PDAC 2016: Large miners should work flexibility into their production profiles

The mantra in mining has more often than not been bigger is better. Miners, especially in the bulk commodity space, are continually trying to maximize production from their operations in an effort to gain scale and lower costs.

The downside of that strategy is becoming apparent in the last couple of years, as it can certainly result in massive oversupply when demand falters. Look no further than iron ore for an obvious example.

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Paul Robinson, a director at the commodity researcher CRU Group, said these companies should make more effort to maximise efficiency at different production levels so that they can reduce output once the marketplace is oversupplied and still maintain really low costs. It does not seem like rocket science, however it rarely happens in mining with the exception of specific cases (like potash).

“I would like to see more flexibility in the industry. But philosophically, I do not think the mining industry thinks that way,” he said within an interview.

He said the ability market is a great model for miners to follow. It has become very efficient operating at different utilization levels.