I read today's Dryblower opinion piece with significant interest. He talks about the soaring price of rubber,the tightening of supply around the large haulage tyre market, and the mad scramble that is only just starting with the worlds leading miners.
Barrick, a gold mining company, acted ahead of the pack here. Moving into a tight economic agreement with Yokogawa for supply of it's perpetual tyres. Meaning that when the crunch comes, sooner rather than later as these things normally happen, they will be one of the few that are able to continue toput rubber on the road at an affordable price.
There is an old saying about failing to learn from history... one that we are going to start seeing very soon.
In August last year I posted on Long term planning, and it's ability to deliver competitive advantages to all companies. But this was particularly true for companies that find themselves staring into another tear away boom cycle.
The key issues for miners is not assurance about future capital expenditure. That is very important but it is not the killer application of long term planning here....
The real killer, the one that makes the difference that saw many careers and companies ruined during the last boom, is being able to access parts and materials when you need to.
In the past three months the number of OEM's servicing the mining sector has shrunk dramatically with Caterpillar gobbling up Terex and Bucyrus. Today, you are eithe rwith CAT, Hitachi, Liebherr or Joy MIning generally speaking...
As demand increases production will soar, as production soars the demand for volume of parts and materials will also soar, and there is just no way these suppliers can match the raging demands of all of their customers, all at the same time.
No way.
So long term planning allows companies to issue to purchase orders 18 - 24 months in advance. Locking in supply and locking out competitors.
Some very interesting months ahead of us....
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