Mining bearish pendulum swinging, in a big way, in other direction
Comment of the Day

June 17 2014

Commentary by Eoin Treacy

Mining bearish pendulum swinging, in a big way, in other direction

This article from Mineweb may be of interest to subscribers. Here is a section:

“A new menace is lurking just around the corner,” MRG warned, “the likes of which will shake the industry to its very core.”

“When asked about their views on retirement within the next five years, 46% of executives expect to retire from full-time engagements or expect to reduce their workload drastically,” MRG observed. ‘With nearly half of all mining executive planning to have one foot out the door in the very near future, this represents a brain-drain, the like of which the industry has never seen and a cataclysmic shift in the demographics of boardroom everywhere.”

Eoin Treacy's view

Mining companies have had to pay up for labour over the last decade because of a lack of skilled people willing to work in what are often inhospitable environments. The fact that so many mining executives are nearing the wind down stages of their professional lives represents a significant challenge from the perspective of shareholders who wish to see companies persist with a safe pair of hands at the helm. 

Nevertheless, this represents a secondary consideration compared to the fiscal constraints imposed on management teams by their creditors over the last few years. The era of abundant capital to throw at any project with little regard for free cash flow has ended and mining companies balance sheets are the better for it. The sector remains in need of a catalyst to stoke investor interest but a loss of downward momentum is evident among the majority of mining stocks suggesting that the worst of the decline is over. 


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