usually takes over 10 years to move from exploration to production. If MinCo is
going to doing everything itself from scratch, MinCo will have to take a bold
entrepreneurship change in business, which is quite difficult given its limited
resources and capabilities. Alliance is a faster way to access such resources
and skills with the support from bigger peers. Acquisition is the most rapid
way to increase share price.
that mining market is now at a turning point (S&P Global Market
Intelligence, 2017), the unknowable future puts a high level of uncertainty
upon players in this sector. Therefore, it is often better to choose alliances
when there is high and unpredictable uncertainty in market (Gerry, 2014).
industry regularly sees regular cycles of highs and lows (AMF, 2017). If the
mining sector entres a new positive cycle, the strategic alliance may turn into
a full acquisition (Gerry, 2014). The need to increase reserves makes it
important to acquire new projects via M&A as the global resource basin is
depleting (McKinsey&Company, 2017), but an acquisition may be a disaster if
market goes grey again. Likewise, a risky option as organic development will
force MinCo to resolve all the losses and risks.
Type of capabilities
is the best option when the desired resources and competencies are ‘hard’ (Gerry,
2014), for example, the profitable commodities of MinCo’s projects. Organic
method, on the other way, is good for internal soft skills if MinCo wants to
build a stronger team. Alliance is comparatively loose in control, but it’s an
easy way to take advantage of other bigger peers’ capabilities.
current capabilities are highly modular, in other words, are restricted in
early stages of exploration and development. This means that strategic alliance
and acquisition both make sense, because MinCo will be quite valuable for major
mining companies with good results in its projects. Organic development will be
extremely difficult because MinCo is less likely to finish the rest steps of
mining activities on its own.
on the analysis above in four factors, the author develops a table showing the
total attractiveness of organic development, M&A and alliances. The scores
1-3 represent from least attractive to most attractive under each criterion.
1: The total attractiveness of organic development, M&A and alliances for
graph indicates that M&A and alliance are both promising options for MinCo,
but strategic alliance is better considering the high uncertainty involved in
MinCo’s business and mining industry.