Serious recession unlikely says RTZ

Britain’s RTZ Corp., currently in the process of acquiring BP Minerals, is set to become the world’s largest mining company when the deal is completed. The BP purchase increases RTZ’s asset base in North America as a proportion of its total assets to 50% from 44%.

“The pace of economic activity remains healthy in many industrial countries, particularly in the South East Asian region, although it is slackening in Britain and North America,” says Frame.

He predicts the world’s over-all rate of economic growth, which to some extent determines the health of natural resources industries, will probably be around 3% this year.

According to Frame, the mining industry’s costs of production, which were dramatically reduced in the recession, have leveled out and are probably rising again.

“Even with supplies becoming easier, most mineral and metal markets are reasonably well balanced,” he says.

“It is vitally important that the mineral industries recognize that high prices can be as damaging in the long term as the weak prices of 1983-1986 period,” he says. “They can discourage consumption by causing substitution, and they can encourage too many potentially marginal producers to enter the market.”

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