A new report has revealed that mining companies need to balance short-term investor expectations with long-term business imperatives in order to remain viable into the future.
Deloitte Touche Tohmatsu’s (DTTL) report titled ‘Tracking the Trends 2015: The top ten issues mining companies will face this year’, found that companies are currently struggling with challenging market conditions, including price volatility, geopolitical turmoil, rising costs, declining grades and a general lack of financing.
Further, the report, which focuses on the trends facing the mining industry in the year ahead, highlighted that companies are clarifying wha their planned long-term achievements are in order to embrace the need for longer-term thinking.
Deloitte Touche Tohmatsu’s global mining leader Philip Hopwood said: "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 adopting new innovations as they seek to produce more for less cost, in a world where volatility market conditions are the new normal, and geopolitical conditions are increasingly impacting economic decision-making."
The report suggests to overcome the industry’s traditionally conservative processes, mining companies should consider their cultural approach to costs, as well as leveraging emerging technologies and preparing for new operational realities.
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They need to consider use of unconventional fossil fuels and gain stakeholder buy-ins for developing renewable energy facilities, and find a better balance between meeting short-term investor and analyst expectations and maintaining project pipelines.
According to DTTL, established mining companies should aim to attract foreign investors, pool their resources, explore alternative financing options and position for private equity.
In comparison, junior companies should focus on their assets and consider options from partnership and joint ventures to sale and consolidation, to capitalise on shifting ownership patterns.
In addition to bringing new skills to the industry, mining companies should also pursue strategies to counter regulatory uncertainty and work to build better mining association and government relationships.