Operate, Expand, Diversify or Divest

operate expand diversify divest picture 2

The Mining sector is facing headwinds from inflationary pressures and global market uncertainty despite robust demand outlook for key commodities

Auxilium Partners is pleased to present its views on the Western Australian Mining market having regard to its first-hand involvement assisting clients in the advisory and restructuring space.

Issues to consider as you operate, expand, diversify or divest

Overview

Continued inflationary cost pressures with no material relief in the near term
Tighter and more expensive lending availability
Russia and Ukraine conflict continues to impact supply and pricing of certain commodities
Critical minerals including lithium, nickel, aluminium, copper and cobalt are a focus with continued robust investment and demand outlook
Skilled labour shortages – from drillers and drivers to mining engineers, geologists and metallurgists

Challenges

Maintenance of skilled and stable workforce – recruitment and staff management needs to be “smart”
Supply chain delays and lead times for key consumables needs to managed appropriately
Operating cost stabilisation and reductions remains challenging
Increased cost of preparation for Environment Social Governance and ongoing compliance
Ensuring selection of third-party mining service providers are financially robust and have capability to complete projects to schedule

Opportunity

Merger and acquisition opportunities to enhance operational efficiencies and synergies
Appropriate innovation and technology will help drive cost reductions and efficiencies
Aus miners are seeking to strategically partner with those in the renewables space for future supply and end-users partnering directly with miners for strategic supply e.g major EV manufacturers. See lithium graph
While share prices have been negatively impacted by global markets equity can be acquired by investors “cheaper” for project’s with the same underlying fundamentals