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Recommendation Date : 21-Jun-2010 Last Update Date : NA
Mining & Minerals :
The per capita consumption of metals in emerging economies is far less as compared to that in the developed economies. The population of four emerging nations put together (BRIC) is almost half of the world. Another important factor that is fast changing is the demography. Countries like India and China are witnessing a trend of large scale urbanization where a substantial part of the population is migrating to a city different from their home town. The result is a decrease in size of families and hence a rise in the per capita consumption. Where does all this lead to? We see this as the emergence of a new culture with an increased demand for various kinds of assets including houses and cars from the end user. Increasing disposable incomes resulting in changing lifestyles has pushed consumers up the value chain who now need more of motor cars rather than bicycles. The consequence of all this is a huge spurt in demand for metals. Also supporting this is the governments thrust on infrastructure development. If there is one sector which will benefit hugely from the above factors, it is mining and minerals. With the government opening up mining to the private sector, many players have seen their fortunes change over the past decade. The more ambitious of the lot have had the courage to look out. Many Indian companies have bought mines in other countries as well. Metals of all kinds will be in demand going forward however metals which are likely to see a huge demand, include steel and stainless steel particularly in India and China. This will in turn drive demand for iron ore, manganese and chromium as these constitute a major raw material for manufacture of steel and stainless steel (the most commonly used 200-series stainless steel in India and China). Another important factor that will drive demand growth for metals and minerals is the disproportionate use of metals by developing countries, especially China. For instance, while Chinese economy constitutes 10% of the world economy, the country consumes around 40% of the total steel produced in the world. This difference is likely to boost demand for metals and minerals going forward.
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