The second is their lesser ability to access credit

Mineral values are among the victims of the bearish stock market tornado. They were yet to the rank of the most popular values until recently. The index of the 15 most liquid mining shares of the London Stock Exchange, FTSE Mining, was multiplied by two between early 2007 and earlier history of the 19 May this year (30.746 points at the meeting, for a capitalization accumulated more than $ 110 billion). Then, went awry.

Yesterday, at the opening, this same index has registered a new lowest for three years at 11.339 points, for a total capitalization of the order of $ 41 billion. Yet, the mineral groups continue to show a strong ability to generate the cash and preserve their astronomical margins. October 2, Tom Albanese, the pattern of Rio Tinto, stated that "the real impact of the financial panic of this week is oversold and we are going to see a certain return to reason". Known then... "Tense conditions of the offer and the strength of Chinese demand and other developing countries should establish a basis for price of mineral resources in 2009 higher than their average", he continued.

Chinese risk

For after Deutsche Bank, in 2009, this country should ensure that the decision of the growth of global demand for aluminum, more than 80 of iron ore, about 75 of that of steel, more than 60 of that of copper and more than 40 of the nickel. "Any slowdown of China's GDP, industrial production and investment in fixed capital will thus have important implications for the application of raw materials", confirms the German bank.

However, recently, many economists have implicated the theory of decoupling of the Chinese economy. And, because of the rise of the risk of global industrial crisis. It is the first reason for the slump of valuations of the mining sector. The second is their lesser ability to access credit. The mines are thirsty of bank credit. The development of the new application more often between 2 and $ 4 billion. According to estimates from UBS, mining projects under construction in Australia require capital investment of the order of us $ 48 billion. 27 Billion have already been spent. It remains therefore to find some additional $ 21 billion to complete. "Some projects are clearly past in the background, either because of difficulties of current funding, or adverse effects of prices or of geopolitical issues," said the Swiss Bank. The credit crisis may therefore operate a severe selection between many Australian mining projects in development. On the other hand, it is the same. Then, it is well known that one of the powerful engines of the jump in the price of these shares has been the movement unprecedented consolidation. In 2007, it had mobilized $ 160 billion according to estimates of PricewaterhouseCoopers (PWC). The scarcity of credit has already been partially scuppered the hostile offer of Xstrata on Lonmin. Final factor in the stock market diving of mines, the need for some shareholders sell their securities at prices below those of the market. And, to meet with "margin calls catastrophic", explained the experts in Fairfax.