Mining Industry
Abstract
Many factors in the macro-environment impact the development of an industry. These factors can by categorized as Political, Economic, Social, Technological, Environmental and Legal (PESTEL). Economic, legal and environmental factors are closely tied up and mostly controlled by the political factors. Political factors mainly refer to intervention of the government in the economy via introduction and amendments of various new policies and laws. The purpose of this essay is to explain how the mining industry faces an uncertain future in some parts of the world due to various political changes. Increase and unpredictable government intervention across the globe is adding further complexity to a sector that is already heavily laden with risk (Grant Thornton, 2011). Introduction
Minerals constitute the back-bone of economic growth for any nation and the entire world has been eminently endowed with this gift of nature. Primary activity of the mining industry is to extract the minerals resources from the Earth. The minerals are mainly extracted through surface mining and underground mining. Coal, iron-ore, aluminum, steel, copper, lead-zinc and other precious materials are some of the major minerals extracted from the earth surface. Around the world, most mining lands are national assets for the county. Hence, government intervention is inevitable.
In context of Michel Porter’s five forces for mining industry:
Rivalry: The mining industry faces a tough rivalry among various companies operating within the sector, due to fewer product differentiations and industry concentration.
Substitute: Due to non-availability of any substitute for minerals and metals, mining industry is not faced by any threat from substitutes.
Buyer power: Buyer power is boosted by the large size of the buyer and their financial strength (e.g.: car manufactures). However, the fact that metals and minerals are important to its users and the lack of product differentiation tends to
Many factors in the macro-environment impact the development of an industry. These factors can by categorized as Political, Economic, Social, Technological, Environmental and Legal (PESTEL). Economic, legal and environmental factors are closely tied up and mostly controlled by the political factors. Political factors mainly refer to intervention of the government in the economy via introduction and amendments of various new policies and laws. The purpose of this essay is to explain how the mining industry faces an uncertain future in some parts of the world due to various political changes. Increase and unpredictable government intervention across the globe is adding further complexity to a sector that is already heavily laden with risk (Grant Thornton, 2011). Introduction
Minerals constitute the back-bone of economic growth for any nation and the entire world has been eminently endowed with this gift of nature. Primary activity of the mining industry is to extract the minerals resources from the Earth. The minerals are mainly extracted through surface mining and underground mining. Coal, iron-ore, aluminum, steel, copper, lead-zinc and other precious materials are some of the major minerals extracted from the earth surface. Around the world, most mining lands are national assets for the county. Hence, government intervention is inevitable.
In context of Michel Porter’s five forces for mining industry:
Rivalry: The mining industry faces a tough rivalry among various companies operating within the sector, due to fewer product differentiations and industry concentration.
Substitute: Due to non-availability of any substitute for minerals and metals, mining industry is not faced by any threat from substitutes.
Buyer power: Buyer power is boosted by the large size of the buyer and their financial strength (e.g.: car manufactures). However, the fact that metals and minerals are important to its users and the lack of product differentiation tends to