Part 2 : The Market-Space
If you’re still into reading my views on the Project Development space, welcome back. You’re probably wondering
“Where’s this guy going with this ? What make him an Expert ? Why am I wasting time READING THIS ?”.
Yeah, I know, I feel the same way half way through reading someone’s, whom I’ve never met, and will never interact with, blog post. But I can answer these questions with
(a) I am building up to an idea/concept, just be patient – it’s Fuzzy Logic being applied here and right now it’s more Fuzzy than logic !
(b) I’m no Expert – just very knowledge and opinionated about a wide range of stuff
(c) In answer to the last question, you got anything better to do ? Well, go ahead and do it; just be sure to return to finish the read.
Porter, the father of Marketing, among others, broadly defines the Market-Space (MS) as a place (which can be either Physical or in today’s term’s, Digital/Cyber) as a “Place where Buyers and Sellers Come Together to Exchange Goods or Services“.
As applied to the Industry, this will constitute Owners of Assets (Mining companies, Individuals or Consortium that own an Ore, Gas or Oil Reserve/Deposit)
These are the Sellers.
The Buyers are those that purchase said commodities either in Raw for (e.g. Australia Direct Shipping Ore (DSO) of Iron to China for beneficiation, or processed e.g. Selling 99.9% Refined Gold bars that’s been Mined, processed via CIL/CIP, refined at Rand Refinery before hitting its target market, which could be the Indian jeweller’s).
Plant Design and Projects work closely with the Seller and provide the SOLUTION that the BUYER seeks from the SELLER. The deliverers of this Solution are the OEM’s and EPC/M Houses or Equipment Suppliers and Consultants respectively.
One could call this a Multi-Level market space as it exists between multiple entities each playing an important part in this Horizontally Integrated Supply Chain. Note that if the Seller’s had no need for the OEM’s and EPCM’s, this would imply Complete Vertical Integration, which I won’t touch on here, as that is a separate discussion falling into the realms of Business and Corporate Strategy, of which each company has it’s own.
The traditional approach has been “Sales Engineers” from OEM’s “calling on the mines an project houses” to peddle their wares. Coffee visits to “shoot the breeze” and maintain the relationship was (and still is) the norm.
Consultants bid for Concept, BFS, DFS studies (FEL 1 to 4) to their traditional clients, most of these being the large Blue Chip mining houses.
I need not go into the details; you know the process. I’ve done this so often during my career, that I deem myself as an expert and have during the course of time, build up invaluable relationships within the industry, something which I personally treasure.
It’s worked well (especially in resource dependant nations like Australia & South Africa) up until 2009. My Global experience though has taught me that this is the approach everywhere from India to Germany and USA.
This is great if the Blue Chips are the one’s investing cash, but not so great if you’re a junior with a quantum-lower cash balance on the Balance Sheet and non-existent revenue on the Income Statement. What the latter does have however, is the desire to invest in beneficiation of its asset, however small it may be, and some finance, usually debt.
These guys can’t afford the traditional approach to Project Development, which is frequently far too Capital Intensive.
There has to be a better way to Project Development, tiered and tailored to the strength of the Balance Sheet that’s being dealt with.
In summary, this Market-Space requires a different solution that will deliver, while MANAGING (not eliminating) Risk and Execution … and this is what I’m seeking to offer.
Watch this space for Part 3.