Taking New Products to the Mining MarketWed, 10/17/2018 - 13:39
Q: What are your expectations for the Mexican mining industry during the new administration and how will this impact your business performance?
A: We think that it is fundamental to have good and collaborative relations with the industry as the opposite would be very harmful to its performance. For instance, we should implement careful and sensitive management of the concessions as suddenly taking these away from a company significantly harms its operations. To take disruptive actions, such as modifying concessions or taxes, can discourage investors and scare capital off to other mining jurisdictions that seem more profitable. We see that mining stocks globally have suffered due to this uncertainty.
My forecast for the industry is that it will not grow in the short term, but production will remain steady. As for our company, we keep growing our solutions’ portfolio to maintain our market penetration. Our main clients are Peñoles, Grupo México, Frisco, Capstone Mining, Agnico Eagle, First Majestic Silver and Goldcorp. We work with the most relevant players in the industry. We are researching and developing new materials on a daily basis in order to provide more polymer solutions and specialized products for abrasion resistance. For example, we substituted rubber and steel. As we keep developing new products, we do not expect our business to be harmed. Continued innovation is our secret for navigating mining cycles.
Q: What can the industry expect as your next breakthrough innovation?
A: We are developing an interior coating for raw mills using our polymers. This is specifically designed for durability and to resist higher impact and abrasion. Greater durability equals fewer payments and higher savings for our clients. For example, a regular coating lasts three months given the high impact inside a raw mill while ours will last over five months. We expect to market this mill coating by mid-2019. We tested it with Capstone Mining at the Cozamin mine to detect any failures in the prototype. We have also started to use 3D printing to build our prototypes. For now, the materials available for this technology do not have mechanical resistance so they cannot be used to build real pieces. But it is very useful for our design process and to help us innovate.
Q: What are your growth expectations for the next five years and how are you working toward this goal?
A: We want to grow our sales 30 percent annually. To do so, we need to keep attracting and developing new talent. Our long-term goal is to build a manufacturing plant exclusively for the mining industry, given our growth in sales in mining, which has been over 50 percent annually. But mining still represents only 10 percent of our total business. Our total debt as of the end 2018 was close to MX$100 million, representing around 20 percent of the company’s total value.
We would like to further gain market share in Chile, Canada and Peru and the US. For instance, in the US, we are mainly present in Arizona and we sell through a distributor called Arnet Solutions. But our goal is to start selling directly to the mine to save costs.
Our strategy for remaining competitive in the uncertainty of a transition year is to keep prices steady, instead of raising them in 2019. Compared to the average price for similar solutions in the market, we may be more expensive than the average, but the cost-benefit of our products is much better. Our durability compared to other materials means our products can last between 50 and 1,000 percent longer that those of others in the market.
Q: What advice would you give to a mine manager to increase productivity?
A: I think that mine operators need to keep a more thorough logbook of their operations to better control how many tones are processed per equipment piece. Digitalization and automation are increasingly helpful in keep productivity up. The use of an hour meter is also key for accurate measuring.