Mining execs bullish on industry outlook after slide in 2013
Despite a massive drop in mining profits in 2013, a new survey reveals industry executives are becoming more bullish on the strength of the sector — especially in the short term.
Vancouver-based Mining Recruitment Group surveyed 232 mining executives and found just 14% of them held a bearish outlook on the industry over the next six to 12 months, according to the report released June 16.
“This is down remarkably from the 64% of executives who held the same view at this point last year,” the survey said.
“Not only are executives not nearly as bearish anymore, the pendulum is now swinging in a big way in the other direction with 35% of respondents now holding a bullish outlook for the next 12 months.”
Still, 51% of executives held a neutral view on the industry over the short term.
A PricewaterhouseCoopers (PwC) report released earlier in June revealed 2013 was a disastrous year for the world’s top 40 mining companies as profits plummeted 72%.
Mergers and acquisitions are expected to increase over the next six months, according to the survey, with 76% of executives reporting they believe M&A transactions will heat up in the near term.
The long-term outlook appears hopeful, as 64% of executives were bullish on the industry through to 2017. This is down about 2% from the same period last year, when two-thirds of executives reported holding a bullish view looking forward three years.
The survey also found 88% of executives have made significant efforts to cut their budgets in the midst of the downward trend facing the industry.
The marketing and investor relations budget appeared to be the main target. Out of the executives making cuts, 69% indicated budgets are being slashed in those two departments.
Just 39% of executives that have reduced overheard have done so via salary cuts. Meanwhile, 53% of those executives have seen layoffs at their companies.
But just 18% of executives said they expect to layoffs in the third quarter of 2014.
Companies with B.C. operations only managed to raise $221 in new capital last year, down from $3.3 billion in 2011.
Despite this decline throughout the industry, the survey revealed 24% were moderately-to-extremely concerned about the lack of capital investment. During the same period last year, 74% of executives reported being concerned about raising capital.