Just as mining companies rushed to grow, in the main, they are now rushing to shrink.

But not all of them.

There are situations and commodities that are creating gaps, provided company leadership is alert enough to the opportunities.

There also has to be a keen lookout for the impact of government stimulus packages.

Confirmation has come from Companhia Vale do Rio Doce of Brazil, Anglo American plc and South Africa’s own Kumba Iron Ore (KIO) and African Rainbow Minerals, as well as several China watchers, that the impact of China’s stimulus package is already being felt.

KIO’s primary downturn strategy is to keep on producing and to sell as much volume as it can, within the limit of not allowing its stockpile to increase by more than seven additional tons.

The US Aluminium Association says that the US stimulus package has also resulted in a $6,5-billion boost for aluminium. The aluminium is for transmission lines that will carry new renewable sources of clean, green energy, such as solar and wind, to be connected to the transmission grid.

The association wasted no time in taking a dip at its nonferrous stablemate, copper, with the claim that, in electrical applications, aluminium can do everything that copper can more efficiently and economically, providing up to twice the conductivity for each pound of copper – dependent on the specific alloy and application – at less than half the cost for each pound, based on current prices – for a 400% economic-efficiency advantage over copper.

The American Wind Energy Association added its marketing message, saying that, by allowing wind to provide 20% of the energy needs of the eastern US by investing in the aluminium for the power grid, it would save consumers R12-billion a year.

It added that, eventually, the grid might also help to make electric vehicles a US reality.

Copper producer Norddeutsche Affinerie CEO Bernd Drouven retaliated, telling shareholders that the company would undertake a “major investment project”, despite the global economic slowdown.

Drouven’s view is that widespread government economic stimulus packages could help generate higher global copper demand in coming months.

“Should the economic stimulus and infrastructure programmes already agreed to or proposed worldwide start to bite in the com-ing months, this could create a very rapid rise in copper demand because of the low inventories held by market participants,” Drouven told Reuters.

Bucking the global cutback trend is the world’s fourth-largest iron-ore producer, KIO, whose CEO, Chris Griffith, plans to increase iron-ore production by 10% in 2009, “market permitting” – not decrease it, as so many others are opting to do.

Griffith reports that China is buying “quite substantially more than its contractual volumes”.

“We seem to be seeing some of the benefits of the stimulus package in China. We are seeing stockpile levels in China coming down. We are seeing an increase in steel production in China,” Griffith says, adding that the company is looking to an upside on last year.

But this does not come without effort. Griffith says that the KIO marketing team spent November and December in China, convincing particularly second-tier and third-tier Chinese steel mills to take KIO product.

KIO is producing at a landed cost into China of between $35/t and $40/t, against a current $80/t-plus spot price for 63,5% fines.

Fifty per cent margins remain good in anyone’s book and KIO can afford at least another seven-million tons of stockpiled capacity before it will need to review its decision to continue producing.

Chinese contract customers have been given an opportunity to increase their offtake of lower-quality iron-ore at a discount to the long-term contract price.

KIO GM: commercial Timo Smit says that Korean offtake is on the rise as a result of KIO signing a second Korean customer. Although the rise will be slight, it is still a rise.

KIO makes the point that the decision of the South African Treasury to defer the imposition of mining royalties until 2010 is assisting the company.

It is also steaming ahead with its Sishen South project, because this project will come on stream in 2012/13, when the iron-ore market should have normalised