Trade Resources Industry Views Mining Companies Will Continue to Face Challenging Market Conditions in 2014

Mining Companies Will Continue to Face Challenging Market Conditions in 2014

Mining companies operating in Australia and globally will continue to face challenging market conditions in 2014, including rising costs, low commodity prices, supply/demand imbalances, and decreased productivity levels.

According to Deloitte'sTracking the Trends 2014report, miners that embrace innovation can lay the foundations for long-term business growth and be best positioned for future success.

Now in its sixth year, the report examines the top ten issues affecting mining companies around the world, highlighting key industry indicators and providing a range of solutions companies can adopt to manage the impacts of shifting industry dynamics.

The 10 trends identified in the global report are:

1. The cost of contraction: mining productivity hits new lows

2. Matching supply to demand: market imbalances wreak commodity price havoc

3. The remaking of mining: exploring the innovation imperative

4. Finding funding: debt up, deals down, and juniors fight for survival

5. The project pipeline stutters: record impairments call capital allocation practices into question

6. Power to the people: local community demands ramp up

7. Resource nationalism spreads: government relations marked by rising hostility

8. Crackdown on corruption: a zero tolerance regulatory environment complicates compliance

9. Changing the safety equation: from zero harm to zero fatalities

10. A dearth of skills: the talent gap slinks into executive suites

Deloitte Australia National Mining Leaders Nicki Ivory (West Coast) and Reuben Saayman (East Coast) said Australian miners needed to address three areas in particular – sustainable cost practices and productivity, innovation (across existing operations and exploration) and capital management.

Nicki Ivory said: "The high cost of doing business again tops the trend list – for the third year straight."

"While the industry can't change global economic trends, miners can change the way they operate.

"But the thinking on costs needs to go well beyond the low hanging fruit toward developing innovative and sustainable cost management practices.

"Business innovation will help deliver those sustainable savings as long as miners build innovation into their DNA. And rather than waiting out the market swing, they need to evolve by adopting processes, technologies, and mindsets necessary to strengthen their long-term operations and deliver value to their shareholders."

Reuben Saayman said: "The report makes it clear that change and volatility are the 'new normal' for the sector. These global trends cannot be changed by miners and they need to be understood and these risks need to be mitigated through changes in the way miners do business."

"The short term measures such as costs cutting, retrenchments and supply chain pressure will not be enough to deal with the paradigm shift that is required for sustainable long term growth. Those that respond through business model changes will be in a position of strength to take advantage of the opportunities available in the market.

"These changes include more sophisticated portfolio and capital allocation techniques, alongside which a more aggressive approach to innovation will help turn the cost and productivity tide."

Source: http://www.yourminingnews.com/news_item.php?newsID=96847
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