Sunday, November 2, 2008

Credit crisis to hit mining projects- Credit Suisse

The credit crisis risks delaying around $50-billion of the mining sector's capital expenditure used to fund new or expand existing projects in 2009, Credit Suisse said on Monday.

Limited access to financing may impact the construction of some 300-million tons of iron-ore, five-million tons of copper, ten-million tons of aluminium and over one-million ounces of platinum, which could be delayed two to three years, a report said.

"We think up to $50-billion of the $75-billion scheduled for 2009 is likely to be deferred for at least a year," it said.

This could then delay a further $150-billion scheduled between 2010 and 2012, the bank's said.

"The potential delay of such capacity is likely to plant the seeds for the next bull market, especially given that the recent five-year bull market did not see large scale capacity additions with the exception of iron-ore," it said.

The delayed projects represent around 66% of next year's spending plans, and for iron-ore it would affect some 35% of the current seaborne market.

"The most affected miners are likely to be those with excessive debt like Xstrata and the juniors who have limited access to financing," the report said.