Economics Report: Thor Mining Plc and the Australian Mining Industry

This economics report provides a comprehensive analysis of Thor Mining Plc, focusing on its business environment, production costs, and sustainability practices within the Australian mining industry. The report begins with an introduction to the company, detailing its operations, products (tungsten, molybdenum, and copper), and market position, including a comparison with key competitors like Tennant Creek Gold Limited. It then delves into the company's production costs and scale, examining macroeconomic factors such as political stability, inflation, interest rates, and unemployment in Australia. The report also assesses Thor Mining Plc's sustainability practices, highlighting its engagement with local communities and adherence to environmental regulations. The analysis covers aspects like environmental impact assessments, resource management, and the company's role in the broader context of the Australian mining sector. The report concludes with an overview of the competitive landscape and the company's market share, providing a well-rounded assessment of Thor Mining Plc's economic performance and sustainability initiatives.

Economics Report

Table of Contents
INTRODUCTION...........................................................................................................................1
MAIN BODY...................................................................................................................................1
1) Introduction to the business and general business environment........................................1
2) Production costs and scale.................................................................................................3
3) Macro business environment..............................................................................................3
4) Sustainability Practices of business...................................................................................4
CONCLUSION................................................................................................................................6
REFERENCES................................................................................................................................8

INTRODUCTION
Economics report generally defined as a survey, which is done to analyse the optimum
usage of scare resources and understand the business environment. It involves a comparison of
two or more alternatives of a product, available in market area, with price under the given
assumptions and constraints (Lèbre, Corder and Golev, 2017). An analysis under this report is
taken the opportunity cost of resources into its account, for measuring the private and social cost
as well as benefits of a project to economy development. The present economic report is done on
a manufacturing company i.e. Thor Mining Plc, that undertakes the advanced tungsten or
molybdenum project, poised for development. Here, to understand business environment of
respective company, a description is given about its locality, products and services offered at a
particular market, targeted customers, intensity of competition etc. Along with this, overall cost
structure is done by analysing different factors of production and overall condition of
macroeconomic conditions evaluated via stability of political system. Furthermore, sustainability
practices of Thor Mining Plc are measured, for generating the positive or negative externalities
of business.
MAIN BODY
1) Introduction to the business and general business environment
Thor Mining Plc is an exploration and development organisation, that listed on the AIM
i.e. Alternative Investment Market in London and Australian Stock Exchange (ASX), under THR
(Owen and Kemp, 2015). This natural resources company mainly headquartered in United
Kingdom, but it operates business in both Australia and America, with key interest in tungsten,
copper and molybdenum. It deals under mining and metal industry as a public organisation with
near about 100 to 300 employees (Bai, Kusi-Sarpong and Sarkis, 2017). In Australia, it is
situated at Marleston, where its project includes: Molyhil – situated in Australia Pilot Mountain
and relates to Tungsten & Molybdenum; another one is Tungsten in the USA Kapunda; Copper
metal in Australia which is 100 % interest in context with development . The project of Molyhil
based on Tungsten and Molybdenum materials located near about 220 km north east of Alice
Springs, Australia (Mhlongo and Amponsah-Dacosta, 2016). While in UK, it is established
nearby Salisbury House at London Wall. Along with this, Thor Plc holds a number of leases
around districts of Molyhil, that includes interests in Bonya copper & tungsten prospects,
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approximate to 30kms to east. In Nevada, USA, the tungsten projects relates to 100% interest in
historic Pilot Mountain Tungsten, that hosting as the largest reported tungsten resource. Tungsten
metal which is a primary resource at Pilot Mountain, has been considered as the most critical
mineral according to the report of US Department in 2018. Thor Plc is also acquired up to a sixty
percent interest in copper development company of Australia - Environmental Copper Recovery
SA Pty Ltd. Thus, in turn respective firm holds rights for earning up to a seventy-five percent
interest in mineral rights (Pimentel, Gonzalez, and Barbosa, 2016). It can also claims to get
portion of historic Kapunda copper mine, that located in South Australia recoverable via Situ
recovery. Along with this, Thor Plc holds a production royalty, which is entitlement from the
Spring Hill Gold - a project in the Northern Territory, Australia. Thus, main products or services
offered by Thor Mining Plc is metals that are Tungsten, Molybdenum and Copper.
