North America's largest metals producers have warned that 2023 will be a difficult year for mining companies due to a potential economic downturn, geopolitical risks and low investment levels. However, the prices of precious metals such as gold are expected to remain high in 2023, which will generate healthy profits for mining companies involved in the precious metals value chain.
In 2022, the sector faced several challenges like rising input costs and bottlenecks in the supply chain. However, there were also plenty of opportunities such as rising demand for metals that are key to economic growth and clean energy initiatives. In 2023, executives expect these challenges and opportunities to continue but new trends will materialize, too.
“ is going to be seen as the start of serious change in the way mines operate and are held accountable. The scenario playing out across the globe is a very interesting dynamic, and honestly, I do not think anywhere is perfectly safe to invest right now," said Mark Bristow, CEO, Barrick Gold Corp.
According to experts, one new trend is the strengthening of government demands for the sector. Examples include the Mexican government’s stance on lithium and the issue between the Panamanian government with First Quantum Minerals. Experts said that more governments are creating unstable environments as they want to nationalize critical minerals to ensure their value remains in the country.
“There is an increased demand for taxation by many governments based on what they believe are mining companies making more money because of higher resource prices. But I do not think they are considering the inflationary pressures we face,” Peter Rockandel, CEO, Lundin Mining, said to Mining.com.
A second trend is the rise of mergers and acquisitions (M&As). Bristow argued that precious metals companies need to consolidate their existing operations further in 2023 and avoid M&As. However, experts argued that copper companies have opportunities to increase production and diversify through M&As.
“For the first time in a long time, we have seen M&As start to pick up and I think that theme is going to continue. A lot of the big companies are talking about the challenges of finding more copper and wanting to grow their production,” said Rockandel.
As a third trend, precious metals prices are expected to rise amid fears of recessions and geopolitical conditions. “I would be surprised to see gold at any less than US$2,000/oz a year from now. This environment, where you see runaway government deficits and the highest inflation in decades, is really positioning gold as demonstrably the best hard currency in the world,” said Ammar Al-Joundi, CEO, Agnico Eagle Mines.
Meanwhile, base metal prices are affected by fears of decelerating economic growth, which would dampen demand. The uncertain outlook is expected to change in a few years as copper mines are depleted and a global need for more mining projects gains force.
“The demand created through electrification is going to be significant and it is difficult to see today where the new supply is going to come from to fully satisfy that. We expect to see an under-supplied copper market for some time yet, which will be very constructive for prices, ”Jonathan Price, CEO, Teck Resources, said to Mining.com.