Key Mining Themes: Europe
BMI View: We forecast limited opportunities in Europe's mining sector due to high levels of public opposition and increasingly stringent environmental regulation within the sector. Bright spots will be in coal production in the east, where Russia, Kazakhstan and Turkey increase production to cater for both domestic needs and export demand. Originally promising mining sector growth in the Nordics is now likely to be more moderate as lower commodity prices squeeze companies' profit margins. We anticipate the mining of rare earths to become a bright-spot in the long term as Russia and potentially Greenland forge ahead with investment into the sector.
1. Coal Production Growth Mainly In The East, But Upside In Germany
Europe's coal sector is set for two distinct paths. In the East, specifically in Russia, Kazakhstan, Turkey and Ukraine, we expect solid growth in coal production as substantial reserves come online in response to growing Asian demand. In Kazakhstan particularly, there is huge potential for coal production as much of the country remains unexplored and the government is eager to attract investment. However, downside risks lurk especially for Eastern European coal production. International institutions including the IMF and World Bank recently followed the lead of the US government in restricting funding of coal-fired power plants except in rare circumstances for environmental reasons. This will have a knock-on effect on the coal mining industries of countries including Ukraine, which depend on supranational funding for their coal-fired power plants.
|Looking East For Growth|
|Select Countries - Coal Production % Growth y-o-y|