Once large miners revisit projects placed on hold due to the global recession they will likely adopt a more cautious stance towards them and approve gradual development, as opposed to aiming to reach production as soon as possible as was the case prior to the crisis, according to Colin Becker, mining expert and Santiago, Chile-based partner with PricewaterhouseCoopers (PwC).

Becker added that miners will likely start to consider restarting projects placed on hold next year when the global economy is forecast to rebound.

Due to the drop off in demand that has accompanied the global recession, some US$13bn in mining investments have been postponed or cancelled, according to a study by PwC. Becker said he expected a great deal of those investments to be reignited if the economy does not take another downturn.

However, other projects are gone for good.

"Many of those projects were never really feasible at the outset," Becker said, adding that the booming market of up until early 2008 motivated large cap miners to announce ambitious projects without fully considering the impact shocks in the market could have upon them.

EMPLOYMENT

With the postponement of investments and the slowdown of production to adjust to low demand, miners have laid off roughly 40,000 workers, mostly in the copper , iron ore and nickel sectors, according to PwC.

Of that amount, a large portion will remain unemployed as it is linked to growth projects yet to be given a green light, according to Becker, but many of those laid off due to cost-cutting in late-2008 have been rehired since or stand to be soon.

As for skilled labor such as mine engineers and geologists, up until the crisis demand far outweighed supply and as a result salaries climbed to levels never before seen. But this year so far, PwC has observed a sharp decline in this demand, Becker said.

However, he forecast that demand and salaries will return to levels similar to those prior to the crisis in the next year or so for qualified labor.

MINING STOCK PERFORMANCE

Although traditionally not preferred by investors, mining stocks measured in the HSBC Global Mining Index started to compete neck and neck with the S&P 500 and Dow Jones Industrial Average (DJIA) in 2007, and in early 2008 surpassed them, according to a study by PwC.

But the HSBC index plummeted as sharply as it had risen at the end of 2008. Nevertheless, given the strong recovery of most mining stocks this year so far, Becker said he expected the index to again surpass the S&P 500 once the world economy recovers, but will likely not reach levels as high as those prior to the recession.