For a more detailed discussion of each of the top ten issues that Deloitte’s global network of mining professionals believe will influence the mining sector most in the coming year, read the full report. Tracking the Trends 2010
Deloitte report recommends cautious expansion and forward-looking approach
Toronto, December 15, 2009 — Volatility seems a mild word to apply to what has been happening in the mining sector over the past year. Deloitte today released a new report showing that, given the continued uncertainties facing the mining sector, the winners will be the companies that learn to manage volatility more effectively by adopting an integrated, forward-looking approach that defines responses to a range of anticipated futures.
“In an industry as notoriously cyclical as mining, more than ever before, organizations must have sufficiently flexible strategies to weather both market upswings and downswings,” says Glenn Ives, North American Mining Leader, Deloitte. “Achieving this flexibility requires advance planning for various potential risks and scenarios. Without this approach, many companies are bound to experience project delays, talent shortages, and spiraling costs as demand recovers — which could ultimately result in an endless series of boom and bust cycles.”
According to a new Deloitte report, Tracking the Trends 2010: A look at 10 of the top issues mining companies will face, mining industry activity has often been disproportionately influenced by short-term outlooks. When commodity prices were hitting record highs two years ago, optimism was expressed with almost giddy expansion as companies rushed to develop and build even marginal, and often technically complex, assets. The result was a precipitous increase in costs for raw materials, energy, equipment, supplies, and labour. When commodity prices subsequently dropped in the wake of the downturn, saddled with committed capital expenses at suddenly uneconomical prices, mining companies turned cost containment into a mantra and began cutting across the board, shedding non-core, and in some cases, high-quality assets, halting production, scaling back workforces, and putting deals on hold.