Commodity prices are likely to put up a strong performance in 2010 even though the speed and extent of the global economic recovery remains uncertain, Frost & Sullivan said on Monday.

This would boost the worldwide mining industry, although difficulties particular to South Africa could dampen local prospects.

“The global mining industry is likely to be buoyed by growing physical demand for commodities, the strong possibility of speculative buying and rising prices,” Frost & Sullivan metals & mining analyst Wonder Nyanjowa said in a statement.

“This is likely to encourage miners to expand production capacity.” However, Mr. Nyanjowa said that South Africa might not reap the full
benefits of the rebound.

“Many of the local challenges that adversely impacted on production in 2009, such as electricity supply shortages, a lack of skills and safety concerns, are likely to continue affecting the performance of the mining industry in 2010. In addition, the prospect of higher commodity prices, particularly in the gold, platinum and coal sectors, was likely to
lead to tough wage demands from unions.

Mr. Nyanjowa said that growing inflation fears in the developed world, particularly the United States, an unstable US dollar, threats of another recession from expansionary fiscal and monetary policies and negative real interest rates pointed towards strengthening investment demand for gold.

Source:, 20100118

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