Starting a firm in the mining supply industry comes with some unique challenges and success can be elusive. But if you find the right niche, and are willing to work hard, there’s no limit to what you can accomplish in this fast-moving and high risk sector. Here are a few guidance points from experts in the field.
Look for Opportunities
Newfoundland business executive Glen McKay was supplying equipment to the province’s nascent mining industry when he saw an opportunity to get involved in the supply of explosives products and eventually blasting and drilling services. He founded Newfoundland Hard-Rok in 1985 and the company has thrived for more than three decades, becoming the leading explosives manufacturer in the province and spinning off two wholly owned subsidiaries that provide similar services.
“Newfoundland Hard-Rok’s operating premise is that if you really value your people, they in turn will increase the value of your business,” mining supply executive Glen McKay said in an interview. “Simple, but very effective.”
Just as supplying products to mines can be high risk so too finding mines is a high-risk business, but well worth the effort, says author and mine explorer Dave Lowell. “In addition to the geological risk are the political risk, the metal price risk, the mine financing risk and the timid, incompetent management risk,” he says. “Success is the summation of a list of well-evaluated risks,” Lowell says.
“Mineral exploration, like investing new blockbuster drugs, has a very low probability of success. Only one out of three hundred attractive targets become a mine. I’d guess that only one out of thirty well-trained exploration geologists ever actually find a mine. However, if an explorer has found one mine, statistically he is likely find others.”
According to a report by consultancy Deloitte, there are a number of key factors for any mining project that will create a successful outcome. Firstly, the deposit should be located in an economic region with good governance and consistent application of civil and tax law. One will also need infrastructure in the form of roads, rail, ports, electricity and communications to support the mine. One also requires a competent and cohesive team who safely work together.
Think Like an Entrepreneur
If you’re starting your own business, no matter which sector you’re in, you have to think like an entrepreneur, says Newfoundland Hard Rok’s Glen McKay. “Most entrepreneurs are motivated and very determined … Those are important qualities for any entrepreneur. It’s not easy to start your own business; you need to have that steel that comes from inside, not from external influences. Successful entrepreneurs also have an innate desire to learn and the ability to cultivate insight.”
There are a range of options in the mining industry, from looking for a potential mine, setting it up properly in the right location and providing equipment to ensure the mine’s smooth operation. And of course, there’s the never-ending demand for mining products, including traditional stalwarts gold and copper, as well as newcomers like cobalt and palladium. For entrepreneurs, this could be the perfect recipe for the creation of a new company.