June/July 2009

Taking the pulse of the mining industry

A Bedford Group survey finds cautious optimism among industry leaders around the world

By M. Kerawala

Much is said about the impact of the current economic downturn and the expectation or hope that the slump will not be sustained. However, until recently, assessments of economic conditions within the mining industry remained largely informal and even vague. To put things on a firmer footing and to generate actionable data, the Toronto-based Bedford Consulting Group recently conducted a scientific survey of mining industry executives around the world.

Bedford, a leading mining industry executive search and recruitment firm, surveyed 130 “C-level” executives (CEOs, COOs, etc.) from small and large mining companies in Canada, the United States, Latin America, Europe, Russia, North Africa, the Middle East, India, the Asia Pacific region and Australia. Findings from the survey are broadly encouraging.

Despite depressed prices and scarce credit, 47 per cent of the respondents expressed optimism about 2009. Even the less optimistic, who account for 45 per cent of the respondents, expect to see better conditions no later than the fourth quarter of 2010. Only nine per cent anticipate a deep recession likely to last well beyond 2010. Eighty-four per cent of respondents expect the gold sector to lead the recovery.

The survey identified four factors impeding the industry’s recovery. They are: lack of available credit (84 per cent); declining metals markets (83 per cent); commodities volatility (81 per cent); and paucity of investment financing (72 per cent). Enhanced credit flow and new infrastructure projects were identified as the top potential stimulants by 89 and 54 per cent of the respondents, respectively.

Given current economic realities, 92 per cent anticipate capital project delays and 72 per cent expect shut-downs. Consolidation among juniors and major asset sales are foreseen by 59 and 43 per cent, respectively.

Retaining employees (25 per cent), developing leadership (54 per cent) and partnering with educational institutions (64 per cent) were listed among favoured recovery tactics. The good news is that most respondents expect to see resurgence in the job market for middle and entry-level skilled professionals.

Some of the trends the survey turned up were illuminative. “The smaller, developing companies are faced with financing challenges, whereas the larger companies are more focused on managing their balance sheets and reducing costs,” reported Russ Buckland, managing partner, Bedford Group. Another thing he noticed was that “the mood is shifting from the pessimism and concern of last year. Now, people are starting to feel more optimistic.”

Buckland’s take-away from the survey is both positive and pre-emptive. “Compared to other industries, like the manufacturing sector in Ontario, the mining sector is more optimistic. Miners are, by nature, optimistic people. Our clients are already beginning to think about planning for the rebound, trying to address challenges like skills shortages,” he reported, adding that companies need to plan for better times right now.

Armed with the data, Buckland said, “We have responded to all the participants. We will hold a round table in camera meeting with the participating companies here in Toronto.” By bringing senior executives together, Buckland added, Bedford intends to “provide them with an opportunity to share their ideas. That will be our initial followup.”

Buckland did have some advice for the industry. “As things begin to move forward, companies need to think more innovatively about their recruitment strategies,” he said. “For example there is a very well-trained talent pool in India,” adding that it was one of the reasons why Indian executives were surveyed. “Our government is going to have to do a better job of reducing barriers to the quick entry of professionals into the country to fulfil demand. We are going to need people all the way from drillers to technical people to senior leaders. There is no question in my mind.”

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