1. PRESENTATION:MANAGING COMMODITY PRICE CYCLESTHROUGH CONTINUOUS
IMPROVEMENT INITIATIVES
Summary:
Mining being a cyclical business, the companies regularly suffer during recessions, which have
devastating effects on their balance sheet. The companies are usually caught unprepared during
the aftermath of a commodity boom and forced to undertake drastic cost cutting measures, which
compromise long term growth potentials when the economy would finally turn around. As in the
every commodity industry, the mining companies cannot effectively control the price, which is
governed by the supply-demand fundamentals. Since the price can swing wildly depending on
the market condition, the companies have to be prepared to lower their costs in order to be cash
positive. A CI based program continually focuses on cost reductions, irrespective of the market
price and the resultant profit margin. By steadfastly maintain its position on the lower half of the
industry cost curve, a company can deal with a downturn, which invariably follows an expansion.
The paper further elaborates on how to structurea sustainable CI based change program in order
to abate the consequences of the economic down cycle.