Increased Demand for Copper for Power Infrastructure Development to Drive Base Metal Mining Activities, states TMR
The global market
for base metal mining is characterized by a markedly high level of
consolidation, with Glencore Plc. solely accounting for over 68% of
the global market in 2014, states a report by Transparency Market
Research. Other major vendors in the market, comprising BHP Billiton
Limited, Freeport-McMoRan, Inc., Antofagasta PLC, CODELCO, and Alcoa
Inc., cumulatively accounted for nearly 18% of the market in the same
year.
The market features
a low degree of competition but has high exit barriers for
manufacturers owing to investment and contract commitments. The
capital intensive nature of base metal mining facilities has
mitigated the threat of new entrants to a substantial degree, reason
why only a few companies hold a majority of share of the market.
Acquiring major mining companies in emerging economies can help
companies in the base metal mining market achieve substantial
traction and expansion across these regions, which are among the most
promising investment hubs for the base metal industry.
Infrastructure
Development Activities to be Key Enabler of Growth
Global estimates
entail that nearly 40% of the world economy is directly or indirectly
affected by the mining industry. Consistent supply of base metals
such as copper, zinc, nickel, aluminum, and tin is central to the
development of sectors such as infrastructure, construction,
manufacturing, transportation, equipment, and utilities. Flourishing
growth across these sectors in the past few years, especially in
developing regions such as Asia Pacific, is the major demand driver
of base metals in the global market.
The European Union
has significantly increased its investment aimed at the development
of the region’s energy infrastructure, to make it more complaint
with renewable energy sources, in the past few years. Transportation,
construction, and equipment industries, which are some of the
principal consumers of a number of base metals, are also expanding at
a plausible rate across the globe.
These factors are
collectively leading to the increased consumption of base metals and
are expected to remain the key drivers of the global base metal
mining market in the next few years. However, issues such as resource
nationalism and the requirement of social license to operate in
resource-rich regions will pose difficulties for companies operating
in the global base metal mining market in the years to come.
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Asia Pacific to
Dominate Global Consumption
Asia Pacific holds a
prominent position in the global market for base metal mining. The
region is the largest consumer of base metals on account of the
excellent development across the industrial and manufacturing
sectors, especially in countries like India and China. The region
accounted for a share of nearly 63% in the global base metal mining
market in 2014 and is expected to strengthen its position further in
the years to come as well.
In the Asia Pacific
base metal mining market, China held a share of nearly 45% in the
market and is expected to expand at a favorable 7% CAGR from 2015 to
2023. In India, the market will exhibit a 6.49% CAGR over the same
period and emerge as another prominent consumer for base metals, next
to Australia. Infrastructure development activities in India will
require increased volumes of base metals in the next few years,
driving the base metals mining market.
On a whole, the
global base metal mining market is expected to expand at a 5.01% CAGR
from 2015 to 2023, in terms of volume, and rise from 103.33 MMT in
2014 to 160.19 MMT by 2023.
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