Loyal E&MJ readers look forward to the combined January-February edition of E&MJ because it carries the Project Survey, which is assembled by the market analysts at Raw Materials Group (RMG) in Stockholm (www.rmg.se). Using the information gathered from more than 24,000 mining industry entities, they give a detailed analysis of the current mining project pipeline. RMG doesn’t hold back and opens the survey with, “the mining boom is over.” That’s tough news to take. According to the Project Survey, the number of development projects peaked in 2006 and they are predicting a steep decline for 2009, but they don’t believe it will reach the trough levels of 2002.

As this edition of E&MJ was going to press, the equity side of the banking industry worldwide was under siege. Bankers were calling in their markers and refusing to lend. All industries have been feeling the effect of the receding tide for months. A prime example in the mining sector is the Russian base metal miners. At the height of the commodity cycle, they were using their new found clout to build market share and ascert themselves. They are seeking Kremlin bailout money less than one year later.

No one knows the situation better than junior mining companies. The Minerals Economic Group released its annual report on exploration spending. Had they not made their prediction for 2009, the report would have been tremendous news, record levels of spending in 2008, sixth consecutive year of growth since 2002, etc. The bulk of the explorers are junior mining companies and they depend heavily on equity financing. They are getting squeezed by a lack credit and declining market capitalization. As they cut back on exploration projects to survive the current downturn in commodity prices, exploration activities will obviously decrease substantially.

Two political moves could jump start the economic recovery. The newly elected Obama administration needs to solve the U.S. housing crisis. The election itself has restored confidence among many Americans, but confidence alone can’t keep families from walking away from mortgages. The $586 million Chinese stimulus package announced during November will boost infrastructure spending programs. When the Chinese and the Americans get their people back to work, the mining business could see another era of high demand.

The good news, and what readers need to remember, is that more than 10,000 major mines are operating world wide and many mining companies have strong balance sheets. While the immediate future looks bleak, the mining business will fair much better than many other industries. Projects in the pipeline are just that— development projects that have not been commissioned. Exploration can resume almost as quickly as it has been idled. The mining business will emerge from this downturn a much stronger industry.

Steve Fiscor, Editor-in-Chief, E&MJ