Canadian mining companies focused on cost control, project execution in 2013: Ernst & Young

Shareholders put pressure on companies to reduce capital spend amid ongoing economic uncertainty

VANCOUVER, Feb. 7, 2013 /CNW/ - Canadian mining and metals companies are keeping cost control and project execution top of mind this year as shareholders become more risk averse, says Ernst & Young.

"High returns in recent years have attracted a different breed of investor with a different risk appetite to the mining and metals sector," says Bruce Sprague, Ernst & Young's Canadian Mining and Metals leader. "These new investors are more sensitive to changes in market conditions and less comfortable with the longer-term horizon and returns."

These changes in shareholder profile are creating a very different operating environment for miners.

"Shareholders aren't willing to take as many risks in the year ahead," says Sprague. "They're putting pressure on companies to deliver projects more efficiently and reduce capital spend on new projects and investments — a much more conservative approach."

Having been very production focused for most of the past decade, companies are now exercising greater restraint and more consideration around project execution. Every project must be cost competitive or risk being stalled or shut down.

"Companies are evaluating their long-term strategies and how they can achieve growth goals without permission from shareholders to invest," explains Sprague. "We're seeing a lot more focus on cost-reduction strategies, including evaluating capital expenditure opportunities."

Prioritizing investments, enhancing project controls and managing local community stakeholder relationships are other key areas of attention — especially as infrastructure development and a skills shortage threaten to raise costs.

"While we expect the fundamental demand story for mining and metals to remain strong, there's growing concern around how the current hiatus in new capital approvals will impact future supply," says Sprague. "Companies that achieve sustainable, long-term improvements in productivity and capital project execution will be best positioned to take advantage of opportunities when new capital investment returns."

About Ernst & Young
Ernst & Young is a global leader in assurance, tax, transaction and advisory services. Worldwide, our 167,000 people are united by our shared values and an unwavering commitment to quality. We make a difference by helping our people, our clients and our wider communities achieve their potential.

For more information, please visit ey.com/ca.

Ernst & Young refers to the global organization of member firms of Ernst & Young Global Limited, each of which is a separate legal entity. Ernst & Young Global Limited, a UK company limited by guarantee, does not provide services to clients.

SOURCE: Ernst & Young

For further information:

Sarah Shields
sarah.j.shields@ca.ey.com 
604 648 3607

Erika Bennett
erika.bennett@ca.ey.com
416 943 5497

Julie Fournier
julie.fournier@ca.ey.com
514 874 4308

Profil de l'entreprise

Ernst & Young

Renseignements sur cet organisme


FORFAITS PERSONNALISÉS

Jetez un coup d’œil sur nos forfaits personnalisés ou créez le vôtre selon vos besoins de communication particuliers.

Commencez dès aujourd'hui .

ADHÉSION À CNW

Remplissez un formulaire d'adhésion à CNW ou communiquez avec nous au 1-877-269-7890.

RENSEIGNEZ-VOUS SUR LES SERVICES DE CNW

Demandez plus d'informations sur les produits et services de CNW ou communiquez avec nous au 1‑877-269-7890.