DBPapers
DOI: 10.5593/sgem2012/s03.v1019

ECONOMIC EVALUATION OF BACKWARD VERTICAL INTEGRATION IN MINING INDUSTRY

J. KUDELKO
Wednesday 1 August 2012 by Libadmin2012

References: 12th International Multidisciplinary Scientific GeoConference, www.sgem.org, SGEM2012 Conference Proceedings/ ISSN 1314-2704, June 17-23, 2012, Vol. 1, 547 - 554 pp

ABSTRACT

Vertical integration of the mining companies is one of the options of their strategic
development. It results from specific needs of basic company and means the take-over
of outside company involved in one part of the production chain. The integration
process may concern mining and processing or mining-processing-metallurgical
operations. The paper presents the economic evaluation of strategic activity of mining
companies, aimed to improve the management methods, in order to create new
structures and to provide the continuous development. Strategy of backward vertical
integration towards suppliers, giving new possibilities and allowing for efficient
company management was discussed as one of possible options. Advantages offered by
this option are significant since they consist in taking over the majority of production
process as well as give the means to control the delivery of the raw materials and
products. The method of evaluation of the vertical integration profitability presented in
the paper may be one of the tools supporting the strategic decisions based on economic
premises.

Keywords: Mining, Strategic Management, Vertical Integration