Mining capital expenditure to bounce back in 2021

After falling by an estimated 6% in 2020, the capital expenditure of 20 leading miners is expected to rise by 23% in 2021 to reach $58bn.

This will be the highest point since 2015 and will be supported by both higher sustaining capex and greater development project expenditure after deferrals from 2020 due to Covid-19.

Rio Tinto and BHP will continue to be the highest spenders, with Rio Tinto’s capex to hit $7.5bn in both 2021 and 2022, an increase of 21% on 2020. Major developments include the continued construction of the $2.6bn Gudai-Darri iron ore mine, which is due to commence production in 2022.

Significant increases in capex are expected at a number of other majors including Anglo American, Vale, Newmont, Teck Resources, and Norilsk Nickel.

Anglo American is predicting spend of between $5.7bn and $6.2bn in 2021, compared with $4bn in 2020. The 2021 figure includes $0.6bn carried over from 2020 into 2021 and 2022 plus $0.5bn for the Woodsmith Mine, as well as $0.8bn-$1bn for its share of the development of the Quellaveco mine in Peru.

The total spending on that project is expected to be between US$1.3bn and US$1.6bn. A similar overall level of spending is then expected in 2022, with a marginal reduction to $5.6bn–$6.1bn in 2023.

Vale is forecasting spend of $5.8bn, including $1.0bn on growth, up from a total of $4.4bn in 2020, with spending of $5.5bn in subsequent years.

Meanwhile, Newmont, which registered an 11% fall in capex in 2020 to $1.3bn, is expecting $1.8bn in spend in 2021, split $950m sustaining and $850m development.  This includes $400m in development capex in Australia, primarily for the Tanami expansion project in the Northern Territory.

Guidance from Teck Resources for 2021 is C$2.0bn ($1.6bn), net of partner contributions and project financing, up from C$1.49bn ($1.2bn) in 2020. A significant proportion of this will be for the Quebrada Blanca 2. The project was 40% complete at the end of 2020 and is expected to achieve first production in the second half of 2022.

Norilsk Nickel’s capex increased by 33% to $1.76bn in 2020 and will increase significantly again in 2021, to between $3bn-$3.4bn. It is then planned to increase to between $3.5bn-$4bn per year from 2022 to 2025.

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