The Business of Mining

“While financing remains scarce, Asian buyers and sovereign wealth funds are increasingly closing the gap, sparking a surge in M&A activity. To expand supplies, companies are also looking at ways to access reserves from some of the world’s less hospitable regions. Amid this complexity, mining companies continue to contend with traditional issues—from securing a social licence to complying with more stringent government regulations. To respond to these industry trends, mining companies must continue to structure strategic plans that take the full measure of their global risks and opportunities into account.”

Observations:

• Deloitte released its ‘Tracking the Trends 2011′ report this week, describing what the consultancy thinks will be the top issues mining companies will be facing next year. ‘managing international investments’, ‘coping with volatility’ and ‘ensuring the social license to operate’ top the list.
• Most consultancies publish industry research reports to position themselves as experts in the industry. A search on the industry pages of the top consultancies reveals that the consultancies known as the ‘Big Five’ are much more productive in delivering valuable ‘free consulting’ than the more specialized strategy consultants.

Overview of consultancy’s mining industry reports:

The Big Five

• Accenture: Publishes a series of reports on both strategic and operational topics such as Asset Performance, Maintenance, Automation, etc.
• Deloitte: Next to the new trends and risk report, the company published reports on Outbound M&A activity from China, Safety in the Industry, and Financial Reporting practices in the last year
• Ernst & Young: Focuses on the financing side of the business. Released the reports ‘Life After Debt’ (May 2010) and ‘The Wall of Debt’ (October 2009). Publishes an annual Tax Survey report. Published a report on the top business risks (comparable to Deloitte’s report). Publishes the quarterly ‘Mining Eye’: monitoring the financial performance of mining firms.
• KPMG: Published a Survey on Climate Change response in mining (March 2010). Published a report on Financial Reporting of Stripping Costs in open pits.
• PriceWaterhouseCoopers: Published its global trends review report ‘Back to the Boom’ early this year. Published the ‘Junior Mine: Trends in the TSX-V2010′ report in October 2010. Publishes an annual M&A report. Published a report on mining’s Total Tax Contribution for 2010.

Specialized Consultancies

• AT Kearney: Focuses on the buying side of raw materials business. Released report on M&A in the Mining & Steel industry in January 2010.
• Bain: No recent mining industry reports.
• BCG: Focuses on steelmaking rather than mining. No mining industry reports published since 2007.
• Booz: No recent mining industry reports.
• McKinsey: Leverages its involvement in drafting the World Economic Forum’s Scenarios to 2030. No mining industry reports published since December 2008.
• Roland Berger: No recent mining industry reports.

©2010 | Wilfred Visser | thebusinessofmining.com