Pitfalls and Pipelines - Philippine Indigenous Peoples Links

52 Pitfalls and Pipelines: Indigenous Peoples and Extractive Industries
mining and metals sector, a number of other factors are also
helping to fuel transactions—including the improved cash
flow and availability of capital to do deals, ongoing industry
rationalisation and the desire for greater vertical integration.”
Importantly, Ernst & Young judged that equity (selling
shares) was still “the preferred source of capital in the sector”
and that this pattern would continue for some time to come,
due to “the lack of availability of bank debt, particularly among
the mid-tier companies.” 25
A year later, the Metals Economics Group also estimated
that 2011 non-ferrous exploration budgets would increase
by around 50 percent from the 2010 total, signifying a new
record, with Latin America as the industry’s favourite regional
exploration target. Nonetheless, the Group anticipated that
the proportion of “overall industry exploration effort committed
to long-term project generation” would remain close to
historically low levels. 26
At the same time, PricewaterhouseCoopers (PwC) concluded
that, while the first half of 2011 saw 1,379 mining
transactions globally, worth a total $71-billion as a result of
“volatile equity markets,” the value of such deals had shrunk
by 49 percent during the third quarter of that year. 27
This bearish prognosis hadn’t materially changed by
mid-2012. Only 22 percent of respondents to the Mining
Recruitment Group’s survey in June thought the mining
sector would perform better in the second half of 2012,
compared to the first, while another 41 percent suggested its
performance was likely to be worse. 28 Nor was the outlook for
Asia-Pacific-focussed metals and mining companies substantially
less gloomy.
According to a May 2012 report by Standard & Poor’s:
“A tighter labor supply and likely higher energy prices will
pressure the profitability of many commodity producers” in
the Asia-Pacific region. Metal producers will also be wrestling
with more expensive raw materials… For Asia-Pacific steel and
aluminium companies, we forecast a negative outlook…due to
a global slowdown and abundant supply.”