Mining companies need to look at new innovative ways
IT COULD take years, but the mining sector is forecast to improve after a prolonged downturn.
According to Deloitte Touche Tohmatsu Limited's Mining Tracking the Trends 2016 report, weak commodity prices and decreasing demand from China will continue to negatively impact the industry "well into 2016".
Philip Hopwood, Deloitte's Canadian and Global Mining Leader, said the market could eventually recover.
"It's an interesting time in the mining industry, just as during the super cycle, people imagined prices would go up forever, people now imagine the market will never recover," he said.
"Neither extreme is true, but cycle times are lengthening, which means it could take years to adjust to current market forces - but it's still a cycle."
The Deloitte report identified the top issues facing mining companies.
According to the report, companies must look outside the industry to adopt best practice as well as looking for ways to adopt new innovations.
The report states innovation is crucial for the industry, which often focuses on technological innovation of old techniques.
China's influence on the industry is also expected to continue in 2016.
With demand for commodities down, Deloitte suggests it is time to adjust to "a new normal".
"To find a balance between current and future demand factors, miners should hone the ability to scale production, labour and other inputs and outputs up or down in response to shifting economic trends," the report stated.
The report found companies should also prepare for an inevitable move to alternative power sources, as well as looking for new financing options and create new forms of stakeholder engagement.
Companies are also warned to keep pace with changing tax management requirements and strengthen safety analytics.
"Miners should be prepared to tackle new risks arising not only from flagging mental health statistics, but also from the risk of physical harm and the mounting threat of cyber attacks," the report said.
Key issues identified in the mining report
- Going lean - operational excellence remains front and centre
- Innovation for the next generation - prepare for exponential change
- China's painful transition - looking for the silver lining
- Adjusting to the new normal - what goes down must come up
- The shifting global energy mix - prepare for inevitable change
- Engagement party - changing the nature of stakeholder dialogues
- The capital crisis - starved of finance, miners struggle to survive
- A taxing time for miners - a global tax reset challenged yesterday's tax management
- The M&A paradox - to buy or not to buy, that is the question
Safe, secure and healthy - an expanded view of corporate and personal welfare