MINING FINANCE / INVESTMENT
Credit crunch threatens mining projects – Credit Suisse
The credit crunch has put $50 billion of capital expenditure for new or expending projects at risk, according to Credit Suisse.
LONDON (Reuters) -
The credit crisis risks delaying around $50 billion of the mining sector's capital expenditure used to fund new or expand existing projects in 2009, Credit Suisse said on Monday.
Limited access to financing may impact the construction of some 300 million tonnes of iron ore, 5 million tonnes of copper, 10 million tonnes of aluminium and over 1 million ounces of platinum, which could be delayed 2-3 years, a report said.
"We think up to $50 billion of the $75 billion scheduled for 2009 is likely to be deferred for at least a year," it said.
This could then delay a further $150 billion scheduled between 2010 and 2012, the bank's said.
"The potential delay of such capacity is likely to plant the seeds for the next bull market, especially given that the recent 5-year bull market did not see large scale capacity additions with the exception of iron ore," it said.
The delayed projects represent around 66 percent of next year's spending plans, and for iron ore it would affect some 35 percent of the current seaborne market.
"The most affected miners are likely to be those with excessive debt like Xstrata and the juniors who have limited access to financing," the report said.
(Reporting by Anna Stablum, editing by David Evans)
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