A presentation on strategic analysis

A PRESENTATION ON STRATEGIC ANALYSIS OF MINING INDUSTRYPRESENTED BY:AKHANI RONAK (23)PATEL JAYSEH (39) PRAJAPATI CHANDRAKANT (44)Presented to: Dr. B.A. PrajapatiProfessor & HODSKSBM, HNGUINTRODUCTIONThe tradition of mining in the region is ancient and underwent modernization alongside the rest of the world as India gained independence in 1947.Theeconomic reforms of 1991and the 1993 National Mining Policy further helped the growth of the mining sector.India's minerals range from bothmetallicand non -metallictypes.The metallic minerals comprise ferrousandnon-ferrousminerals, while the nonmetallic minerals comprise mineralfuels,precious stones, among others.Unless controlled by other departments of theGovernment of Indiamineral resources of the country are surveyed by the Indian Ministry of Mines, which also regulates the manner in which these resources are used.The ministry oversees the various aspects of industrial mining in the country.Both theGeological Survey of Indiaand theIndian Bureau of Minesare also controlled by the ministry. Natural gas, petroleumand atomic minerals are exempt from the various activities of the Indian Ministry of Mines. HISTORY INDIA The tradition of mining in the region is ancient and underwent modernization alongside the rest of the world as India gained independence in 1947.Theeconomic reforms of 1991and the 1993 National Mining Policy further helped the growth of the mining sector.India's minerals range from bothmetallicand non -metallictypes.MAJOR PLAYERSIndiaInternational20 Microns LimitedBHP BillitonAshapura MinceRio TintoBird Group of CompaniesValeBombay MineralAnglo AmericanJM ExportsChina Shenhua EnergyMitcoCoal India LimitedRockwell EngineeringFortes cue Metals GroupPRODUCT APPLICATIONCoalCopperNickelLeadGoldDiamondSilverZincPlatinumPORTERS FIVE FORCE ANALYSIS

THREAT OF NEW ENTRANTSBefore the breakup of the De Beers monopoly, it was virtually impossible for new entrants to jump into the industry. With forced change in business practices, stronger implementation of laws and discovery of diamonds in areas outside of the De Beers scope of control, competition has now increased in the market.There is now room for about 3 more major players and several smaller niche operators who often consolidate and manage to compete in smaller segments.BARGAINING POWER OF BUYERSHistorically, consumers had no control over the diamond industry, its pricing and supply. With an economic downturn in the industry, there was reduction in demand which lead to an oversupply problem and reduced prices. To address this, major companies reduced mining operations and turned the industry back to its higher demand lower supply model. Once again, the buyers power is non-existent in this industry.

BARGAINING POWER OF SUPPLIERSThe bargaining power of suppliers in the mining equipments manufacturing industry is low as raw materials consist mainly of basic commodities, steel and copper. Also, other supplies include basic electrical components and equipments that go into the production of OEs. Bucyrus was able to increase its gross margin in the period 2004 2009 by decreasing cost of sales by78.8% in 2004 down to 69.6% in 2009. THREAT OF SUBSTITUTESThe biggest threat to the diamond industry are from high quality high tech synthetic diamonds. These directly impact the basis of the value of the diamond, i.e. the customer perception of its rarity and value.The price of diamonds are not a true indicator of their value or supply. But it is all in the perceptions of the consumers. With synthetic diamonds, consumers will begin to challenge the diamond as a rare natural item and in some places they may overtake the sale of natural diamonds. 10COMPETITIVE RIVALRYIn a change from previous industry structures, the broken cartel now means that there is some competitive pressure from the industry. There are still limited players, but overall, the increased presence of different companies means a more competitive market.

PESTEL ANALYSIS

POLITICALThe mineral resources in India consist of Coal, Iron ore, Manganese, Mica, Bauxite, Titanium ore, Chromate, Diamonds, etc. India is the third largest producer of Coal and Lignite & Barites and the largest producer of mica in the world. India is also ranked among the top producers of Iron ore, Bauxite, Manganese ore and Aluminum. In 2003-2004 India has produced 355 million tones of coal all of which has been consumed internally. Coal India Limited is a State owned company which contributes a bulk percentage in the Coal production.ECONOMICThe Northeast of India is endowed with huge untapped natural resources and is acknowledged as the eastern gateway of Indias Look-East Policy. Nonetheless, the region is cited as a conflict-stricken remote corner of India, witnessing a series of insurgencies and illustrating the alienation of the locals from the mainstream. Although the causes of insurgency in the region have been primarily political, the ambiguity related to the economic potential has added fuel to the turmoil.

SOCIALThe total proved coal reserves in the country are about 101.83 billion tone, which is about 10% of the Global proved reserves. As per the Integrated Energy Policy, with the present rate of production these reserves would last for over 80 years. In the country coal is the primary energy source and it meets about 55% of primary commercial energy needs.The total employment in the coal sector is about 550,000 and hence the total dependents are about 5,500,000.For each person employed there are about ten dependents, which include five members of the families of the employee and another five supporting these families and the mining activities.

