Taking a strategic view
Energy in the global metals and mining sector
This article highlights the energy imperative and how strategic management of energy is already beginning to happen in these industries
Traditionally, companies in the global metals and mining sector have viewed energy as a necessary cost of doing business, an overhead item to be managed in line with the budget. But over the past several years, the very notion of energy has changed. Whether because of expense, unreliable supply, or environmental concerns, traditional sources are no longer a simple answer. Today, companies are presented with more options. Choice is certainly good, but it also requires that companies shift their thinking and begin to consider energy not as an expense but as an asset, one that can be managed strategically to create shareholder value and competitive advantage.
Like any asset, energy should be strategically managed to create business value and yet for many global metals and mining companies, energy may represent the area of greatest potential impact.
Adopting an energy strategy focuses on the ways organizations acquire and consume energy, and on how they assess and influence the financial impact of their energy use. The article outlines an effective energy management strategic framework which considers:
- Supply—The sources and cost of energy, both traditional and emerging
- Demand—How much energy a company needs to use and how efficiently it uses it
- Enablers—Including investment, technology, and manufacturing
- Policy—With consideration to environmental regulation, taxation, and stimulus
At the heart of the right decisions is getting commodity volume and pricing right and the ability to evaluate options through scenario analysis. Armed with analytics, companies can pinpoint areas of opportunity both inside their own operations and along the supply chain. Using effective analytics tool such as MarketBuilder can companies to analyze commodity markets by providing a thorough approach to modeling future pricing.