Mining & Metals

Mining and metals

With a strong but volatile outlook for the sector, the global mining and metals industry is focused on future growth through expanded production, without losing sight of operational efficiency and cost optimization. The sector is also faced with the increased challenges of changing expectations in the maintenance of its social license to operate, skills shortages, effectively executing capital projects and meeting government revenue expectations.

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EY’s Global Mining & Metals Center brings together a worldwide team of professionals to help you achieve your potential — a team with deep technical experience in providing assurance, tax, transactions and advisory services to the mining and metals sector.

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• Your capital agenda — getting fit and being agile

  Volatility in the market is the single most disruptive trend for mining and metal companies and is raising challenges around how to maintain margins, and build a strong and flexible balance sheet.

  In order to get in shape and prosper through long term volatility, EY can help you effectively deploy six levers:

  1. Cost reduction initiatives
  2. Working capital improvements
  3. Productivity improvements
  4. Capital discipline
  5. Portfolio management
  6. Optimization of financing arrangements

  Related content:

  • Applying IFRS in mining and metals – October 2016 
  • Navigating volatility: do you change your business, or the way your business works?
  • Video insights: Portfolio optimization by Lee Downham
  • Divestments in mining and metals: extracting hidden value
  • Making working capital work for you
  • Video insights: Working capital and how miners can achieve large savings
  • Mergers, acquisitions and capital raising: 2015 trends and 2016 outlook
  • Debt in the mining sector
  • Mining and Metals Quarterly Briefing
  • Mining Eye: UK
  • Mining Eye: Canada
• Productivity — adopting broad transformation

  Productivity has been declining in the mining sector since 2000. The productivity decline has mostly been a conscious choice — mining companies pursued production and revenue growth during the boom period in commodity prices, and mines were developed to get product out as quickly as possible not as economically as possible.

  Declines were across the productivity spectrum, including labor, capital and material, with a major contributing factor to the decline being the challenge of operating at scale. Recent cost cutting has addressed some of this decline but this improvement has now plateaued.

  We believe that companies need to embed sustainable loss elimination practices through employee engagement and an integrated end-to-end approach for long-term sustainable improvement in productivity. We also believe that innovation and technology could be a productivity game changer, as R&D in the sector has fallen behind other comparable sectors.

  In our series of insights papers, we explore the transformations necessary to improve productivity.

  Related content:

  • Navigating volatility: do you change your business, or the way your business works?
  • Video insights: The key issues of productivity for miners by Paul Mitchell
  • Productivity in mining: now comes the hard part
  • Productivity in labor: it is only a ceasefire
  • Opportunities to enhance capital productivity
  • Productivity in mining: A case for broad transformation
• Steel — competing for growth

  Excess steelmaking capacity continues to be the biggest challenge in the global steel sector, particularly in light of slow global economic growth. Increasing price volatility, global trade, margin pressure and rising debt are creating particularly difficult operating conditions.

  EY believes that the real growth is in globalization; steel businesses’ long-term success depends on it. The businesses that ride the next wave of growth will be those that understand the trends and refine their strategies, business models and portfolios according to a truly global mindset. Steel producers must find the right balance between globalization and customization.

  Some key transformation themes for the sector include:

  • Rationalizing excess capacity
  • Increasing market and product concentration
  • Unlocking long-term value through debt reduction
  • Increasing market competitiveness
  • Embracing digital

  Related content:

  • Debt in the steel sector
  • Blog: a new level playing field for the steel sector
  • Global steel 2015-2016 - Globalize or customize: finding the right balance
  • Global steel 2015-2016 - Japanese Executive Summary
  • Global steel 2014: Planning to profit from opportunity
  • Indian steel: strategy to ambition
• Transparency and stakeholder management

  There are new rules being imposed on the mining and metals sector requiring much broader disclosure of tax and other payments. Companies are challenged with staying abreast of recent and pending rules and regulations, and this is key to positioning for success. Reporting of government payments is a challenge for many, but increased transparency can only help to improve investor confidence and to generate trust with stakeholders. The sector has many conflicting stakeholders, and communities can now shut down a project, not just delay or reduce value, and so the sector’s ability to articulate its social return on investment is key.

  Related content:

  • Mining in an era of transparency
  • Webcast replay: Managing mining risk in an era of transparency
  • Tax guides country by country
• Meeting your reporting challenges

  Transformational events and trends are shaping financial reporting, resulting in significant challenges for management, boards, audit committees and auditors.

  To help you navigate the complexities of reporting, EY has created the Refining IFRS series which examines the complex, but unique, issues faced by mining and metals companies applying IFRS, as well as the Good Mining Guide, an illustrative set of consolidated financial statements.

  EY has also created a Centre for Board Matters which covers the assurance, governance and risk issues that directors across all sectors need to consider, looking at current and future trends.

  Related content:

  • Applying IFRS in mining and metals – October 2016
  • Good Mining 2015
  • The new revenue recognition standard – mining & metals, June 2015
  • Amendments to IFRS 11 Joint Arrangements: potential implications
  • IFRS updates - refining and applying IFRS series
  • EY insights: reporting
  • The Centre for Board Matters