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TORONTO – Mining companies facing an uncertain economic outlook and rising costs need to keep investing in their development projects to ensure they are ready to go when the market picks up again, a new report suggests.
The report by audit and consulting firm Deloitte to be released Thursday suggests while miners need to focus on controlling costs that may have risen during the recent boom, they also need to hold the course on their strategic plan for the long term.
Jurgen Beier, national mining leader at Deloitte Canada, said as prices for many key commodities slip, the focus is increasingly on reducing costs that may have been masked in boom times. “The key thing with cost is that when you’re not worried about the revenue line, basically there is less focus on the cost line,” he said.
“Over time, inefficiencies creep into running any business and many of these inefficiencies are based on merger and acquisition transactions where the companies haven’t been completely integrated.”
But Beier noted that cutting costs needs to be balanced with ensuring a miner’s future and that means continuing to develop new projects so they are ready to go in the next boom.