BMI View: Germany's coal sector is one of the largest in Europe and is the main driver of mining activity in the country. Coal output continues to grow courtesy of strong demand for lignite used in the majority of the nation's power plants, however, the industry finds itself increasingly under threat from the rapid development of renewable energy production as well as growing opposition to fossil fuel-based energy production across the EU. These factors are likely to see the relative value of German mining gradually decline over the long-term.
Germany's mining sector is heavily focused around coal mining, with the country currently the largest producer of lignite, or brown coal, in the EU and boasting the eight highest annual output in global terms. Located primarily in the Rhineland region in Western Germany, the lignite mining industry remains a major employer. The industry's lobbying efforts and its obvious important to local employment have so far helped coal miners to withstand pressure from regional government and environmental groups to scale down their activities. Indeed, our forecasts point to continued, albeit moderate growth in German coal production over the next few years through to 2019. We project annual growth in output to average 0.4% year-on-year over 2015-2019.
Growth in coal production will support a modest increase in Germany's mining industry value over the period, with the sector set to increase its value from USD4.34bn in 2015 to USD4.99bn in 2019. However, the longer-term outlook for mining in the country looks less and less assured as the development of Germany's renewable energy sector reduces the need for fossil fuels. 2014 saw renewable sources, including wind and solar power replace lignite as the largest since contributor to power generation in the country, while the share of thermal, or hard coal also declines on a y-o-y basis. We expect the divergence between 'clean' and fossil fuel-based energy production to increase as the German government steps up its Green agenda and is seen to tow the line with the EU's Emissions Trading Scheme (ETS). While assurances from Berlin that coal-fired power plants and mines are safe for the time being, the coal industry as a whole will be braced for a growing battle for its survival over the coming decade. To make matters worse, the steady increase in coal imports into Germany and other EU states over the past few years will inject increased price competition into the local coal market. US imports to Germany alone have doubled in the five years to 2013.
|Still Going Strong|
|Germany - Mining Industry Value 2013-2019 (USDbn)|
Beyond the coal sector, we expect Germany's iron ore sector to record modest growth in the next five years. Germany's iron ore production totalled 0.4mnt in 2012, accounting for a fraction of a percent of global output. We expect Germany's share of global iron ore output to decline over the coming years as our modest growth forecast is overshadowed by rapid growth elsewhere, mainly in Australia, Brazil and West Africa.
Aside from coal and iron ore, there is almost no mining activity in the rest of the country due to the high cost of labour, high power costs, relatively stringent regulation and the relative lack of significant mineral deposits. The majority of the country's mines which were operating in the 1990s closed due to weak metal prices.
The Germany Mining Report has been researched at source and features BMI Research's mining and commodity forecasts for metals, minerals and gems, covering all major indicators including reserves, production, exports and values. The report also analyses trends and prospects, national and multinational companies and changes in the regulatory environment.
BMI's Germany Mining Report provides industry strategists, service companies, company analysts and consultants, government departments, trade associations and regulatory bodies with BMI's independent forecasts and competitive intelligence on the mining industry in Germany.
- Use BMI's independent industry forecasts on Germany to test other views - a key input for successful budgeting and planning in this mining market.
- Target business opportunities and risks in Germany's mining sector through our reviews of latest mining industry trends, regulatory changes and major deals, projects and investments in Germany.
- Assess the activities, strategy and market position of your competitors, partners and clients via our Company Profiles (inc. KPIs and latest activity), Key Projects Tables and Competitive Landscape Tables.
BMI Industry View
Summary of BMI’s key forecasts and industry analysis, covering mining reserves, supply, demand and prices, plus analysis of landmark company developments and key changes in the regulatory environment.
Industry SWOT analysis
Analysis of the major Strengths, Weaknesses, Opportunities and Threats within the mining sector and within the broader political, economic and business environment.
BMI Industry Forecasts
Historic data series (2009-2013) and forecasts to end-2019 for key industry and economic indicators, supported by explicit assumptions, plus analysis of key risks to the main forecasts. Indicators include:
- Mining industry: Industry size (USDmn), real growth (%), % of GDP, employment (‘000), workforce as % of total workforce, average wage (USD).
- Output: Production volumes (‘000 tonnes, carats etc.) for all major metals, minerals, ores and gems mined in each state, including bauxite, copper, gold, coal, lead, silver, tin, titanium, uranium, zinc etc.
- Exports: Value of exports (USDmn) for all major metals, minerals, ores and gems mined in each state.
- Commodity markets: Global demand, supply, stocks and benchmark prices (USD) for aluminium, copper, lead, nickel, tin, zinc, gold and steel.
BMI’s Mining Risk Reward Index
BMI’s Risk Reward Indices provide investors (mining companies and support service providers) looking for opportunities in the region with a clear country-comparative assessment of a market’s risks and potential rewards. Each of the country markets are scored using a sophisticated model that includes more than 40 industry, economic and demographic data points to provide indices of highest to lowest appeal to investors, with each position explained.
Competitive Landscape Tables & Analysis
Comparative company analyses and tables detailing USD sales, % share of total sales, number of employees, year established, market cap/NAV, ownership structure, production and % market share.
Details and analysis of all current and planned developments (new ventures, capacity expansion and other investments) across the sector broken down by metal/ore.
Examines the competitive positioning and short- to medium-term business strategies of key industry players. Strategy is examined within the context of BMI’s industry forecasts, our macroeconomic views and our understanding of the wider competitive landscape. The latest financial and operating statistics and key company developments are also incorporated within the company profiles, enabling a full evaluation of recent company performance and future growth prospects.
The Mining reports are based on an extensive network of primary sources, such as multilateral organisations (UN, WB, IMF), national chambers of commerce and industry, national statistical offices, government ministries and central banks, and multinational companies.
*Company profiles are not available for every country. Those reports instead contain information on the current activities of prominent companies operating in the market.