The mining, metals, and heavy industry markets have been challenged in the face of record-low prices for raw materials. Should they just wait for the next boom, or could there be more to the story?
Prices are hitting historic lows for commodities such as raw metals and coal, and many mining companies and industrial conglomerates are striving to cope with difficult market conditions. While the market floor isn’t currently the ideal place for heavy industry, there are some enticing opportunities around the corner that savvy managers should be able to recognize.
Cycle-Centric
By nature, the mining market is a boom-and-bust game. Speculation about growth in China can drive production for a few years, but as soon as demand slows, prices drop and jobs are cut. Most companies will try to showcase leanness for their shareholders.
Ernst & Young proposes moving in a different direction. In a recent report detailed by EyeWitness News, the company suggests that viable firms look a step ahead, especially since so many are underutilizing opportunities that the current business climate has to offer.
A contracting market is actually the perfect environment for mining companies with long-term goals to prepare for growth. Many companies are selling the rights to mines in response to low prices, and from a financial perspective, investing in existing mines is a much more viable option than opening new ones, as Adani’s Carmichael Mine challenges in Australia (reported here by ABC) has illustrated.
No Small Task
Of course, companies in the mining and metals industry are focused on cutting unneeded costs and building a sustainable business model in the current depressed market, so the logic behind avoiding new investments is understandable.
But while many firms don’t have access to capital, others ought to ask themselves if they’re making the most of what they have. After all, what sounds better to investors: “We are shaving off parts of the company, and becoming more sustainable”? Or, “Soon the market will rebound”?
The best way to free up spare capital is to ensure that operations are running as smoothly as possible, and with the best public image in the face of mounting regulations. Whether you’re dealing with tailing ponds, haul roads, material handling, or any other logistical cost, your business will save money by utilizing Midwest Industrial Supply Inc.‘s dust control solutions.
Their products can make your operation more environmentally friendly, and help to win supporters in your community beyond those who work in heavy industry. Once your community is ready for growth, the market will inevitably follow.
