Some large consultants to the mining industry are doing very well–in spite of reports of a downturn in the profits of big mining companies. Here is a quote from a long report on recent profits by AMEC:
The consensus view right now is that all companies in the mining industry are struggling because of high costs and falling commodity prices. This isn’t entirely true. Take AMEC PLC, the giant resource project management and consulting firm. In its latest financials, the UK-based company reported a 37% jump in year-over-year revenue, along with a 25% rise in diluted earnings per share. And in Australia, mining services firms made headlines this week by reporting their best results. “The order book has been maintained at record levels. We see continued demand for our services, and this has not been significantly impacted by the on-going economic uncertainty,” AMEC said.
I am sure we have all had opportunity to work with people from AMEC. I have always found them personable, smart, and productive. The company deserves this success if those from AMEC that I know are representative of the rest of the company. I trust their success continues.
And recommend that you take a few minutes to consider if you should invest in yet another provider of services to the mining industry, rather than in the mining companies themselves.
The linked report, makes one wonder about the potential benefits of investing in good consulting companies. Here is just one paragraph:
Rising costs have been a concern in the industry for the better part of a decade, but the inflation entered the realm of the absurd in the last couple of years. The most talked-about example right now is Barrick Gold Corp.’s Pascua-Lama project on the Chile-Argentina border. In the mid-2000s, Pascua was expected to cost US$1.5-billion. By the time it was green-lighted in 2009, the cost was US$3-billion. In 2011, the estimate was raised to as much as US$5-billion. And last month, Barrick boosted it to a laughable US$8-billion.
Maybe it would be better to put money in AMEC in preference to Pascua-Lama?