2022 Mining Conference: A look at recent trends shaping the industry
February 16, 2022
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1 minute 30 seconds
Inflationary pressure on both operating and capital costs, mergers and acquisitions among mining companies, and shareholder-friendly dividend frameworks were some of the most prevalent topics at our recent Mining Conference. With prominent industry leaders in precious and base metals mining present, we examined the current state of the industry, the impact of inflation on metals supply and demand, and what challenges lay ahead for the sector for the rest of 2022.
"The annual TD Securities Mining Conference kicks off the year with in-depth discussions with company management teams about the opportunities and challenges they see for the year ahead," says Greg Barnes, Managing Director and Head of Mining Equity Research at TD Securities. "Our conference is the first mining conference of the year globally and establishes many of the themes that continue to develop as the year progresses. This year, management teams are particularly focused on inflationary pressures, supply-chain challenges and the increasing recognition that mining will play a key role as the world continues its transition to a low-carbon economy."
Key takeaways from our Mining Conference include:
"The annual TD Securities Mining Conference kicks off the year with in-depth discussions with company management teams about the opportunities and challenges they see for the year ahead," says Greg Barnes, Managing Director and Head of Mining Equity Research at TD Securities. "Our conference is the first mining conference of the year globally and establishes many of the themes that continue to develop as the year progresses. This year, management teams are particularly focused on inflationary pressures, supply-chain challenges and the increasing recognition that mining will play a key role as the world continues its transition to a low-carbon economy."
Key takeaways from our Mining Conference include:
Inflationary pressures
Management teams who presented were almost universal in their view that cost pressures are running somewhat hotter into 2022. Mid-last year, operating cost inflation was widely seen as running within a range of 3-5% year-over-year. By the end of 2021, guidance from industry leaders suggested that the higher end of that range was more appropriate.
Everyone wants more copper
With copper supply-and-demand balances remaining tight, and new development projects difficult to come by, both base metals and precious metals companies highlighted their copper exposure and are seeking ways to increase leverage to the metal.
Also, with copper prices expected to remain robust, there is increasing potential to develop more copper-and-gold projects. There are also new opportunities for stream funding to play a large role in helping get those projects off the ground.
Returning capital to shareholders remains a key priority
Broadly speaking, the mining sector is generating significant free cash flow with only a few large development projects underway and metal prices at decade (if not all-time) highs. Balance sheets are well positioned with debt reduction no longer a high priority for most companies. Increasing dividends was a key theme discussed for precious metal producers and it is expected base metal producers will follow the same trend. Buying-back shares is also on the table in both sectors and is generally seen as being more shareholder friendly.
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Managing Director and Head of Mining Equity Research, TD Securities
Managing Director and Head of Mining Equity Research, TD Securities
Managing Director and Head of Mining Equity Research, TD Securities
