Commodity rally

After a run of low commodity prices, 2016 showed what the mining sector hopes are the first signs of recovery. Prices increased across a broad range of commodities, boosted primarily by demand from China. Coal was one of the best-performing commodities – the price of metallurgical coal, a key ingredient in steelmaking, peaked at more than USD 300 per tonne from just USD 80 per tonne at the start of the year. The price of iron ore rose to almost USD 80 per tonne in November, a 100 percent increase on the start of the year.

The surprise rally in commodity prices at the end of 2016 has reignited exploration activity and is expected to lead to an overall increase in production. With higher prices, coal mines in Australia, Canada and Mozambique, mothballed when prices were below USD 100 in 2015, have been brought back into production. Two of the world’s largest mining groups, BHP Billiton and Rio Tinto, have said they expect to see increases in both metallurgical coal and iron ore production volumes in 2017.