Operating context

Socio-economic demand drivers underpin the prospects for long-term growth in our chosen natural resources market sectors. Despite the cyclical constraints in the short to medium term, we believe focusing the Group’s expertise and capacity on delivering sustainable fit-for-purpose project solutions to clients in these market sectors will enhance shareholder value over the long term.


SHORT TO MEDIUM TERM

  • It is expected that weak demand for commodities will persist in the short to medium term, given turbulent global economic conditions and muted GDP growth forecasts.
  • In this context, large developed and developing economies provide the greatest opportunities for growth.
  • While expectations of a price recovery in the short to medium term are firming, based on a recovery in the USA and relatively strong growth in India, it is unlikely that commodity prices will reach the levels seen in 2011.
  • The rate and extent of the oil price collapse, together with a global oversupply, continues to impact on the oil and gas market.
  • In this market, global energy producers have delayed or cancelled major greenfields LNG projects, which are expected to come to market closer to 2020.
  • Expenditure on brownfields LNG projects presents opportunity, but competition is increasing in this market.
  • In the metals and minerals market, increasing supply deficits in key commodities will provide growth opportunities in certain regions in the medium term.

MAJOR INVESTMENTS IN OIL & GAS
ARE BEING POSTPONED, HOWEVER CAPITAL IS STILL BEING INVESTED BY MAJOR ENERGY PRODUCERS.





The pipeline for large capital projects

Notes:
The infomine database was used to compare changes in project pipeline numbers from 2015-2016 for the Americas and Australasia.
The project IQ database was used for African comparisons as it is tailored to the African market.

LONG TERM

  • While commodity prices will take some time to recover, population and income growth and increasing urbanisation in emerging countries will support long-term demand for natural resources.
  • By 2030, it is expected the global population will have increased by 1,2 billion people, with 1,1 billion more people living in cities.
  • In 2035, Africa will account for 21% (1,8 billion) of the world’s population compared to 16% today. Africa’s population will account for 45% of the global increase.
  • Energy demand is projected to grow by 88% in Africa between 2014 and 2035, outpacing the global average. This is underpinned by ongoing urbanisation and electrification, providing strong prospects for power generation projects on the continent.
  • In the water sector, global demand is set to outstrip supply in excess of efficiency improvements in existing infrastructure.

GLOBAL GDP IS EXPECTED TO DOUBLE BETWEEN 2015 AND 2035, CREATING SUSTAINABLE DEMAND FOR NATURAL RESOURCES.



 GLOBAL GDP  Primary energy consumption