Commentary: Short-term exec optimism returns: MRG Survey

The following is an edited summary of findings from the Mining Recruitment Group’s latest executive survey, which was distributed during the first week of October and completed by 125 mining leaders.

This year has seen extreme highs and nearly unprecedented lows. At the time of our last survey four months ago, things looked pretty bleak. Thankfully, this new report provides evidence that the worst may be behind us. Short-term sentiment on the sector’s strength and viability has increased, and executives seem focused on growth, not survival.

Executives are more optimistic than they were in mid-year. In a survey, 55% of respondents believe that the sector as a whole will perform better than it did in the first half of 2012. This is up from 22% of respondents in June that thought things would get better in the second half of 2012. Not everyone is convinced yet, though, with 31% of executives expecting the sector will get worse in the first half of 2013. When comparing the next 12 months to the last, sentiment is up dramatically, with 67% of executives expecting the sector to perform better. This is up from our last polling, where 63% of executives operated under the impression that the sector would perform the same as it had previously, or get worse.

Respondents felt bullish about the prospects for their own businesses over the next 12 months, with 74% of executives thinking their company is positioned to outperform the market as a whole. One quarter of respondents figured their company would perform in-line with the market, and only 1% felt their businesses would have a worse time in the year ahead.

When asked about their short-term, six- to 12-month outlook on the overall strength of the mining industry, 47% of respondents are bullish. This is up remarkably from third-quarter polling, where only 8% of executives had a bullish view and 38% had stated they were bearish. With 11% of respondents holding a bearish outlook and the remaining 41% holding a neutral view, a big change appears to have occurred in the psychology of mining executives over a short time.

Though the short-term outlook has picked up considerably, the long-term outlook remains rosy, with 69% of respondents being bullish on the industry’s strength over this time frame, whereas only 8% are bearish at any degree. The remaining 23% had a neutral view. When asked to predict when market conditions would take a sustained turn for the better, 41% said it would take until third-quarter 2013 or beyond to develop real traction. But many are optimistic that things will turn around in the first quarter of 2013 with 27% of the vote, and 21% expecting improvements in the second quarter.

Of the respondents, 59% were moderately to extremely concerned over a lack of investment capital moving into the industry over the next two years, down from 76% during our last polling. Also down substantially is concern for volatile commodity prices over the next two years, with only 23% being moderately to extremely concerned, in a marked change from the 43% indicated in June.

When asked how current conditions have affected short-term business objectives, 52% admit that their companies have scaled back exploration and development plans, while 37% say that current conditions have had no effect on their plans. Eleven percent say that their companies have launched into survival mode.

In the current landscape, an overwhelming 74% of those polled say that their companies have made a concerted effort to reduce overhead.

These findings are largely unchanged from our previous polling. Interestingly, in light of the increasingly positive short-term views in the sector, 89% of respondents said they were just as focused on cost-cutting initiatives as they were six months ago.

When it comes to hiring, 66% of respondents expect to recruit over the next six months. This is a major reversal in outlook from our last polling, where 60% indicated that they would not be hiring.

Of those planning to recruit, geologists will be in highest demand at 60%, while 54% needed mining engineers. Good executive leaders don’t fall far behind, with 29% of the companies polled planning additions to their executive teams. Another positive sign is that companies are looking at marketing again, with 23% planning to hire investor relations staff.

— Andrew Pollard is president of the Mining Recruitment Group, a Vancouver-based boutique executive search firm established in 2006, and focused on the unique needs of the mining industry. He can be reached at apollard@miningrecruitmentgroup.com or www.miningrecruitmentgroup.com.