With the tougher (again) macroeconomic conditions of late around planet Earth, questions are being asked about the continuing health and fitness of the Australian mining boom.
But challenges such as those facing the minerals sector now are not new.
Indeed similar challenges befell a non-mining entrepreneur by the name of Robin Hood in the UK many centuries ago.
After a stellar debut in which Robin rose to fame with help from his faithful management team including Little John and Friar Tuck, Robin’s business environment gradually became ever more difficult – with his challenges akin to those faced by Australian miners now.
Firstly, Robin faced declining business conditions complete with both “demand” and “supply” problems.
That is, after years of plunder, rich people woke up to to the fact that Sherwood Forest was something of a “no go” area. Enter Sherwood Forest wearing your best silks and regalia and you stood a far higher than average chance of being robbed – so why go there at all?
The gentry of Nottingham started taking alternative routes and avoiding Robin’s home patch. That made life tougher on Robin.
What’s more is that there were now fewer and fewer rich people around the Nottinghamshire area anyway! Years of “Gillard-like” higher taxes imposed by King John and the Sheriff of Nottingham had lightened the gentry’s coffers.
But wait there was more – Robin’s assistance to the poor had also taken effect, with the previous throngs of tramps and vagabonds now replaced by newly minted merchants thanks to Robin’s assistance.
Next, Robin had always struggled with the challenge of competing business objectives.
It seems one day the focus was on King John and the Sherriff – while the next day Robin was off courting Maid Marian over dinner down at the newly opened Hog’s Breath tavern.
Increased activism also required attention which originated from both Robin’s shareholders and stakeholders – meaning the poor (who cried out for more) and also the Merry Men.
A declining competitive advantage was another challenge for Robin.
What was once a small, fast-moving technical team of Merry Men became bloated by the addition of bureaucracy as Robin’s popularity swelled the ranks of his “company”.
With such a large contingent of Merry Men at his back, surprise ambushes were no longer the easy option they once were to lure in unsuspecting gentry.
The quality of his troop had also declined – as the fast-growing rob-from-the-rich “business” had required rapid expansion of his “workforce”.
What’s more is that rivals had responded to his success: the Sherriff, for example, deployed reinforcements to counter Robin’s insurgency.
Back in the forest the Merry Men considered forming a union to lobby for more mead and venison. Union representative Will Scarlett had already promised a greater share for the Merry Men in the wealth being redistributed to the poor.
Lastly, there was a question mark over the sustainability of past growth rates.
Rabbits and deer were literally running low in number in the forest. A larger proportion of Robin’s ill-gotten gains were required to balance the budget and to buy-in food and mead.
So like Australia’s miners, the question hung over Robin as to whether the Merry Men’s best days were already behind them. Ring any bells?
Australia’s miners now face not dissimilar challenges.
- Declining business conditions are evident with the slowing of economic growth rates in China and ongoing economic travails of the eurozone and US
- Competing business objectives abound as many companies face multiple development opportunities across different commodities. Where then to focus key efforts?
- Declining competitive advantage is a major issue as Australia’s costs have escalated both for construction and operating phases
- The sustainability of past growth rates is also a challenge for those companies which have had early success in mining boom phase 1. How can that momentum be maintained with the more challenging external environment prevailing now?
Robin Hood overcame his multiple challenges to become a worldwide folklore legend.
Can your company overcome the current business challenges too?
Allan Trench is a Professor at Curtin Graduate School of Business and Research Professor (Value & Risk) at the Centre for Exploration Targeting, University of Western Australia, a non-executive director of several resource sector companies and the Perth representative for CRU Strategies, a division of independent metals & mining advisory CRU group (email@example.com).