• The Mining - Non Ferrous industry is subject to fluctuations based on changes in global economic conditions and metals’ end-use markets. The metal prices have been affected by a gamut of factors, including a stronger U.S. dollar, interest rate hikes and U.S-China trade war apprehensions. Further, disappointing data from China is a major concern as China is the biggest metal consumer. Since the industry cannot control the price of the products, it focuses on improving sales volumes, operating cash flow and lowering unit net cash costs. Over the past few years, miners have trimmed capital spending and focused on cost-reduction strategies and digital innovation to drive operating efficiencies.
   
• The industry is currently plagued with escalating production costs. Labor is major component of input costs for the mining industry. The industry has been facing a shortage of skilled workforce that led to a spike in wages. Moreover, labor-related disputes can be damaging to production and revenues. Miners are feeling the pinch of higher fuel prices. Electricity outages and shortages in several countries are adding to the woes. To minimize fuel price volatility and secure supply, companies are opting for alternate energy sources. 
   
• Resources are getting depleted, supply from old mines is declining and there is a lack of development of new mines. Further, development projects are inherently risky and capital intensive. Meanwhile, demand is increasing due to requirement from emerging markets, and economic activity in the United States and other industrialized countries. So, there will be an eventual deficit in metal supply that could aid in bolstering metal prices, which bodes well for the industry in the long haul.

Zacks Industry Rank Indicates Bright Prospects

The Zacks Mining- Non Ferrous Industry is an 11-stock group within the broader Zacks Basic Materials Sector. The industry currently carries a Zacks Industry Rank #68, which places it at the top 27% of more than 250 Zacks industries.

The group’s Zacks Industry Rank, which is basically the average of the Zacks Rank of all the member stocks, indicates bright prospects in the near term. Our research shows that the top 50% of the Zacks-ranked industries outperforms the bottom 50% by a factor of more than 2 to 1.

The industry’s positioning in the top 50% of the Zacks-ranked industries is a result of positive earnings outlook for the constituent companies in aggregate. Looking at the aggregate earnings estimate revisions, it appears that analysts are gradually gaining confidence in this group’s earnings growth potential. In the past year, the industry’s earnings estimate for the current year has increased 5%.