Tintina Resources likes to claim that the Black Butte Mine will be safe because it’s modern. But a new report from a leading financial company says that the mining industry needs to modernize many processes to survive a fluctuating economy.
Global audit and investment company Ernst & Young recently issued a report, “Navigating Volatility,” which found that mining companies, among others, need to become better at budgeting and generating cash to survive future economic ups-and-downs.
While some mining industry observers are celebrating an uptick in metals prices due to Britian’s withdrawl from the European Union and are encouraging people to buy in, Ernst & Young cautions that companies and investors can’t depend on such momentary price jumps.
According to Australian Mining Magazine, Ernst & Young predicts the current market instability will remain for some time, stating “the longer-term economic outlook is volatile, leading to the possibility of substantial revisions to long-term metal price forecasts and making it hard for mining and metals companies to plan for the future.”
According to Australian Mining Magazine, EY Global Mining & Metals advisory leader Paul Mitchell said mining companies need new blood to create a better system. So hiring someone like John Shanahan as CEO was probably not Tintina’s best move, for more reasons than one.
“Our analysis is clear that mining companies need a different mindset in this environment if they want to maintain a strong balance sheet and develop plans for long-term profitability,” said Mitchell. “Miners can no longer rely on conventional wisdom and expertise from within the sector; they must cast the net wider and seek outsiders’ experience to get that next productivity and efficiency boost.”
Tintina Resources has yet to start excavating the Black Butte mine, but they’ve already made many promises. When industry analysts warn that it’s hard to plan for the future, the public must wonder how good Tintina’s promises are. Can a little company like Tintina weather the economic forces that have caused larger companies to buckle? If not, what damage will it have cause in the meantime?