Striking gold: top mining companies and the secret to their success
What is the secret to success? We take a look at some of the global leaders in the mining industry and what it is exactly that makes them so successful.
Mining has reasserted itself in a big way over the past 12 months, with emerging markets such as India to Brazil finding their way into the industry. Here we take a look at some of the top mining companies across the world and how they are finding favour with mainstream investors while quietly increasing revenues and moving technology forward.
Revenues for the Australian-based company almost tripled between 2004 and 2012. The company bases its revenues on metals as well as mining. By revenue alone, it stands as the largest company in all of Australia. Andrew Mackenzie currently serves the company as CEO, following in the footsteps of Chip Goodyear and Marius Kloppers, two men who took the stock price of the company from $8 to $70 in less than three decades.
Much of the success of BHP Billiton comes from its diversification. The company loves to reinvest in its operations around the world and always maintains the cash on hand to follow up on new deposits of natural resources as they are found.. To this end, BHP has oil, coal and other operations in Algeria, Brazil, Canada, Chile, Colombia, Pakistan, Peru, Trinidad and Tobago, the United Kingdom and the United States.
The Rio Tinto Group is a dual British and Australian mining and metals operation with many individual operations focused on particular natural resources. Rio Tinto has perhaps the most complex subsidiary structure of any mining company on this list. The result is a highly specialised operation that has proven successful for the parent company, as each specialty company is able to completely maximise its profitability in bull markets for certain natural resources and metals.
Rio Tinto also negotiates its ownership stake in subsidiaries dependent upon the futures of certain resources, ensuring that there is always liquid cash available for the right mining operation at the right time. Money moves more freely within this company than with any other, and that freedom of resources creates opportunity for the subsidiaries Rio Tinto has in Australia, South Africa, Papua New Guinea, Indonesia, Canada, Madagascar, Chile and Brazil, among many other countries.
Partnership with the Chinese opens up markets for Rio Tinto that are closed to many of its competitors. Chinalco, a state owned Chinese mining company is the major shareholder in the main Rio Tinto company. Although efforts by Chinalco to increase its 18.5 percent stake have been blocked by shareholders and regulators, Chinalco continues to be a major investor in big projects that Rio Tinto takes on. For instance, Chinalco recently invested $1.3 billion in a Rio Tinto iron ore project that is currently taking place in Guinea.
Sam Maurice Cossart Walsh AO currently serves as the CEO of Rio Tinto, taking over from Tom Albanese in 2013.
As the number one mining operation headquartered in Brazil, the Vale Mining Company can lay claim to be the largest nickel and iron ore mining company in the world. Investments in technology specifically catered to nickel and iron ore help Vale corner the market on these two resources, although the company also has many smaller investments in other mining operations including copper, coal, fertilizer and manganese. Brazil and Indonesia house the major operations that Vale undertakes.
Vale prides itself on one of the most thorough exploration operations of any mining company in the world. The Mineral Development Center, located in Brazil, is a laboratory that is geared especially to finding new ways to extract, process and economise ores. It has played a central part in the creation and the exploration of many technologies that have greatly benefited the mining industry as a whole. One particular focus in technological advancements is the development of more accurate and less expensive ways of subsoil drilling and testing rock sample collections for potential deposits.
The logistics structure of the company is also one of the best in the industry. Much of the profitability in Vale comes from its speed in operations, and Vale operates a complete system of railroads, ships and ports alongside its mines in order to ensure a complete infrastructure that can move as quickly as the company requires with no bottlenecks. This infrastructure stretches from Brazil into Indonesia and includes Mozambique, Oman, the Philippines and Argentina. Another income stream comes from the transportation of products for other businesses, and Vale also operates consumer railroads as well in the Vitória – Minas and Carajás Railroads.
Murilo Ferreira is the current CEO of the Vale Mining Company.
Glencore is the third largest family business, quite impressive when you consider that it is also tenth on the list of Fortune Global 500 companies in terms of size. The company headquarters is in Switzerland and was previously known as Glencore International before its merger with Xstrata to create Glencore. Two of the biggest products of Glencore are zinc and copper. The company holds the major market share in zinc with a global share of 60 percent, and a 50 percent share in the copper market trade.
With substantial operations in Zambia, Ecuador, Colombia and the Democratic Republic of the Congo, the company seems to specialise in areas with enough political upheaval to keep others out -even when potential profitability may be high. In order to shore up these investments, Glencore has ownership in the much safer market trading platform globalCOAL and Century Aluminum Co.
Currently, the most important executives in the Glencore company are Tony Hayward, the Chairman, and the CEO Ivan Glasenberg.
Vale invests $150mn to extend life of Manitoba operations
Vale has announced a $150mn CAD investment to extend current mining activities in Thompson, Manitoba by 10 years while aggressive exploration drilling of known orebodies holds the promise of mining well past 2040.
Global energy transition is boosting the market for nickel
The Thompson Mine Expansion is a two-phase project. The announcement represents Phase 1 and includes critical infrastructure such as new ventilation raises and fans, increased backfill capacity and additional power distribution. The changes are forecast to improve current production by 30%.
“This is the largest single investment we have made in our Thompson operations in the past two decades,” said Mark Travers, Executive Vice-President for Base Metals with Vale. “It is significant news for our employees, for the Thompson community and for the Province of Manitoba.
“The global movement to electric vehicles, renewable energies and carbon reduction has shone a welcome spotlight on nickel – positioning the metal we mine as a key contributor to a greener future and boosting world demand. We are proud that Thompson can be part of that future and part of the low carbon solution.”
Vale continues drilling program at Manitoba
Coupled with today’s announcement, Vale is continuing an extensive drilling program to further define known orebodies and search for new mineralization.
“This $150mn investment is just one part of our ambitious Thompson turnaround story. It is an indicator of our confidence in a long future for the Thompson operations,” added Dino Otranto, Chief Operating Officer for Vale’s North Atlantic Base Metals operations.
“Active collaboration between our design team, technical services, USW Local 6166, and our entire Thompson workforce has delivered a safe, efficient and fit-for-purpose plan that will enable us to extract the Thompson nickel resources for many years to come.”
The Thompson orebody was first discovered in 1956 by Vale (then known as Inco) following the adoption of new exploration technology and the largest exploration program to-date in the company’s history. Mining of the Thompson orebody began in 1961.
“We see the lighting of a path forward to a sustainable and prosperous future for Vale Base Metals in Manitoba,” said Gary Annett, General Manager of Vale’s Manitoba Operations.