The Top Three Priorities For Global Mining Industry: Improving Operational Efficiency, Expand Markets and New Products

Tuesday 3 April 2012, Amsterdam

The top three priorities for global mining industry buyer respondents in 2012 are ‘improving operational efficiency’, ‘expand in current markets’ and concentrate on ‘new products and services’. Similar priorities were highlighted with more emphasis on the expansion of business operations abroad. Industry respondents expect to improve operational efficiency through effective utilization of resources, development of adequate quality control and disciplined cost control measures, as market demand for mining products keeps fluctuating.

Respondents from buyer companies expect increased levels of consolidation within their industry over the next 12 months, with 74% of respondents also anticipating an increase in merger and acquisition activity. The ICD Research survey shows a 2% increase in 2012 compared to 2011.The expectation that consolidation will rise is due to the inadequacy of capital, shortage of skilled labor, cost consolidation, expansion of large companies and the growing cost of raw materials. This increase could lead to a rise in bargaining power of buyers, re-evaluation of existing contracts with suppliers, and the potential need to meet new compliance procedures or work more closely with leading suppliers.

An analysis of responses by mining industry buyers reveals that ‘machinery and equipment purchase’, ‘new product development’ and ‘new facility acquisition’ will show a significant increase in capital expenditure over the next 12 months. As global mineral demand is projected to rise in the next 12 months, mining companies plan to increase their capital expenditure towards ‘machinery and equipment purchase’. Expanding operations in the current market is considered one of the important priorities for mining industry buyers in 2012, where considerable investments will be made on new machinery and equipment.

According to 47% of global mining industry buyer respondents, the headcount in their organizations is expected to increase steadily by up to 2% in 2012. Furthermore, 23% of respondents anticipate an increase of more than 2% in recruitment activity, while 19% expect no change over the next 12 months.  Enhancement in commodity prices such as coal, gold, copper and silver will lead to the expansion of existing mines and a rise in production and processing facilities to achieve necessary targets, leading to increased manpower recruitment.

Activities such as exploration, mining, drilling and expansion are expected to record significant progress in 2012 in comparison with 2011. In order to meet increasing power requirements, countries such as China and India will consume substantial quantities of coal during 2012 and, as a result, several companies in these regions plan to increase their coal production output and are looking to recruit coal mining engineers and exploration geologists.