Mining Execs More Optimistic

— The following are the latest findings of the Mining Recruitment Group’s survey of more than 70 mining executives that was distributed and completed during the first week of August 2009. This survey is a direct follow-up to ones conducted in November 2008 and April 2009, and it highlights many distinctions as to the strength and viability of individual resource companies and the mining industry as a whole over this time.

So far into 2009, it goes without saying that the gloom and doom so prevalent in the first quarter is nothing more than a memory for most. Though many in the sector still face massive uncertainty at present, anecdotal signs of a recovery are beginning to show through (this was our busiest summer period on record) with continued and increasing regularity.

With financings slowly returning and commodities prices emerging from the doldrums, optimism has returned to the marketplace, along with jobs. For most executives, the future is very bright for the sector as a whole as companies move away from restructuring for mere survival and return to business as usual.

Those that took part in our latest survey were executives from mining companies of all sizes. Of those polled, 54% came from companies with market caps below $50 million, 33% from companies between $51 million and $250 million, and 13% from companies with market caps in excess of $251 million. The findings are not scientific in nature, but I believe they reflect an accurate cross-section of the industry.

Our new findings indicate that executives believe a recovery is well under way, with 76% of respondents thinking that the mining sector will perform better over the coming 12 months as compared to the last year.

Confidence has returned to the sector since the second quarter, when only 40% of respondents felt this would be the case.

Of the remaining total, 21% indicated that they thought the industry would perform at about the same levels, with only 3% believing that the worst is still yet to come.

Respondents still feel quite bullish about the prospects for their own businesses in 2009 and beyond. Only 3% felt their own businesses would perform worse than the sector as a whole. An overwhelming 79% thought their own companies were now positioned to outperform the market moving forward, with 18% expecting to perform about the same.

In a new question that asked respondents to outline what they expect to see as the sector continues to adjust to current economic realities, most executives seemed to be on the same page: 85% expect further consolidation among juniors; 82% foresee further capital project delays; 48% foresee a further sell-off and liquidation of assets; and 27% expect to see continued shutdowns of operations.

Putting the economy aside, executives also identified other limiting factors that their companies are increasingly facing: 66% cited sociopolitical risks; 59% see government red tape as a major issue; 24% note a lack of good projects; and 21% cited increasing operating costs.

Down from a dramatic 39% of companies in our survey conducted last November, and 21% from our last poll, only 18% of executives now say that their companies are in pure survival mode. Rather similarly to before, 85% stated they were still actively focused on cost-cutting measures, though of this segment, 24% are not as focused on it as much as they were six months ago.

A significant sign that executives believe a recovery is under way, 88% of respondents stated they were not considering further employee reductions, a dramatic increase from 62% in the last survey.

Down slightly from our last survey in April, 38% of executives expect to recruit over the next six months. Though this number has dropped from 50% since last quarter, with only a small percentage of executives expecting layoffs to continue, demand is steadily growing for mining professionals.

Of those companies that are planning to recruit, mining engineers are the hottest commodity, with 67% of those that plan to hire looking to secure at least one of these professionals. Geologists continue to be in high demand with 42% of companies in need, and good executive leadership doesn’t fall far behind, with 33% of companies polled planning to make additions to their executive teams.

With 33% of the companies planning to hire looking to add executives, we wanted to know how companies evaluate the success of new executives over the first 12 months of employment.

Suggesting a number of criteria as possible ways to evaluate new execs and asking respondents to choose their top three, the results are as follows: 60% want to see that the decision-making style of the new hire fits with the team; 52% look for contribution beyond/outside what the exec was hired to do (non-role specific); and 48% look to see if the new executive has exceeded expectations (role-specific impact). Coming in fourth, high integrity was selected by 44%. — The author is president of the Mining Recruitment Group, a Vancouver-based boutique executive search firm focused on the unique needs of the mining industry. He can be reached at:apollard@miningrecruitmentgroup.comorwww.miningrecruitmentgroup.com