Mine Product Marketing in the 1990s

One of the key elements of change in the mining industry has been the ever-increasing integration and coordination of previously highly segregated business disciplines, the extent to which the marketing and finance functions have evolved and merged within the mining industry. If one listens to the language of mine product marketers today, one hears terms like contango, backwardation, forwards, options, min/max, synthetics, swaptions, caps, collars, FRA's, spot deferreds, double bottom, head and shoulders. The list is endless and a glossary may be out-of-date even before the ink is dry. No longer can a marketer of mine products get through the day and, more importantly, keep his or her job merely by reciting statistics on supply, demand, prices and the jargon of quotational periods, delivery and payment terms. Walk into the office of any marketing department today, and computer terminals spewing on-line market prices and instantaneous news retrieval command the attention of all who enter. Traditionally, mining companies, particularly those in North America, took a passive view toward marketing their products and an even more passive view toward management of price risk. The typical, albeit simplified, gold producer of the 1970s and early 1980s spent all of its energy exploring, delineating, developing and producing a product that was placed by the mine gate. Like magic, anonymous buyers took it away and left piles of dollars in its place. No fuss, no muss and nothing to get in the way of more exploring, delineating, producing etc. The typical copper producer, meanwhile, was slightly more creative. Copper producers still spent most of their energy exploring, producing etc., but they at least acknowledged the identity of their customers. Many even went so far as to fabricate finished mine products into shapes and sizes that their ultimate customer needed. Wire, cable, sheet and extrusions were all in forms ready to be purchased by power companies, motor manufacturers and telephone companies. But, while production and costs steadily increased, research and development into new expanding markets was funded by little more than lip service. Competitors and competitive products steadily eroded market share and realized prices. The now-famous Business Week magazine cover that proclaimed "The Death of Mining" was an imminent reality.