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Top mining trends: Joint ventures, social investor, prepping for the next downturn — Deloitte

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Top mining trends: Joint ventures, social investor, prepping for the next downturn — Deloitte

(Kitco News) Deloitte released its top 10 mining trends for 2020 this week, and the list includes the idea of a social investor, better partnerships and joint ventures as well as seizing opportunities ahead of a potential global slowdown.

“Over the past few years, the mining sector has made significant strides to steer through disruption and volatility. However, they continue to grapple with a host of external challenges—from an uncertain geopolitical landscape and technological disruption to increased demands from communities and investors. How can miners succeed and lead from the front?” Deloitte asked prior to listing its top trends for this year.

The theme for 2020 is “leading from the front,” Deloitte said in its 12th Tracking the Trends report published earlier this week.

One of the biggest challenges to mining success in the new century remains trust, which is why the social investor is the number one trend.

“In many jurisdictions around the world the level of trust in mining is low, even though the industry is considered critical in supplying raw materials and driving the economic development of many regions around the world,” Deloitte said. “To help regain investor trust, miners should embrace a commitment to value beyond compliance. Value beyond compliance is about the fundamental synergy between economic performance and social progress.”

Following increased M&A activity, it is not surprising that Deloitte also highlighted “getting partnerships and joint ventures right” as its second top trend.

“Market capitalizations in the sector have been declining over the last two years (figure 1) and companies—particularly juniors—still often struggle to raise capital. Alternative funding models do exist—from royalty streaming to offtake agreements. Private equity firms, which once shied away from the resources sector, have also been investing more actively in mining companies, providing additional access to financing,” the report said.

Another major element is preparing for the next downturn by seizing opportunities amidst uncertainty, which is Deloitte’s third trend.

“Commodity prices rise and fall in tune with economic trends, which are currently foreshadowing a potential global downturn … Globally, trade volumes are down and geopolitical tensions remain high. The inversion of the yield curve in the US, Canada and UK bond markets over the third quarter sent a strong market signal that a downturn might be in store,” the report said. “To avoid being blindsided, there are some bold plays mining companies can consider to prepare.”

The rest of the trends for mining are dynamically managing risk, decarbonization, intelligent mining, modernization of core technologies, talent and community, leadership, and tax tribulations.

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