As commodity prices come down, there may not be enough miners left who are used to working to tight budgets, experts have told The Australian.
Cost-control is becoming more important, but a lot of the people who were used to running at tight margins like they did in the 90’s have left the industry or retired.
“There’s a lot of younger people in the industry who haven’t had to manage a business on tight margins,” Deloitte partner Gary Doran told The Australian.
“Traditionally a contracting business is all about managing to a very tight margin, there aren’t huge profit margins in it, and the real skilled project managers are those that can manage their shift schedules well, manage their variation orders, and get their quoting right in the first place,” Doran, who heads the restructuring division in the firm’s WA office said.
“All those practices have slipped because the market has become so fat, and a lot of people don’t have the skill set now to do it. That’s obvious in the industry,” he said.
It is telling that senior mining executives are coming from the automotive industry, which has had to learn to run on tight margins, he explained.
“If you look at the chairman of BHP, (Jac) Nasser, he’s out of the automotive industry. If you look at where (new Rio Tinto chief executive Sam) Walsh came from, he’s out of the automotive industry,” Doran said in the article by Paul Garvey.
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