The mining bill was the first and top priority of the Wisconsin Legislature in 2013, but it may take years before any mining-related jobs are created in the state.
That’s because the global demand for mining and mining equipment is at a standstill.
The slowdown is taking a toll on Milwaukee-based Joy Global Inc., which manufactures mining equipment. In the company’s most recent quarterly report, Joy Global CEO Mike Sutherlin said prices for industrial metals and bulk commodities have declined by 20 to 40 percent over the last 18 months. Seaborne coal prices have declined 17 percent since the beginning of the year, and China’s domestic coal prices have fallen nearly 20 percent.
Lower pricing is making higher-cost mines uneconomical and will result in closures that will rebalance the market, Sutherlin said. Until that happens, there is little incentive to invest in new mining capacity, he said.
"For the first time in over a decade, global capacity has caught up with demand and most mine commodities are in surplus," Sutherlin told a recent conference call with analysts.
The surplus is primarily the result of the post-recession economic recovery falling short of expectations, he said. The Eurozone is just starting to recover from a multi-year recession, China’s growth has slowed and growth in the United States remains sluggish, Sutherlin said.
"The market has become even more challenging, with declines in order rates for both original equipment and aftermarket. The supply surplus that was centered in the U.S. coal market last year has migrated to the international markets, and they are now going through similar aftermarket corrections to that in the U.S.," Sutherlin said.
"Based on the U.S. experience, we expect this to create headwinds for most of the next year. Although original equipment orders have always been lumpy, the uncertainty around their timing has increased. A select number of projects are continuing to move forward, but at a…Read more...