Back to basics key message in Deloitte trend forecast – by Megan Van Wyngaardt ( – January 20, 2015)

HANNESBURG ( – While the outlook of the global mining sector for the year ahead looks bleak, with mining companies having to contend with price volatility, geopolitical turmoil, rising costs, declining grades and a general lack of access to financing, advisory firm Deloitte believes all is not lost.

In its ‘Tracking the Trends 2015: The top 10 issues mining companies will face this year’ report, the company noted that miners had not seen many positive indicators in recent years, with productivity issues facing South African miners, uncertain growth prospects for countries such as China and India and weak prospects for many commodities, particularly iron-ore and coal.

However, it remained cautiously optimistic, stating that with any data, it was possible to see the glass as either half full or half empty. The US economy was rebounding, but areas of Europe continued to stage a slow, fitful recovery and both China and India had a long way to go on their paths towards urbanisation, industrialisation and electrification.

Further, the outlook for several commodities, including nickel, aluminium, zinc and lead, was improving. The mining sector also appeared to be coming back into favour with investors, with sector valuations, mining capitalisations and total returns showing signs of recovery.

“There is no doubt that mining companies operate in complex geographies where they face increasing challenges in responding to regulatory and compliance requirements.

“At the same time, they have an imperative to adapt to changing market conditions while adopting new innovations as they seek to produce more for less cost. These conditions remain regardless of whether we are in a downturn or a recovering market,” Deloitte global mining leader Philip Hopwood said in the report.
The report’s first trend prediction for this year highlighted that, to embrace the need for longer-term thinking, mining companies were getting back to the basics to clarify what they stood for, what they believed and what they planned to achieve in the long term.

The report also identified innovation as the new key to survival, stating that miners had to overcome their traditionally conservative tendencies by embedding innovation into corporate identity; thinking big, testing small and scaling fast; leveraging emerging technologies; becoming part of an innovation ecosystem; and preparing for new operational realities.

Tying in with South Africa’s biggest current crisis, the report noted that reducing electricity costs would be another significant trend in the year ahead. It stated that miners needed to consider new approaches to energy, including the use of unconventional fossil fuels and gaining stakeholder buy-in for developing renewable-energy facilities.

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