Mining’s future isn’t just the market, it’s marketing
When it comes to our commodities, we can’t just think about the market anymore; we have to think about the marketing, too, says MPi boss Steve Heather.
As the ground has started to shift under the mining industry in recent times, one thing should start to become crystal clear to all of us in positions of influence in this industry: mining companies will need to become better marketers if we’re to meet the challenges and changes ahead of us.
It’s not just that the mining industry needs to better market itself to the Australian public (which is something I’ve been arguing for a long time). It’s also that mining companies will need to become better marketers of the niche products they will be producing.
The canary in the coalmine here is Australia’s relationship with China.
This big lesson is right in front of us
As everyone in this industry is acutely aware, the Australian Government talked tough on China over coronavirus and China bit back by putting a lot of Australian exports on the backburner, including coal. When you put all your eggs in one basket like that, you give your customer a lot of power.
How should we, as the affected industry, respond? The commentary in the press correctly identifies that it’s time to diversify our customer base. Arguably, it’s well past time we did that.
But then the commentary goes off the rails. We’re told it’s time to get on board with India and send all our coal there, instead. Now I understand there may be no other option due to transport and logistics issues and the like, but we need to recognise that’s simply taking all of our eggs out of one basket and putting them into another. Imagine if we had already done that and then how India might have viewed us, given the storm around Adani over recent years.
Just like being a one operation mining company, and that being a Cobalt mine in the Democratic Republic of Congo (DRC), places you at high risk, so does having one customer.
A shift in commodities, a shift to boutique markets
Putting coal aside for a moment as it is a sunset industry, we probably shouldn’t think of any single country as “the next China” and we shouldn’t be looking for a one-stop-shop marketplace — as if every commodity were gold, with the Mint ready to receive each ounce.
The other area where the ground has shifted for our industry is the kinds of commodities we’re going to be mining — and the kinds of companies we’re going to be — in the near future. A lot of these new mines that are coming onstream will be in more boutique minerals — like nickel sulphides, various other battery metals and rare-earths.
As we see more of these small to medium-sized mining companies open, it is going to be important for them to pay far more attention to creating diverse customer bases (be they countries or companies), lest they end up with all of their revenue coming from a small number of customers. This would represent a threat to their business akin to the demand choke threat from China.
Enter the mining marketers
We already are good at engaging people to sell our stories to investors and we are trying harder to sell our story to the general public and schoolkids (more needs to be done); however, we are also going to need people a different class of marketer who can woo these external customers.
They’d need to be the right people, of course. Possibly people with a commodity trading background, a financial background, or people who have been involved in business development activities. They’ll need to be able to talk to a broad range of customers. They’ll need to be able to represent a particular company, with their particular type of nickel sulphide or nickel concentrate, that may be suited to just that particular customer. It’s a very specific pitch.
We’re going to need these marketers across the sector. People who have had their careers dominated by gold will find this somewhat of a foreign concept. We won’t need iron ore miners who can sell just to steel companies, but also to car makers, solar panel manufacturers, and so on. Consequently, these marketers are also going to need to understand technical issues such as purity levels and the like.
As we have argued before, as certain mining jobs become redundant, others are created.
The risks of customer concentration
And lastly, as business owners we think about customer concentration risk all the time and with that in mind I would be putting Tesla in the same category as China and India.
They may be “good” customers but be wary of making them your “only” customer.