Energy & Mining

Energy

Around the world, economic development is dependent on sufficient sources of energy – oil, gas, coal, and others. Company executives, political leaders and consumers are all concerned about the availability and security of these resources.

The global recession at the end of 2008 and beginning of 2009 coincided with a drop in oil and gas prices from their record highs in mid-2008. Demand for oil and gas will increase as the global economy improves. Although this will be most noticeable in emerging markets such as India and China, it will apply worldwide. China in particular is looking to expand its involvement in all aspects of the industry beyond its in-country activity, acquiring interests in Scandinavia, Africa and South America. Looking beyond China, M&A activity continues unabated as companies look to diversify into new products and markets.

Companies strive to find replacements for the reserves which are extracted. In the search for new sources of oil and gas, exploration is moving to more challenging locations, including deeper offshore waters and more remote onshore locations. As new technologies emerge, more oil is being recovered from existing wells, and previously uneconomic finds such as oil sands are now viable.

Oil & Gas companies are also faced with increasing regulatory demands, especially involving environmental issues. These demands are influencing companies to invest in alternative energy sources such as wind and wave power and revisit the viability of nuclear power.

Mining

In recent years the mining industry has seen commodity prices rise, and company profits have grown. However, the global economic downturn has changed this. While overall demand continues to exceed supply due to under-investment in the 1990s, the level of demand e.g. from China has dropped – though this is likely to recover quickly as we exit the 2008/2009 recession.

Mineral deposits and mine developments are often in remote areas and in countries where there is potential political risk. Additionally, mining companies are embroiled in negotiations with governments and other parties regarding issues ranging from reduction of pollutant emissions and environmental damage, to community needs and taxes.

Around the world, mining companies are responding to these challenges through innovative strategies - seeking new capital resources, technological improvements, and consolidation via mergers and acquisitions.