Check out my predictions for the resources industry next year, and you tell me!
Like it or lump it, the world runs on resources. Which means that when we’re talking about the future of the resources industry, we’re talking about a Pretty Big Deal.
Setting the bar high, the last few years in the industry have given us plenty of dinner party conversation. Are the days of peak oil gone? How do we cope with a changing industry? (Trump said what?!)
The end of the year usually brings with it a sense of reflection, which got me wondering. What are we in for in the next 12 months?
Well, it’s impossible to know for sure – it’s just crystal ball-gazing, after all. And loathe as I am to admit it, I’m not always right. But with that disclaimer out of the way, here’s what I expect to see in the resources sector in 2020. Strap yourself in – it’s a bumpy ride.
1. Continued low interest rates
We all know what the economy’s up to at the moment – unfortunately for a lot of us, our livelihood depends on it. But it is what it is, and with the situation not necessarily improving a whole lot, I predict that interest rates will stay low in a bid to give the economy a fighting chance.
2. An uptick in projects
Now here’s some good news. With low interest rates, it’s a whole lot easier to get a project off the ground. So I think we might see the number of projects getting a modest boost.
3. A rise in the price of oil
Will we ever hit over $100 per barrel again? Maybe not. But don’t rule out a modest increase for 2020.
4. A rise in the price of iron ore (but not to July ’19 levels!)
An Australian government report released last year may indicate that key steel consumer China has already reached its peak consumption levels, but others see the situation differently. With an infrastructure push on China’s horizon, many believe that the demand for steel will rise – of course, taking the price of iron ore with it. But I don’t expect anything near the meteoric display we saw this July.
5. Continued rise in the price of gold
Political uncertainty continues to influence the price of gold. And with rising international tensions, unpredictable leaders and large-scale change (like Brexit), we can expect that price to continue to climb.
6. Stagnant or declining S&P 500
…and for the exact same reason, we can expect the S&P 500 to take a small hit.
7. Difficulty in finding resources
Once again, we’re back to supply and demand. More projects means more manpower – but it takes time to upskill and train people. This kind of demand can’t be met overnight! I predict that companies will have more trouble finding the people they need with the right skills to do the job.
8. Increase in day rates and salaries
A smaller talent pool puts the power firmly in the hands of prospective employees and consultancies, who know they’re in demand and can afford to raise their prices.
Well there we have it – 2020 in a nutshell. What do you think? Am I on the money, or barking up the wrong tree?
In any case, it’ll be an interesting year.
And that, folks, is alright by me.