Editorial Strengths can easily be overlooked

One could not really accuse the industry of being modest, although it is sometimes slow to trumpet its own successes. It’s practitioners are quite willing to talk about good things in the industry, but some of its strengths can be easily overlooked.

Michael Chender, president of a consulting company based in Halifax, pointed out some of these strengths during his lead-off speech at the recent Mineral Economics Symposium sponsored by the Canadian Institute of Mining and Metallurgy.

Chender pointed out 10 “new skills” the industry has gained over the past few years that are at odds with the “very conservative, even stodgy” image that many outside the industry have of mining. His points are worth repeating.

First of all, the mining industry has developed a strong cost- control discipline as a result of the very tough years earlier this decade. Copper producers, for example, have cut costs to below what they were 10 years ago and Inco’s improvement in productivity are a benchmark for any company in any industry.

Mining also has a long tradition of working internationally. Not only do many Canadian mining companies have international operations, but individual Canadian geologists and engineers have gained international experience over the years. Experience dealing in different languages in different cultures using different legal systems will likely prove increasingly valuable in a closely linked world economy.

The recent gold boom has fostered an entrepreneurial spirit in the industry that was not always obvious a few years ago. Creation of new companies and spinning off gold-mining vehicles from existing companies has familiarized mining companies with the problems of starting businesses, raising capital and financing development.

That same entrepreneurial spirit has produced an industry that is very sophisticated in it’s financial dealings. There are few industries that are as imaginative in raising money be it through gold loans, gold-indexed bonds or sophisticated equity financings.

Mining companies also have a long tradition of “cross- pollination” that comes from dealing regularly with a multitude of other companies in the same business. Juniors learn from seniors and seniors learn from juniors and they all form various joint ventures and working relationships. Combined with that is an industry that openly values the exchange of information between all these players, something that will be a hallmark of industries that succeed in the next decade and beyond.

Ironically, too, the industry is probably one of the most familiar and well-versed in environmental issues. Ironic because this capacity arose from the confrontation over the years between miners and environmentalists. “However,” says Chender, “after almost two decades of dealing with this issue, the industry has become more sophisticated about environmental problems and procedures.” With this issue gaining in importance on the national and international agenda, the mining industry really has a head start in addressing environmental concerns.

An obvious, but sometimes overlooked aspect of the mining industry is its diversity. “In addition to being a miner, the typical mining company is also a land holder and manager, engineer, contractor, builder and shipper” among other things.

The industry that has evolved in the late 1980s is one that also has the potential to develop larger markets through vertical integration. Industrial minerals producers, for example, are diversifying into specialty chemicals manufacture.

What’s more, today’s mining companies are cash rich, giving them the wherewithal to put these skills and strengths to work.

And, finally, compared to some newer industries such as computer manufacturers or other high tech industries that may not yet have experienced their first downturn, mining companies are familiar with the cyclical nature of the economy. Mining companies understand the business cycle and plan for it. “This understanding of cyclicality and the ability to plan for it is an increasingly valuable asset in an increasingly unpredictable world. It allows us not to be seduced by the inevitable hysteria that accompanies bull markets and not to be unnecessarily disheartened by market bottoms.”

It’s an impressive list of credentials as Canada looks ahead to the 1990s — indeed, into the twenty-first century. These very skills may form the basis for strategic planning that will allow Canada’s mining companies to expand their already prominent role in the trading world of the future.

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