Newcrest Mining SWOT and PESTLE Analysis

Strength

1. High technological capability for gold extraction: The company has developed mine plans such that it will lead to increase in the quality of gold ore being fed into the milling process. Applying mine optimization studies has helped the firm increase its accuracy of estimation of output from different projects. This technique provides them with the ability to revise their output estimates continuously. This has made a significant difference in the resource allocation decisions that were made previously. Another technological advancement is that Autoclaves have been significantly improved to decrease the density and viscosity of slurry, leading to better extraction of gold from its ore. Sensors in various positions in autoclave are helping in automation of the milling process further. With respect to the drilling operations, the firm has been able to develop its open pit capacity up to 120 meters, thus ensuring an imperial grade ore.

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Weakness

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Opportunity

1. Pandemic uncertainty to induce more demand: Fiscal 2021 has seen gold demand surge, which has skyrocketed gold prices by 20% cumulatively over the last three years. The prices are expected to increase at the same CAGR up to 2024. The main reason initially was the recession caused by US-China trade war and Brexit but currently Covid-19 is the dominant factor. Investors are preferring gold as the safe haven in the time of uncertainty, which is believed to be better denomination than any paper currency. Its increasing prices have historically bet inflation. The central banks of various countries use it as a safe haven such that 75% of the US reserves are in the form of gold. Countries like China and India have ever increasing consumption of gold in terms of jewelry, electronic components and medical equipment. So, the intrinsic value assigned to gold along with the capability to act as a hedge for the uncertain situations, is poised to remain high.

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Threats

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Political

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Economic

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Social

1. Mining sector involves multiple human rights concerns: Mining sector is always under public scrutiny for issues related to child labour, forced labour, and underpaid labour, poor working conditions, local community displacements and high natural resource erosion. If a company comes into limelight regarding any such happenings it will be a cause of concern for various stakeholders. Apart from monetary loss due to legal actions the company loses goodwill among the general public. For instance diamond mines in Sierra Leone have long been associated with conflict diamonds. The mining industry in Papua New Guinea is always under a strict watch by UN to prevent any exploitation. This affects the negotiating terms for companies like Newcrest Mining. The policy changes will remain frequent and so it leads to uncertainty in sending the profits to the parent country. The company can ensure the development of the local population through employment as well as education. It also needs to continuously improve its waste management techniques to sustainably continue extraction operations.

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Technological

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Legal

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Environmental

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