Most large mining companies are expanding through mergers and acquisitions, and this is creating opportunities for junior companies to find new projects, especially in Nordic countries, according to Magnus Ericsson, president of Raw Materials Group.
At the annual meeting of the Finnish Association of Mining & Metallurgical Engineers (FAMME), held in Helsinki, Ericsson gave a talk on international development and change.
“The giants don’t want to take risks,” Ericsson said. “They buy smaller companies with their mining assets and projects, once the operations have proved viable.”
A growing number of ventures are under way in Finland, Greenland, Norway and Sweden. In Finland, exploration was once dominated by the country’s geological survey and by base metals miner Outokumpu, whereas today juniors Endomines and Kalvinit are on the scene, looking for gold in the east and titanium pigments in the north, respectively.
According to Ericsson, the trend towards growth through mergers and takeovers began gaining momentum in 1995, and since then an average of US$20 billion annually has been spent (the figure nearly doubled in 2001, owing to the merger between Australia-based BHP and Billiton, based in London).
During that period, however, global spending on mineral exploration decreased to US$2 billion from US$5 billion. Ericsson now believes the drop in spending has bottomed out and that there’s a growing need for mined products.
“The need for ores and minerals is recognized,” he stressed. “There has been an increase in the attractiveness of mining following increases in commodity prices and signs of increasing exploration expenditures.”
In the zinc, gold and lead sectors, the 10 largest companies control less than 60% of production, whereas for copper, iron ore and bauxite, the figure approaches 70%, a low level compared with other industries.
Most of the chromite, gold and iron ore in Europe come from Nordic countries; in terms of copper and zinc, Nordic producers rank second.
Last year in Finland, more than 40 million euros were spent on mineral exploration spending, compared with 10 million euros in Greenland and 20 million euros in Sweden (little was spent in Norway).
In an effort to spur further investment, the Finnish government has earmarked 10 million euros for an investment fund aimed at exploration. The private sector is expected to contribute another 20-40 million euros.
— The preceding is from an information bulletin published by the Finnish Association of Mining & Metallurgical Engineers.
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