Diversification – A Shield for Big Miners in a Challenging Environment

Over the past decades, the mining industry has successfully implemented diversification to generate stable earnings. This strategy worked in its favor when most of the sectors and industries were hit by the global pandemic. Owing to their wide product range and geographical presence, key players in the industry were able to bounce back quickly on their feet. Majority of mining companies have iron ore in their product portfolio. The rally seen in iron ore prices this year provided a cushion to big miners’ financials amid a challenging market environment.

Players have adopted a product diversification strategy and also established themselves in various countries, which helped them distribute their risk. China, which was the origin of the deadly virus currently threatening the world, has managed to recover from its ill effects and is one of the key markets for the mining industry. Though 1Q20 has been tough for the industry, it is now on an upward growth trajectory. Whether this growth is sustainable or not remains to be seen.