Wednesday, 23 January 2013

Deloitte - 2013 Top 10 issues mining for companies

HT My own Markert Narrative Blog: more ..........

Deloitte Report - HERE  - Deloitte Page Here
Despite near-term tapering demand, the world remains at risk of longterm supply constraints. This danger will grow as companies halt production in the face of capital cost increases and growing shareholder demands for more immediate returns. Although companies are hesitant to invest aggressively, one thing is clear: failure to replace depleting assets will result in higher future commodity prices. Significant rewards will be available to the companies that invest today

1. Counting the costs
2. Managing demand uncertainty
3. Capital project deceleration
4. Preparing for the M&A storm
5. Governments eye the mining prize
6. Combatting corruption
7. Climbing the social ladder
8. Plugging the talent gap
9. Playing it safe
10. At the IT edge
Set an unwavering course

Projects all over the world are feeling the heat associated 
with rising operational and capital costs at a time when the 
economics of mine projects are starting to look less attractive 
as commodity prices head south. This is forcing miners 
to put a much greater focus on project returns rather than 
production volumes. Projects need to earn their keep and 
only the highest quality projects will get the green light.
Carl Hughes, Global Head – Energy & Resources

on M&A
In the past year, capital markets have deteriorated. Now, equity and debt 
investors are largely opposed to financing development assets. For the 
vast majority of mining companies, this means their best recourse for 
financing is to look to Chinese, Korean, Japanese and other Asian sources 
of development capital. With the majors unlikely buyers, this lack of 
capital will also drive M&A activity in the developer space – already a 
trend being played out in the gold sector in 2012.

Exploring labour-driven acquisitions
Some mining companies are engaging in 
mergers specifically designed to close talent 
gaps. In this regard, the benefits of a specially
 trained workforce cannot be overlooked. For 
example, companies that plan to shift from 
surface mining to underground mining can 
improve their position by acquiring an 
underground miner.

On Governments
Whether it’s through resource nationalism, special mining 
taxes or the gradual creep in taxation, governments are 
looking for a larger share of mining company profits. 
Combined with mounting community demands, 
the difficulty in obtaining local licences, social and 
environmental mandates and labour union pressures, it is 
getting increasingly difficult to justify a large number of 
mining projects to investors and financiers.
Reuben Saayman, Queensland Mining Leader, Australia

A chart on projected investment regions. Make discoveries here and they should be more valuable.

But on the other hand
As the comfortable countries are mined out, mining companies need 
to find new reserves in less hospitable places. This will require a much 
higher level of risk assessment, planning and forecasting, taking into 
account such issues as obtaining community permissions to access 
local watersheds, exploring public-private partnerships to build out 
infrastructure and being prepared to walk away from projects – or from 
regions – where the risks patently outweigh the rewards.
Tony Zoghby, Mining Leader (Assurance), South Africa
Links to follow

1. Economist Intelligence Unit, September 1, 2012. “China at a glance: 2012 – 16.” Accessed at
article.aspx?articleid=1089493693&Country=China&topic=Summary&subtopic=At+a+glance on September 18, 2012
2. Morgan Stanley Australia Limited+, March 27, 2012. “Global Metals Playbook: 2012” by Peter Richardson and Joel Crane.
3. Ibid
4. Reuters, December 6, 2010. “China mulls $1.5 trillion strategic industry boost: sources,” by Benjamin Kang Lim and Simon Rabinovitch.
Beijing. Accessed at
on September 19, 2012.
5. The Australian Financial Review, June 12, 2012. “China gears up for splurge on projects,” by Angus Grigg.
6. Reuters, September 13, 2012. “Australia miners slam brakes on huge pipeline of projects,” by Sonali Paul. Accessed at
on September 19, 2012.
7. British Geological Society, June 2012. “The Future of the Global Minerals and Metals Sector: Issues and Challenges Out to 2050,”
by Andrew Bloodworth and Gus Gunn.
8., June 26, 2012. “Lower gold production hits Australia in Q1 2012,” by David Chaston. Accessed at
news/59941/lower-gold-production-hits-australia-q1-2012-new-mine-opening-2013-new-zealand on September 19, 2012.
9. Reuters, June 19, 2012. “Peru mining chamber sees lower 2012 output,” by Omar Mariluz. Accessed at
article/2012/06/19/peru-mining-output-idUSL1E8HELEO20120619 on September 19, 2012.
10. Financial Times, May 6, 2012. “Mining industry braced for pullback,” by Helen Thomas, London. Accessed at
cms/s/0/05645a82-960e-11e1-a6a0-00144feab49a.html#axzz272LaEALf on September 20, 2012.
11. Deloitte Access Economics, July 30, 2012. “Investment Monitor: Resources sector propping up pipeline.” Accessed at on September 20, 2012.
12. Mining Weekly, July 31, 2012. “Australian mining leaders cautious about big investments,” by Esmarie Swanepoel. Accessed at on September 20, 2012.
13. Deloitte Financial Advisory Services LLP, March 26, 2007. “Capital allocation: increasing your odds for placing the right bets.”
Online poll of 595 executives.
14. DataStream
15. Thailand, Malaysia, Singapore, Indonesia, Philippines, Vietnam, Laos, Cambodia
16. Niger, Guinea, Burkina-Faso, Sierra Leone, Liberia, Ghana, Nigeria, Angola, Namibia, Botswana, Mozambique, DRC, Tanzania, Zambia
18. The Wall Street Journal, November 16, 2011. “The $200,000-a-Year Mine Worker,” by John W. Miller. Accessed at on September 27, 2012
19. Ibid
20., April 9, 2012. “Mining investments in Chile to reach $100 billion by 2020,” by Cecilia Jamasmie. Accessed at on September 27, 2012
21. Daily Maverick, July 3, 2012. “Mining safety: The same old story,” by Khadija Patel. Accessed at on September 27, 2012
22. The Epoch Times, September 25, 2012. “Chinese Coal Mine Accident Kills 20,” by Alex Johnston. Accessed at on September 27, 2012
23. McKinsey & Company, January 2011. “Understanding the strategic value of IT in M&A,” by Hugo Sarrazin and Andy West.
Accessed at , on September 27, 2012

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