Investors of BHP Billiton (NYSE: BHP) and Rio Tinto (NYSE: RIO) have taken a beating along with many other mining investors in recent days. There is an interesting multi-year outlook piece around new CEOs and the challenges of mining costs and less robust demand ahead. Fitch’s observation for the next three to five years ahead  which investors should consider.

We are not looking at this from the credit ratings. Our own care in this report is that Fitch’s view projects the challenges that each of these new CEOs will face as the next three to five years will play a role in the profitability of these companies. Fitch said, “The new CEOs at BHP Billiton, Rio Tinto and Anglo American will face a series of common challenges over the next three to five years as commodity-demand growth from China slows and prices gradually revert towards mean levels.”

Ok, now wait a minute here… Commodity-demand growth slowing in China AND prices reverting toward mean levels? That sounds more bearish than what many of the bulls are hoping for. 24/7 Wall St. recently cautioned that when the World Gold Council said that central banks were buying more gold than they had since 1964 that the underlying bullish trends sure sounded and looked tired.

Another aspect to consider from Fitch is that the focus in the coming years will be on mitigating the higher costs (mining cost inflation) as well as controlling fixed costs and better mine development budget discipline. In the prior two or three years these companies prioritized production growth to capitalize on scarcity pricing premiums.

We would note that it was just this morning that BHP Billiton (NYSE: BHP) was downgraded to Neutral from Buy at Citigroup on Thursday. Citi also raised Rio Tinto (NYSE: RIO) to Buy from Neutral about a month ago.

If acquisitions that Fitch projects come true, they will likely be on companies that either have massive reserves that can be accessed easier or on sites where the cost of production is already lower. If you looked at the recent transformative acquisition by Silver Wheaton Corp. (NYSE: SLW) for a part of the gold stream from Vale S.A. (NYSE: VALE).

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