Tennant Creek Gold Limited, Batavia Mining Limited, Albidon Limited, Southern Gold
Ltd. etc. are some of the main competitors of Thor Mining Plc. All these companies extract same
kind of minerals like Copper, Tungsten, Gold and more, that unlocks a portfolio of undeveloped
assets, with the development of modern equipments and centralised processing facilities
(Hakansson, 2015). It shows that there is an intense competition within mining industries for
Thor Plc. Hereby, Tennant Creek Gold Limited (TNG) has a multi-commodity resource portfolio
in mineral assets like ferrous, non-ferrous and other precious metals. It is operated in both
Western and Northern Australia, as well as seek to play a keen interest within those projects that
includes extraction of iron ore, lead-zinc-silver, vanadium, nickel and more (Tennant Creek
Mining and Gas Projects, 2019). Therefore, it is considered as the biggest competitor of Thor,
that undertakes various prospective areas. It includes Carlton Shelf, Manbarrum, Burt Range
Shelf and McArthur River for extraction of Zn-Pb-Ag (Zinc-Lead-Silver).
Thor Plc (THR) and its main competitor Tennant Creek Gold Limited (TNG), both listed
on the Australian Stock Exchange (ASX) and Alternative Investment Market (AIM) in London
(Franks, 2015). With the statistical information, current number of shares of THR is approximate
to 821,646,863 with average volume 788,151. In terms of EPS i.e. net income dividend by shares
outstanding are calculated as -0.003 AUD (Thor Mining Plc, 2019). But as compared with TNG
Limited, it holds a larger number of shares that are 1,124,545,124 with average volume about
651,600. In terms of EPS, it is measured as -0.005AUD (Gunningham and Sinclair, 2017).
Therefore, these statistical information shows that Thor Plc covers 10% of market share, while
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its main competitor TNG Limited holds 50% and remaining ones by 40%. Thus, it shows the
perfect competition within mining industry of Australia, where Thor Plc mainly operates its
business, because there are a number of sellers present that offers same type of products and
services to targeted customers (O’Faircheallaigh, 2015). Therefore, THR is a price taker firm so,
it must accept the equilibrium price at different level, where it sells the services. This condition
of perfect competition also demonstrates that new entrance can easily enter or exit their
businesses, because mining products are identical from one seller to another, that actually plays
as price takers due to the pressure of competitive firms. Along with this, market price is also
determined by supply and demand within entire market,
2) Production costs and scale
Thor Mining Plc extracts a number of most versatile and useful materials like copper,
tungsten and molybdenum, where extraction of copper contributes to 2.5% as annual growth. But
due to weakening Australian dollar, global copper prices has largely fallen (Banerjee and et. al.,
2016). While economic growth of foreign countries shows expectation of increasing the export
demand of copper, that aid mining industry of Australia to earn high profitability.
3) Macro business environment
Stability of the government or political system in which business is operating
Thor mining plc is a mining company which is successfully operating in Australian
market. This company mainly do molybdenum, copper and tungsten based projects. Management
of this company has experience in financial sectors also (Yakovleva, 2017). Macro environment
is defined as the set of extrinsic conditions which impacts a business and its developments either
in a positive or negative manner. These external factors include political stability of nation in
which company is operating (Lèbre, Corder and Golev, 2017). Australia is a politically stable
country which has transparent regulatory system and efficient government frameworks which
underpins its economic status also. Due to the stability of government in Australia, multinational
company can perform secure business in this region. Tax rate of mining products is less and
country ranks at 15th number in case of doing business in easily manner (Owen and Kemp, 2015).
Labour market in mining is appropriately supported by the flexible and modern employment
codes. Australian economy is facing structural change as investment of mining have boomed in
2012. From this time, government in Australia is supporting mining via corporate tax cuts,
relaxation of free trade agreements etc. All kind of mining activities are given wide support in
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Australia accept for Uranium mining as it is used in preparation of nuclear weapons (Mhlongo
and Amponsah-Dacosta, 2016). In this context, Australian Labour Party has maintained a policy
of “no new Uranium mines”. Other than this, all rules and regulations formulated by Australian
government for mining sector is very supportive.
Recent change and current Level of inflation, 'average' interest rate and unemployment of
country where business is physically located.
