norm for many miners in recent years, as part of an industry-wide restructuring effort, and there had been a refocus on core assets.

However, the report also argued that the current slump in prices was reflecting the cyclical nature of the industry. For gold companies, while the long-term view was above current spot prices, volatility remained the key issue. For base metal producers, a growing global population that would have greater overall need for products such as cars, computers and household goods, had helped support current prices.

“Owing to the low commodities price environment, miners have had to cut costs to survive. Now, they must continue to employ responsible cost management and sound investment in production,” PwC global mining leader John Gravelle said in a press release.

The report noted that at under $1 200/oz, gold was trading at multi-year lows, driven by the strength of the US economy and expectations of higher interest rates.

While the long-term price of gold for planning purposes was down this year compared with 12 months ago, now at $1 284/oz on average, mining companies had narrowed the range of their view of the long-term price.

However, the pricing used for reserve pricing had remained relatively consistent year-over-year.

Cost cutting was the order of the day with all-in sustaining costs being the key metric companies used to report costs. The issue was that many mines were operating at cost levels above spot prices.

PWC said silver, considered a hybrid metal for its use as a currency and in industrial applications, had been hit the hardest in the past three years, falling by more than half to below $16/oz today.

Reducing costs would be critical for silver companies to survive the current price rout as companies focused on what they could control, rather than on a volatile market price.

Copper, which is used in everything from cars to electricity transmission, and which would always be in demand to manufacture consumer goods, was now trading around $3/lb, down from its record of $4.60/lb in early 2011. PWC noted that the copper price had not been as volatile as other commodities.

The copper price being used in the long term by respondents for planning purposes was found to be $3.11/lb on average, with a narrow band of $3/lb to $3.25/lb, and one company with $4/lb.

Owing to its widespread use, the price of copper was still considered high enough for many well-disciplined producers to make a profit.