Gold Mining Capex Forecast Stabilizing, But Still Negative

Mining capex is expected to fall 5% year on year in 2014, according to a Citi industry survey, compared to double digit declines for the last three years. Combined with falling commodities production (to provide some much needed price support) this adds to the price risk that the mining equipment and aftermarket sectors are currently facing, and it may even be too optimistic.

“Our own mining capex model (based on >40 mining companies worldwide) points to a 8% Y/Y decline in 2013E, followed by a 12% Y/Y decline in 2014E and 16% decline in 2015E,” write Citi analysts Natalia Mamaeva and Timothy Thein. “We maintain our view that the market still underestimates the extent of downside, especially in 2014E and...