Cancor Mines Competition
Now Viewing Cancor Mines's competition in: Metal Ore Mining
Call Preparation Questions
Customers, Marketing, Pricing, Competition
How many customers does the company have? - Small companies may have just a few large customers.
Who are the company’s largest customers? In what industries? - Customers may be industrial customers or bullion traders.
How does the company set prices with customers? - Contracts are generally for one year based on the prevailing monthly price for that period.
Which metals exchange does the company use for pricing? - Three exchanges are used to determine metals prices – the New York Commodity Exchange (COMEX) which is the most common; the London Metal Exchange (LME); and the Shanghai Futures Exchange (SHFE).
Who are the company’s primary competitors? - Newmont Mining and Phelps Dodge, both based in the US, are two of the largest metal mining companies in the world. Competition from imports is increasing.
How does the company differentiate itself from competitors? - Since metal ores are commodity products, differentiation comes primarily from delivery performance and willingness to customize contracts.
Competitive Landscape
Demand is driven by industrial demand and economic growth, both domestic and foreign. Individual company profitability depends on volume and operating efficiency. Large companies can afford to discover and develop new deposits and increase reserves. Small companies typically own just one mine, limit exploration to that one property, and operate it as efficiently as possible. Metal ore mining is capital-intensive: annual revenue per employee is about $300,000.
Business Challenges
CRITICAL ISSUES
Cyclical Industrial Demand - Demand for metal ore is sensitive to cyclical demand from the construction, electronics, electrical, transportation, and jewelry industries. Demand for gold and silver is also affected by speculative pressures. During the last recession and its aftermath, gold mining dropped 25 percent and copper mining dropped 22 percent. Annual production for various metals has fluctuated as much as 12 percent over the past 10 years.
Volatile Metal Prices - Given the high fixed-costs of mining, industry profitability can be sharply affected by changes in metal prices. Over the past 10 years, iron ore has fluctuated as much as 19 percent in a year, copper 30 percent, and gold 18 percent. From 2001 to 2005, prices for gold bullion increased 50 percent, while prices for copper ore increased 100 percent.
Industries Where Cancor Mines Competes
- Metals & Mining
- Precious Metals Mining & Processing(primary)
- Copper Mining & Processing
