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Planning for Metals and Mining Success Without Help from the New US Administration

The election of Donald Trump surprised pundits and markets. After the initial shock subsided, however, the outcome prompted strong gains in the stock market. Investors seem to expect President-elect Trump's pro-US and pro-business stance to benefit US companies.

The metals and mining sector has registered particularly strong gains: the Index of US metals and mining companies rose by more than 7% the day after the election. The market’s sentiment seems to be that infrastructure and corporate investment (encouraged by anticipated corporate tax cuts) in combination with protectionist trade policies could benefit an industry hard hit by weak demand growth and aggressive competition from low-cost imports. A sober look at the probable impact of the President-elect's key policy intentions, however, strongly suggests that the new administration's policies will not extricate the US metals and mining industry from its broader macroeconomic difficulties.

In this white paper, we will discuss the potential impact of President-elect Trump's key policy intentions (to the degree that these are identifiable today) regarding demand for and supply of raw materials and semifabricated metals, with a particular focus on steel, aluminum, copper, iron ore, coal, and scrap. We will outline key impacts and implications of the future administration’s policies on industry players’ relative costs, and conclude with a summary of actions that metals and mining players need to adopt to be successful in the face of the long-term structural challenges.

Demand

Supply

Impact and Implications

About the Authors

John Slaven is a partner and managing director in the New Jersey office of The Boston Consulting Group. He is a core member of the firm’s metals and mining leadership team. You may contact him by e-mail at slaven.john@bcg.com.

Christian Barthel is a principal in the firm’s New Jersey office. He is a core member of BCG’s metals and mining leadership team, and of its industrial goods and corporate development practice areas. You may contact him by e-mail at barthel.christian@bcg.com.

Metals & Mining
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