Competitor Supply Study Case Study

Recommendation
We identified that the jurisdiction was indeed a competitive threat, based on the coal quality, cost of production and availability of export infrastructure. However, its competitiveness was primarily in certain coal quality types and in certain markets. We were able to identify the specific market risks posed by this jurisdiction and prescribe strategic positioning that would enable our client to minimize the impact of these risks on its business.

Methodology
Drawing initially on our own mine-by-mine database, we were able to build a comprehensive supply picture for both production and exports through further research and modelling.

Detailed export mapping models were utilised to determine whether infrastructure constraints (port and rail) would impact volumes. Cost curves were developed from the ground up, based on our proprietary methodology and covering mining, overheads, royalties, rail and port costs as well as considering foreign exchange rates.

Outcome
Our report was presented to the client’s board and senior management, and it clearly outlined the potential competitive threat this jurisdiction may provide in the future.

The report included supply forecasts by producer, quality and port to 2030 and quantified the volumes of each commodity that could be shipped into our clients’ key markets over the period. It also provided a full cost curve of supply to enable our client to assess the sustainability of this competitive threat.

This analysis helped our client to start positioning both their marketing strategy and investment approach accordingly.