The Canadian mining industry has been growing exponentially for quite some time. However, speculations have been made, expecting that the mining industry will be taking a hit soon. While this is a disappointment, especially due to the previous boom, one may wonder how this will affectthe mining industry overall.
Understanding the Canadian Mining Industry
The current affairs of the mining industry can only be understood by comprehending why and how the Boom actually occurred. Due to the growing demand for metals and non-metals specifically produced by the Northern regions of Canada, the areas of Yukon and Nunavut benefited from unusual growth in 2012.
In 2011 alone, the GDP for the two territories were 2.9% and 6.8% respectively. However, this grew exponentially to 8.6% and 16% by the end of 2012. Expectations were surpassed as the speculated 6% increase in GDP turned out to be less than what was actually achieved.
The decrease in prices for the respective metals led to a dip in the GDP by 2013. The industries in the North, however, continued to grow. It is applaudable that the industries are capable of reducing production according to demand. Therefore, the degeneration in the GDP was not as originally speculated.
Challenges Faced by the Mining Industry
Falling Commodity Prices
The extensive duration of the boom has had both negative and positive effects. Many companies were initially not expecting such a downshift in demand. The matter escalated further as the management teams at the time of the boom could not respond appropriately and effectively to such reductionism.
As seen previously, the regular changing of production within these industries is something that they can adapt to. As a result, the industry overall will not suffer to such a great extent. However, that does not necessarily mean that every industry will manage to survive such shifts.
Another major concern to consider is the rise in costs due to a booming mining industry. The industries primary focus has always been to focus on primary metals that are profitable. Hence, when the demand for the metal fell, they suffered in the long run. This could have been avoided by extracting and producing more than one metal to cover costs and to avoid price hikes.
Cutting Costs in Retaliation
Inexperienced management teams do not have the skill to plan tactics to overcome such obstacles. Their most basic response is to cut costs. This, in return, has hurt many organizations in the long run. Rather than cutting costs rapidly, it is always advisable to focus and plan on overall models of operations. This involves implementing sustainable cost reduction schemes.
Future Demand from the Canadian Mining Industry
Based on the current information, it is still early to make any speculation whatsoever. However, it is safe to say that the demand will most certainly rise. Currently, the situation may appear to be dire, but it is temporary nonetheless. Besides, it is nothing that companies cannot handle or overcome with proper strategies and tactics.
To meet the challenges at hand, opting for strategies like cost reduction and implementing the best practices will prove to be a good decision; but history tells tales of industries suffering from a major catastrophe due to the retirement of booming industries. Rather than just surviving or meeting ends, there is a need to incorporate a highly skilled workforce for effective results. Since the industry is specialized in complex operations and dangerous work environments, an ineffective workforce will have disastrous effects on the productivity.
The growth in demand for metals is imminent, yet to take advantage of this boom, industries will need to play smart and be adaptable at the same time.