Boston, MA -- (SBWIRE) -- 07/17/2012 -- We see modest growth across mineral commodities in the US over our forecast period as mining companies see larger growth opportunities in developing markets. The US contains large deposits of key mineral commodities such as coal, copper, gold, zinc and lead and we forecast the industry value to grow to US$83.8bn in 2012. We see the domestic mining sector growing at a slower pace than many developed market peers such as Canada and Australia, but believe there still exist promising opportunities for mine development in the US. With metals prices to stay elevated by historical standards, previously uneconomical deposits may become mineable again.

We expect new investments will target minerals for which global fundamentals remain favourable such as copper and gold, driving our industry growth forecasts. Several of the largest US mining companies are developing projects to mine copper and gold as global demand outstrips supply. While copper supply in the US has fallen over the last decade as ore grades decline and miners have sought larger deposits abroad, we see several new mine expansions coming online, which will support output. While investment in copper and gold will likely continue, we see minimal investments into mineral resources for other base metals. Weaker market fundamentals for zinc and lead will keep price gains modest in the coming years and we do not expect domestic mining companies in the US to invest heavily in developing these resources.

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Regulatory Hurdles Hurt Competitiveness

The US maintains one of the most favourable business environments in the region and indeed the world. Political stability and investor friendly policies that create few barriers to entry are favourable for mining sector development. Furthermore, established mining sector infrastructure and developed regulatory and legal environments protect mining companies from unexpected or unforeseen risks.

We note, however, that environmental opposition may create additional challenges for mining sector companies in the years to come. Public pressure on regulators may introduce additional laws and regulations on mining companies seeking to develop projects in environmentally sensitive areas. Furthermore, federal level pollution controls will likely weigh on growth for coal mining companies as power generation capacity in the US shifts away from aging, more polluting technologies to cheaper cleaner alternatives such as natural gas.

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