Mining sector in Australia is one of the most established sector which contributes
approx.. 7% to the GDP of nation. In order to perform their business in a proper manner, it is
important for the concerned company to acknowledge their macro environments especially
economic aspects which can impacts the business in a proper manner (Bai, Kusi-Sarpong and
Sarkis, 2017). At present, unemployment rate of Australia is 5.7% which is around 0.4% less
than the rates prevailed in 2016. Out of total number, unemployment rate of young people in
2016 is 12.7 % which is more than the rates of previous years. In case of present year 2019,
unemployment rate is 5.3 % which is less than previous times (Pimentel, Gonzalez, and Barbosa,
2016). Average interest rate in Australia is 1% which is not changed in recent years. In recent
months of this year, Inflation rate in Australia was 1.3% which is increased to 1.65 in June
quarter of 2019. Inflation rate in the year of 2017 and 2018 was 1.9% on average basis. Current
situation of Australian economy is good (Hakansson, 2015). In the year of 2018, country has
faced “Per Capita “ recession but this slow down has not stayed for a long time. Economy of
Australia has recovered that phase due to the robust regulations formulated by Australian
government. Economic freedom score of Australia is 80.9 due to which it attains the 5th rank at
global level. Due to government support, Australian economy is very dynamic and attractive for
investment especially in mining and construction sector.
4) Sustainability Practices of business
One of the most evolving and developing sectors within the corporate world is regarded to
be mining industry. This sector is constantly encompassing a large number of transformations
and changing the face of this industry across the confines of Australia. This is done with the
effective use of a dynamic workforce, latest & emerging technologies and diverse set of ideas.
The activities of this sector can be more effectively carried out with the active engagement of
community of Australia. This may include the indigenous population of the respective country
also. By engaging them in the various activities and practices of mining sector, the businesses
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belonging to this industry can gain advantage of availing the support and facilitation from people
through which they can inflate their existing level of profits and revenues. Also this will help in
creating awareness among the community regarding the mining exploration and the places where
they can move to at the time of explorations. The management of mining within all stages, i.e.
from extraction of minerals, exploration to mine closure and more, requires the serious
consideration of environmental and social impacts. For this purpose, legal and contractual
frameworks of Australia which govern mining, takes consideration of the sustainability as well
as welfare of affected communities (Franks, 2015). Therefore, Thor Mining Plc, recognised the
rights of local communities and indigenous people, before framing sustainable practices. It has
also adopted the rules, which are made on environmental and social impact assessment and mine
closure. In order to manage and conserve resources, mining industry and Australian Government
work under collaboration to run programs, like The Leading Practice Sustainable Development
Program as a Mining initiative in 2006. For protecting environment and people from harmful
factors of mining, a number of practices has run by Thor Mining Plc and other companies that
deal in same sector (Gunningham and Sinclair, 2017). It includes designing policies as per
environmental regulation which also establishes clear rules for investors; adoption of more
innovative approaches like latest equipment for mining, performance based regulation and more;
ensure that affected communities especially indigenous people must be informed in advance
about mining projects, land use options after closure of same etc.; and engagement of customers
for enhancing access about mining related information. As there is an intense competition in
mining industry, so, it shows an increase in employment (O’Faircheallaigh, 2015). Therefore,
Thor Plc also develop new employment policies for improving labour condition and providing
more jobs to people of all communities, especially people who belongs from indigenous
community.
Customer Engagement:
Currently due to fluctuations within commodity prices, companies that deals in mining
industry are on the verge of re-organizing capital investments of them. Addition to this, by
growing shift toward innovations and entrance of new companies has also lead mining
companies to rely on effective sustainable practices (Banerjee and et. al., 2016). It includes
customer engagement, for developing better relationship with them via framing new price
strategy policies. Mining companies within manufacturing space, are seeking to step out of
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comfort zone, in order to foster the customer loyalty and awareness. Thus, by building an
effective customer engagement strategy, renowned mining firms can also easily churn the price
rates through prolonging the journey of their customers (Dwyer and et. al., 2016). Today, for
staying competitive within dynamic market space, customer engagement type of practices
becomes indispensable for companies that operate business in mining industry. This would help
in creating value of business for customers and improving the overall profit margins for
organisation as well. Moreover, to enhance customer satisfaction and increase their loyalty,
marketers across the mining industry are mostly relying on customer engagement solutions. As
customer engagement aids a company that deals in mining industry, in bridging the
communication gap via various channels of communication (Yakovleva, 2017). In this regard
with respect to Thor Plc, like other mining companies, the respective renowned firm has faced a
number of challenges, to identify the potential customers and make improvement in retention
capabilities of them. This mining company mainly seeks to build the strategy for strong customer
engagement to refine its prevailing customer relationship. This would help in providing real-
time, as well as personalized experiences for targeting the potential customers. Hereby, main
primary objective behind engagement is to keep customers engaged by planning future activities
for spur the sales of equipment and services (Dwyer and et. al., 2016).
