Although mining companies’ profits in 2010 reached an all-time high of more than $50 billion, and the companies are investing to increase their supplies of major raw materials, it probably will not be enough to accommodate strong demand or curb rising commodity prices. Mining companies are increasing capital investment but face numerous obstacles in developing new mines and increasing output, such as rising costs, government requirements, inadequate ports and railways, and constricted supplies of certain minerals. Copper is one of those minerals, as is iron ore, the demand for which will likely exceed supply for at least the next five years as China increases steel production. Ernst & Young’s most recent mining research and consulting report predicted that miners this year would surpass 2009’s investment level of $113.7 billion for 1,123 projects.

Source: Wall Street Journal