http://www.miningweekly.com/page/americas-home
TORONTO (miningweekly.com) – Consider the resource supercycle; it was a once-in-a-generation event driven by China becoming the world’s workshop. The country’s demand for commodities seemed insatiable and pushed many metal and mineral prices to historic highs.
The mantra for most mining seniors became “big is beautiful” and their mergers and acquisition (M&A) activity was soon geared towards fulfilling this.
Today, the supercycle is on hiatus and subdued prices are likely to last for some time to come. The industry continues to clean out its Augean Stables and, just like the Herculean labour, the task has been both messy and necessary, with the spate of write-downs, divestments and spin-offs reflecting this.
Compounding matters are the ongoing economic headwinds, the unnerving volatility and the ability for some prices to sink still further. For example, the iron-ore sector continues to struggle after the price plunge during the second half of 2014.
Aside from cutting costs and reducing cash burn, the seniors are also focusing on improving their productivity and their competitive edge. This was identified as the number one issue in multinational professional services firm EY’s ‘Business risks facing mining and metals 2014 to 2015’.
Central to achieving this, companies needed to seek an across-the-board transformation that included re-evaluating mine plans, re-assessing mining methods and increasing the level of automation where applicable, EY said.
Companies were also advised to learn from the recent past but remain open to innovation, while refinancing their debt if necessary, while conducting continuous performance reviews was suggested to inform broader corporate strategy.
However, these suggestions could sometimes be easier said than done, particularly for severely diluted juniors without the necessary projects to interest or excite. For them, the battle was merely to stay alive.
For the rest of this article, click here: http://www.miningweekly.com/article/mining-sector-will-find-reward-by-addressing-risk-2015-01-16