Brand Portfolio
It is another main sustainable practice of Thor Mining Plc, where, to overcome from
threat of intense competition and make business sustainable, respective company seeks to build a
strong portfolio of assets. For this purpose, it expands business in other countries by acquiring
two gold and uranium focused organisations of Australia that are – Hamersley Metals Pty
Limited (HML) and Pilbara Goldfields Pty Limited (PGL). Both of these Australian companies
hold interests together in granted licences at various stages. The licence in this regard, includes a
prospective for uranium and gold, by covering a total area of about 784 square kilometres within
Pilbara region of Australia (Western) and Northern Territory. This area also known for its vast
mineral deposits. For this purpose, it has made investment to near about £ 450,500 by issuing its
new shares, each at a price of 0.85p.
CONCLUSION
It has been concluded from this economical report that industry which contributes the main
role in development of economy is mining. Hereby, companies extract metals and minerals from
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mines by using the latest equipment, that helps construction and manufacturing firm in producing
their commodities. Along with this, to protect environment and communities that are affected by
mining operations, mining industry with the collaboration of Government, runs a number of
programs and sustainable practices. Thus, economy report helps government of a nation to
analyse contribution of various industries in economy development.
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REFERENCES
Books and Journals
Yakovleva, N., 2017. Corporate social responsibility in the mining industries. Routledge.
Dwyer, L. and et. al., 2016. Modeling the impact of Australia’s mining boom on tourism: a
classic case of Dutch disease. Journal of Travel Research. 55(2). pp.233-245.
Banerjee, O., and et. al., 2016. A conceptual framework for integrated economic–environmental
modeling. The Journal of Environment & Development. 25(3). pp.276-305.
O’Faircheallaigh, C., 2015. Social equity and large mining projects: Voluntary industry
initiatives, public regulation and community development agreements. Journal of
business ethics. 132(1). pp.91-103.
Gunningham, N. and Sinclair, D., 2017. Leaders and laggards: next-generation environmental
regulation. Routledge.
Franks, D. M., 2015. Mountain movers: Mining, sustainability and the agents of change.
Routledge.
Hakansson, H., 2015. Industrial Technological Development (Routledge Revivals): A Network
Approach. Routledge.
Pimentel, B. S., Gonzalez, E. S. and Barbosa, G. N., 2016. Decision-support models for
sustainable mining networks: Fundamentals and challenges. Journal of Cleaner
Production. 112. pp.2145-2157.
Bai, C., Kusi-Sarpong, S. and Sarkis, J., 2017. An implementation path for green information
technology systems in the Ghanaian mining industry. Journal of Cleaner Production.
164. pp.1105-1123.
Mhlongo, S. E. and Amponsah-Dacosta, F., 2016. A review of problems and solutions of
abandoned mines in South Africa. International Journal of Mining, Reclamation and
Environment. 30(4). pp.279-294.
Owen, J. R. and Kemp, D., 2015. Mining-induced displacement and resettlement: A critical
appraisal. Journal of Cleaner Production. 87. pp.478-488.
Lèbre, É., Corder, G. and Golev, A., 2017. The role of the mining industry in a circular economy:
a framework for resource management at the mine site level. Journal of Industrial
Ecology. 21(3). pp.662-672.
Online
Thor Mining Plc. 2019. [Online] Available Through: <https://www.zoominfo.com/c/thor-
mining-plc/124059933>.
Thor Mining adds Gold and Uranium focused companies to Australian Portfolio. 2019. [Online]
Available Through:
<https://www.proactiveinvestors.co.uk/companies/news/217318/thor-mining-adds-gold-
and-uranium-focused-companies-to-australian-portfolio-217318.html>.
Tennant Creek Mining and Gas Projects. 2019. [Online] Available Through:
<https://dpir.nt.gov.au/mining-and-energy/tennant-creek-mining-and-gas-projects>.
Thor Mining Plc. 2019. [Online] Available Through:<https://www.asx.com.au/asx/share-price-
research/company/TNG/statistics/shares>.
2019 index of economic freedom. 2019. [Online]. Available
through:<https://www.heritage.org/index/country/australia>
Australia mining. 2018. [Online]. Available through:<https://www.export.gov/article?
id=Australia-Mining>
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Australia unemployment rate. 2019. [Online]. Available
through:<https://www.ceicdata.com/en/indicator/australia/unemployment-rate>
Australia interest rate. 2019. [Online]. Available
through:<https://tradingeconomics.com/australia/interest-rate>
Australia inflation rate. 2019. [Online]. Available
through:<https://tradingeconomics.com/australia/inflation-cpi>
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