The mining industry is one of the most profitable in the world. Worth billions of dollars, it’s an industry with tremendous growth potential. This prospect of earning a big profit with little operational costs is very appealing to startups.
However, although there is a high demand for minerals, fossil fuels, and metals, it comes with several challenges you need to consider. Not only is the market very competitive, but you’ll have to be aware of the various legal issues that come with starting a mining business.
Therefore, from the start of the process, you’ll need to ensure you’re following SMART steps to be successful. To make sure you’re on the right path here are 6 considerations you should keep in mind:
The Knowledge
The mining industry is a complicated one. So you’ll have to have a lot of knowledge about it before starting a business. If you aren’t prepared, you’ll find that your company rapidly fails.
As a business owner, you need to have expertise and experience in the industry. If you know people that are already in the industry, you can ask them for advice.
Location
In the planning stage, consider where you will set up your company. As mining is such a big industry, you’ll have to decide where your company will succeed. Take a look at the top mining countries for the materials you want to mine and what other companies are operating there.
Legal Issues
One big downside that comes with starting a mining company is the legal issues. Regardless of the material, you’ll be mining for, you’ll have to research what legalities come with it. You’ll need to obtain:
- All of the correct licenses to operate in a specific country.
- A separate license for drilling.
- Pass all health and safety regulations.
- An export license.
- Be aware of government policy.
The Exploration Process
This is often one of the top things mining startups will forget. Before starting your company, you’ll need to undergo a long process of exploration. During this stage, you’ll have to discover what materials are in your chosen area. Using advanced scientific techniques and laboratory testing, it’s an essential step to take.
By investing in exploration, you’ll be certain that you chose the correct location. This will help to save money in the long term and make it a lot more profitable.
The Cost of Employees
For a mining business, you need skilled employees. From mining the materials to the legal documentation, it’s a vital requirement. Without experienced employees, your business won’t thrive. But with this experience and the number of employees you’ll need comes a big cost. Not only will you need to consider their wages but any accommodation costs (if you’re drilling).
The Cost of Equipment
Although it’s a profitable industry, there are significant upfront costs. This includes the cost of the mining equipment. Of course, over time as you scale the business you can upgrade it. But in order to be successful in the first place, you’ll need good-quality and reliable equipment.
This will include industrial pumps, construction vehicles, drills, finding an independent power producer, etc.