Key takeaways: What you need to know | KPMG | MM

Key takeaways: What you need to know

Key takeaways: What you need to know

Key takeaways from KPMG International's Metals and Mining Outlook 2016.

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Finding 1: Confidence in the global economy is low and metals organizations are ramping up their focus on cutting costs and performance improvements.

How are leading metals manufacturers responding?

  • Working with national governments and regulators to advocate for greater consolidation across the sector and the reduction of structural capacity in key markets 
  • Focusing on products where they enjoy clear market or cost advantages in order to reduce the impact of commodity competition from lower-cost producers 
  • Reinvigorating their efforts to identify and leverage efficiencies across the entire product portfolio.

 

How are leading mining organizations responding? 

  • Maintaining a strong focus on capital and capital deployment to prioritize cash flow returns over increased production volumes 
  • Becoming more decisive about managing their balance sheets to focus on free cash flow generation
  • Improving the discipline around the management and use of their resources and ore bodies to focus on higher-growth or higher-margin commodities.

Finding 2: Metals organizations want to expand market share and will adjust their investment strategies to achieve lower costs and improve access to customers.

How are leading metals manufacturers responding?

  • Rethinking their global footprint to growth markets while taking advantage of opportunities for improved cost structures
  • Aligning their growth investments with expected shifts in customer footprints as key sectors – such as auto-body manufacturing – move closer to customers in lower cost and growing destinations
  • Understanding the impact of new and emerging trade tariffs, barriers and protections within key markets and reassessing the make versus import equation.

 

How are leading mining organizations responding?

  • Exploring opportunities to purchase high value assets in new geographic markets to improve cost efficiencies or drive scale
  • Rigorously assessing the potential risks involved in new acquisitions to improve project certainty and confidence around earnings and cash flow
  • Continuing to reshape their portfolio of assets, products and markets to create the optimal footprint for sustainable growth.

Finding 3: Metals organizations expect to pour significant investment into R&D over the coming years in an effort to drive new growth and open new markets.

 

How are leading metals organizations responding?

  • Investing into R&D to develop more sophisticated, value-added products to offset pricing pressures on commoditized products
  • Partnering with customers – and even competitors – to share development costs and create new products that meet evolving customer needs
  • Investing into new technologies that create opportunities for greater operational efficiency and business flexibility. 

 

How are leading mining organizations responding?

  • Investing into technologies that improve automation, enhance efficiency and improve safety across the mining operation
  • Rethinking the technology investment roadmap to prioritize cash flow and margins while managing capital and costs.

Finding 4: Metals organizations are worried about the potential for supply chain failures but most lack complete visibility into their supply network.

How are leading metals manufacturers responding?

  • Exploring opportunities to improve transparency across their supply chain, both upstream and downstream
  • Implementing new technologies and applying Data and Analytics to identify opportunities to improve supply chain efficiency and flexibility
  • Improving the sharing of data between metals customer, suppliers and operations through new IT platforms and tools.

 

How are leading mining organizations responding?

  • Assessing the sustainability of price increases and demand rises to adjust production accordingly
  • Learning how to improve supply chain efficiency and visibility from other manufacturing sectors such as automotive
  • Shifting the supply chain focus from development to operations.

> Read full report (PDF 2.6 MB)

© 2017 KPMG International Cooperative (“KPMG International”), a Swiss entity. Member firms of the KPMG network of independent firms are affiliated with KPMG International. KPMG International provides no client services. No member firm has any authority to obligate or bind KPMG International or any other member firm vis-à-vis third parties, nor does KPMG International have any such authority to obligate or bind any member firm. All rights reserved.

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