Mining companies face a difficult year as prices for most commodities weaken‚ compelling them to address productivity and to find ways to bounce back more quickly once the commodity cycle bottoms out.
“In a world where volatility has become the norm‚ the key for future success lies in determining not how to ride the sector’s typical waves‚ but how to accelerate resurgence from a down cycle‚” Deloitte says in a report released on Monday‚ titled: Tracking the trends 2015: The top 10 issues mining companies will face this year.
Among those issues are the difficulties in securing finance‚ energy shortages and constricted project pipelines. Citing the example of Australia‚ it says 21 projects had been removed from the government’s major projects list by April last year and the value of projects at the feasibility stage was A$40-billion (R380-billion) lower than before.
“Several of the major companies have decided to narrow their focus to only a small handful of commodities‚ leaving the development of other commodities to more specialised producers‚” Deloitte says.
“Combined with the critical lack of financing available to many industry players‚ they may herald a pipeline obstruction that has the potential to place future supply at risk.”
Junior companies‚ traditionally at the heart of exploration activity and the nursery for projects bought by major companies and brought into development‚ are “struggling to simply keep the lights on”.
Exploration in the junior sector is declining‚ with spending in nonferrous metals‚ excluding coal‚ dropping by a third last year‚ Deloitte says. This is on top of a 39% cut in spending in 2013. Major companies have cut their nonferrous exploration budgets to $11.7-billion from $15-billion.
“Given the amount of time it takes to move from exploration and development to production‚ this exploration slowdown could create a supply imbalance in the next decade or two‚” Deloitte says.
Gloomy outlook for mining sector
“In a world where volatility has become the norm‚ the key for future success lies in determining not how to ride the sector’s typical waves‚ but how to accelerate resurgence from a down cycle‚” Deloitte says in a report released on Monday‚ titled: Tracking the trends 2015: The top 10 issues mining companies will face this year.
Among those issues are the difficulties in securing finance‚ energy shortages and constricted project pipelines. Citing the example of Australia‚ it says 21 projects had been removed from the government’s major projects list by April last year and the value of projects at the feasibility stage was A$40-billion (R380-billion) lower than before.
“Several of the major companies have decided to narrow their focus to only a small handful of commodities‚ leaving the development of other commodities to more specialised producers‚” Deloitte says.
“Combined with the critical lack of financing available to many industry players‚ they may herald a pipeline obstruction that has the potential to place future supply at risk.”
Junior companies‚ traditionally at the heart of exploration activity and the nursery for projects bought by major companies and brought into development‚ are “struggling to simply keep the lights on”.
Exploration in the junior sector is declining‚ with spending in nonferrous metals‚ excluding coal‚ dropping by a third last year‚ Deloitte says. This is on top of a 39% cut in spending in 2013. Major companies have cut their nonferrous exploration budgets to $11.7-billion from $15-billion.
“Given the amount of time it takes to move from exploration and development to production‚ this exploration slowdown could create a supply imbalance in the next decade or two‚” Deloitte says.
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