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[Report] EMEA Miners Feel Pressure of Economic and Political Trends

Mining companies across Europe, the Middle East, and Africa (EMEA) are feeling the pressure of economic and political forces, according to a report whic...

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|Jun 20|magazine4 min read

Mining companies across Europe, the Middle East, and Africa (EMEA) are feeling the pressure of economic and political forces, according to a report which reveals a lack of confidence in credit quality. 

Standard & Poor's Ratings Services said in its report, EMEA Metals And Mining Companies Are Under Pressure As Chinese Growth Decelerates, that steelmakers in the region are struggling to improve margins by a significant amount. It does however expect steel volumes to recover by around three percent following declines of 11 percent over a period of two years.

On top of this mining companies are also beginning to feel the strain of a moderate deceleration in Chinese growth, according to Standard & Poor's credit analyst Andrey Nikolaev, who said that this has combined with an increasing supply of bulk commodities to spark a fall in price for iron ore and coal.

The report also cited the increasing political uproar in Ukraine, which has seen the annexation of Crimea by Russia and a number of separatist uprisings in the east of the country. Recently Russian gas giant Gazprom cut off its supply to its neighbour country.

There were some positive signs despite the headline unease. The report points to a resistance of copper prices to a downward slide and a surge in nickel prices because of an export ban from Indonesia.

Capital spending is also trending downward, meaning that free cash flow should improve next year.

More details can be found here: https://www.globalcreditportal.com/ratingsdirect/renderArticle.do?articleId=1333233&SctArtId=243826&from=CM&nsl_code=TWEET&sourceObjectId=8668674&sourceRevId=1&fee_ind=N&exp_date=20140620-13:44:37