Perspective: Bright future for mining just around corner, but challenges remain

Challenges remain amid bright future for mining.

In an international report released recently by The Mining Recruitment Group, 140 mining executives from around the world revealed their outlook on the strength and viability of the sector over the short and long term in addition to the current management strategies being employed in the wake of the market turmoil.

Only 22 per cent of respondents thought that the mining sector would perform better in the second half of 2012 as compared to the first, with another 41 per cent suggesting it will likely perform worse. When comparing the next 12 months to the last, it doesn't get much better with 63 per cent of executives operating under the impression that the sector will perform the same as it has or get worse.

Respondents felt bullish about the prospects for their own businesses for the remainder of 2012. Sixty-three per cent of executives think that their company is well positioned to outperform the market as a whole. Only three per cent felt their own businesses would have a worse time in the year ahead.

Andrew Pollard, president of Mining Recruitment, said, "The report provides evidence in support of the view that the industry is in the midst of an extremely challenging year. Though the short-term sentiment certainly proves to be pretty bleak, the most important and yet surprising finding is the level of optimism of those on the inside track and their confidence in the regained strength of the industry in the coming years."

Though the short-term outlook is quite meager, there was a marked difference on their perspective over a three year period. 82 per cent of respondents are bullish as to the strength of the industry over this time frame, whereas only five per cent are bearish at any degree. The remaining 14 per cent had a neutral view.

When asked to predict when market conditions would take a sustained turn for the better, 56 per cent of executives surveyed thought it take until the Q1 2013 or beyond to develop any sort of real traction. Many (38 per cent) are optimistic that Q4 2012 will be when things start to turn around with. Only five per cent thought this would happen before the fourth quarter came around.

Key report findings:

When asked about their short term (six- to 12-month) outlook on the overall strength of the mining industry only eight per cent of executives were bullish to any degree. Seventy-six per cent of respondents were moderately to extremely concerned over the lack of investment capital moving into the industry, whereas only 43 per cent were moderately to extremely concerned with the volatile commodities prices over the next two years.

In the current landscape, an overwhelming 71 per cent of those polled said that their companies have made a concerted effort to reduce overhead. Of those focused on cost savings: 64 per cent have scaled back on marketing and investor relations budgets, 32 per cent noted a reduction or elimination of incentive pay, and 80 per cent have scaled back on their exploration or development plans.

When asked as to how the current conditions have affected their short term business objectives only 32 per cent indicated current conditions have had no affect on their plans.

Seventy-six per cent of executives indicated that they were not considering any further layoffs for the remainder of 2012 though with drastic cost cutting measures having been implemented and fear of the availability of capital, 60 per cent of respondents do not expect to recruit over the next six months.

Of those that are planning to recruit, geologists will be in highest demand with 71 per cent of those respondents indicating they will have a need.

Fifty per cent also indicated the need for mining engineers and good executive leaders don't fall far behind, with 21 per cent of companies polled planning to make additions to their executive teams.

Only 32 per cent of respondents said that their company is involved in any sort of succession planning.

About The Mining Recruitment Group

Established in 2006 and based in Vancouver, The Mining Recruitment Group is a leader in executive search for emerging junior and mid-cap mining companies. To request a copy of the report with detailed findings, email [email protected]