Table of opportunities and risks of the projects in

Table
4: SWOT analysis for the fourth scenario

The
recovery of mining sector indicates a higher level of M&A and rising
commodity prices. It will be easier for MinCo to find strategic alliances and
future acquirers.

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Commodities:
Lastly, as for the scenario ‘Thinner and
smaller devices’, MinCo has similar strengths and weaknesses to those in
the ‘Greener electric era’. In this context, MinCo may find it attractive to
explore precious metals, including Gold, Silver and Platinum, which are used in
many important components of most computers and electronic devices (Chipsetc, 2017).

1.1  Evaluation
on current countries of projects

Another
question is whether MinCo chose the right countries of projects. The author
uses The Suns and Clouds Chart to evaluate the balance of opportunities and
risks of the projects in Western Australia, UK and Arizona of USA.

 

 

 

 

 

 

 

Graph
3: The Suns and Clouds Chart of project in Western Australia

For
Western Australia, the chart looks quite favorable. The risks are all below the
diagonal, and opportunities dominate better places although risk 4 is
approaching the thundercloud. Therefore, the project in Western Australia is
highly viable.

 

 

 

 

 

 

 

Graph
: The Suns and Clouds Chart of project in UK

For
UK, however, risk 1 and 5 are in the parabola which presents high level of
danger and failure, while two suns appear at a weaker position. Overall, the
risks surpass the opportunities in the mining sector in UK, showing an
unfriendly environment.  

 

 

Graph
3: The Suns and Clouds Chart of project in Arizona in the USA

For
Arizona in the USA, risk 5 is approaching the parabola while the rest ones are
manageable. The good news is that all opportunities are in favorable places,
balancing the possible adverse impact from risk 5, so this project is still
viable.

Apart
from Australia and USA, MinCo may go to New Zealand and Canada for next
projects, because both countries enjoy abundant resource reserve and the high
closeness of culture, economy, geography and administration to Australia and
Canada respectively.

2.    
Justification of suggested
strategy

From
former analysis we know that strategic alliance is a favorable strategy, but we
also need to see whether it is plausible in the long term.

Ø  Suitability.
Strategic alliances are often created between a
junior exploration company like MinCo and a larger mining company (Abdel-Barr,
2013). Sharing the resources and capabilities of each side, the arrangement
allows MinCo to be better positioned in the industry with the endorsement. With
the added resources and competences from alliances, MinCo obtains stronger
competitive advantages and lowers the impacts of macro risks, completing a more
healthy and sustainable value chain of mining life cycle. Therefore, MinCo can better
pursue exploration and development, adding value to shareholders.

Graph
4: How MinCo collaborates with strategic alliance

Ø  Acceptability.
The strategy should be accepted by both internal
and external stakeholders. As strategic alliance is a loose way of
collaboration, the managers and workers do their work as before but with more
support and knowledge. For external stakeholders, such as government, NGO and
local communities, mining activities look more viable and harmless because
alliance adds credibility to the projects.

Ø  Feasibility.
To attract alliances, MinCo should prove that
the projects underway profitable and the risks are manageable (Daniels, 2014).
With right commodities in right countries discussed, MinCo will be valuable for
major companies to consolidate current markets or to extend global reach.

Ø  Robustness.
The mining sector is affected by various
changes in the market, as well as exploration results (Abdel-Barr, 2013). Strategic
alliances are robust in such environment because the agreement is often not
long term (Abdel-Barr, 2013) and both parties remain the flexibility of ending
the arrangement or turning it into a full acquisition. Also, Strategic alliances
often focus on certain areas and certain commodities (Mining Risk Review, 2017),
allowing MinCo to form different alliances in different projects, so the risks
are mitigated.

Interpretation of
Results

From
the perspective of value chain in mining industry, the author points out that
it is hard for MinCo to achieve sustainable increase in share price given its
limited capability and uncertain results of undergoing projects.

Then
three strategies to improve the condition are analysed and alliance is the best
option. Next, the author considers the long-term nature of external environment
and draws some implications for MinCo. Based on the four scenarios, attractive
commodities are identified. Based on the overall balance of risks and
opportunities, Australia and USA are of lower risks for mining activities while
UK seems hostile.

Conclusions and
Recommendations

In
conclusion, strategic alliance is a promising way to constantly increase
MinCo’s share price given its current state and future scenarios in the long
term, enabling MinCo to keep flexible and robust faced with unexpected changes
and threats.

As
for commodities, the author recommends MinCo to take three directions based on
the scenarios, namely, base metals to meet the demand of emerging markets,
metals used in batteries to face a greener world with EV growth, and precious
metals to support revolution in electronic devices.

In
terms of operating locations, the author suggests that MinCo give up the
project in UK due to unfriendly environment while continue in Australia and
USA. With healthy finance, MinCo may develop projects in New Zealand, Canada,
and Latin America.