TECHNOLOGICALThe promotion of research and development(r&d), and an appropriate R&D framework to stimulate the development of pollution prevention techniques.The development and diffusion of technology solution between firms across both the small and large sacle sectors.Where possible, the incorporation of rehabilitation measures during mining process.The introduction of life cycle assessment approaches as a generic tool to assist technology choices and support EMSs.The need for greater assessment of the social context of technology development, application, and diffusion.

ENVIRONMENTALIssues related with the societyFor establishing the coal/mineral preparation units land is required for various uses and the people living on this land will need to be displaced. Issues related to ecology-The preparation plants established in forest areas or very close to the forests will disturb both the terrestrial and aquatic fauna. When established in agricultural land plants will tend to disturb the characteristics of top soil.For effective planning and implementation of CSR, R&R and Community Development (CD) it is necessary to understand the impacts of mining and associated activities on the environmental components and then devising the imitative requirements to be incorporated in mine planning and development of CSR, R&R and CD packages/schemes.LEGAL In general, resources in India are jointly managed by central and state government. The proprietary title vests in the federating states while the center has jurisdiction over mines and minerals development. With regard to coal, Mines and Minerals (Regulation and Development) Act (MMRDA) was enacted in 1957 where in coal is listed as a schedule one mineral. This implies that while ownership of coal resources vests with state, prospecting and mining are controlled by central government.There are large number of laws and regulations that govern various aspects of coal sector. Some of these have been extended to coal mining and some are only incidental to the sector. SWOT ANALYSIS

STRENGTHSLabors easily availableLow labour and conversion costsLarge quantity of high quality reservesExports iron-ore to China and Japan on a large scaleWEAKNESSPoor infrastructure facilities.Mining technology is outdated.Low innovation capabilities.Labor force is highly un-skilled and inexperienced.High rate of accidents.

OPPORTUNITIESConsiderable potential exists for setting up manufacturing units for value added products.There exists considerable opportunities for future discoveries of sub-surface deposits with the application of modern techniques.Current economic mining practices are generally limited to depths of 300 meters and 25 percent of the reserves of the country are beyond this depthTHREATSMining companies and equipment suppliers are under the constant threat of being taken over by foreign companies.A heavy tax burden discourages further investment.Politicians undervalue the industry's contributions to the economy.Stricter environment rules restricting mining activities

PRODUCT LIFE CYCLEExploration Phase It Involve land issuesbring an influx of a few job. some economic development through the purchase of local goods and services. Design Phase This phase helps mining companies determine if and how a project can be safe, environmentally sound socially responsible, while meeting or exceeding regulatory requirements

CONTConstruction phase:This may take two years or more and involves building roads, processing facilities environmental management systems, employee housing and other facilities Production phase:Once construction is complete and systems have been tested, mineral production can begin It involves recovering, processing and transporting the minerals this process last depending on the size and type of the mineral depositCONTPost Closure Phase:Upon closing operations, measures must be taken to address environmental impacts that include water, vegetation and erosion. Closure Phase: a mine has a finite life span, and each site has a mine closure. Includes dismantling the facilities and returning the mine site to a safe, stable and reclaimed state. Mine closure takes, on average, one to five years.

VALUE CHAIN ANALYSISExplorationMiningConcentrationHydrometallurgy and BiotechnologyRefiningValue additionGeneralPhysical separationEXPLORATIONGeochemical sample analysis;Mineral/ore characterization;Certified Reference Materials; and,Artisanal and small-scale miningMININGASSM technology;ASSM training assistance; and mining inputs economic studies.

CONCENTRATIONCombination/FlotationFlow sheet design and optimization, and piloting;Plant audits;Ultrafine milling; and,Control and optimization strategies.HYDROMETALLURGY AND BIOTECHNOLOGYAtmospheric and pressure leaching;Bioleaching (refractory gold and base metals);Solvent extraction and ion exchange;Electro winning;Process simulation;Reagent development and evaluation;Gold recovery by CIP/RIP;Activated carbon regeneration;Uranium processing expertise, and U3O8 recovery;Cyanide measurement, monitoring and auditing; and,Leach circuit control.

REFININGGold refining and value-added products/chemicals;Hydrometallurgical refining of zinc (PWG to SHG),and off-grade ferroalloy fines; and Titanium chlorination technology.

VALUE ADDITIONNew industrial applications for gold: Catalysis; Biomedical; and Nanotechnology;Smart materials and sensors;PGM-based super alloys;Low-nickel stainless alloys;Jeweler fabrication;Gold and platinum jeweler alloys; and, Identification of downstream,Metals-based, economic development opportunities.

GENERALOre characterization, analytical and process mineralogy;Certified Reference Materials;Materials characterization, testing and development;Engineering design, manufacturing, installation and commissioning;Project management services; and, Regional minerals-based studies.

PHYSICAL SEPARATIONBulk sample preparation;Gravity, magnetic, electrostatic and dense-media separation; and,Pneumatic jigging, and Mineral Density Separation.

FINANCIAL ANALYSISReturn on AssetsTotal Assets Turnover RatioNet Sales Current Ratio

RETURN ON ASSETSTOTAL ASSETS TURNOVER RATIONET SALESCURRENT RATIOTHANK YOUYOU