Dr Caterpillar’s (excellent) prognosis for mining

Cat added more than 12 000 jobs, not counting the workers who joined the company from Bucyrus to bring its total workforce to 153,000.

But what is it saying about this year?

Here are some of the highlights from Caterpillar’s annual review and outlook for 2012:

We are almost out of the woods

“In our opinion, the risk of a worldwide recession has diminished significantly over the past quarter, but we remain concerned that central banks, particularly in developed economies, will react to the first signs of better growth by tightening economic policies. Even modest premature tightening could significantly slow economic growth.”

Cat can’t build mining trucks fast enough

“We expect 2012 to be a new sales record [$68 – $72 billion] at a time when construction activity in the United States and Europe—two large markets for us—are still depressed.”

We expect mining to continue to be strong globally, and we have a sizable order backlog for mining equipment. We expect sales to increase in 2012 and are in the process of adding production capacity for many of our mining products. However, we expect sales to be constrained by capacity throughout 2012.

Metal and commodity prices will rise

“We expect improving world economic growth to increase demand for commodities. Our outlook assumes most commodity prices will increase slightly in 2012 and continue at levels that encourage investment. We expect that copper will average over $4 per pound, Central Appalachian coal about $75 per ton and West Texas Intermediate crude oil about $100 per barrel.”

Growth in America will improve

The full impact [of Fed easing] has likely not materialized yet, and we expect economic growth will improve further in 2012. Our outlook assumes economic growth in the United States of at least 3 percent in 2012.”

Euroland will not bring us all down

“The Eurozone public debt crisis has been a lingering negative, but it is unlikely to trigger a worldwide recession. The Eurozone will likely have at least two quarters of weak, possibly negative growth, but should begin to improve in the second half of 2012.”

Asia and the Pacific – including Japan – will power ahead

“We project the Japanese economy will grow 3.5 percent in 2012, recovering from a 2011 recession. Rebuilding from the tsunami and more expansionary central bank policies are expected to drive the recovery. We expect economic growth in Asia/Pacific will exceed 6.5 percent in 2012, about the same as in 2011. Growth should improve in Australia and Indonesia, the result of recent interest rate cuts.”

For 2012, we are expecting economic growth in China of about 8.5 percent. We have seen the Chinese government begin to ease lending policies and expect that will continue in 2012.

Latin America will slow, but mining will continue to ramp up

“Growth in Latin America is expected to slow from 4.3 percent in 2011 to about 4.0 percent in 2012. Our outlook assumes interest rates will be flat to lower in most countries. We expect that economic growth will be sufficient for construction spending and mining output to increase.”

Africa is catching up with Asia’s pace

“Africa/Middle East will likely benefit from low interest rates and favorable commodity prices. We expect the regional economy will grow nearly 5.5 percent and that construction spending will continue to improve. “

Russia and Co will build and build

“We expect the CIS economies will grow more than 5 percent, and construction spending will increase more than 15 percent. Favorable factors include low interest rates, higher metals and energy prices, and increased production of oil, gas and metals.”