The mining industry is currently experiencing a boom, with more and more companies entering the market each year. One of the most exciting aspects of this growth is the increasing availability of cost-effective solutions for companies who are looking to maintain a large-scale operation without the high cost of ownership that traditional mining companies are faced with.
One of the most significant recent developments in the industry is the MPP (Mobile Mining Party) acquisition by Canaan, a $15 billion dollar multinational corporation. MPP will be incorporating some of Canaan’s leading-edge technologies into its operations, which will undoubtedly benefit both companies in the long run.
The Rise In Popularity Of Contract Mining
The trend of companies contracting out the majority of their mining activities has become more popular over the last few years, with some large-scale players setting up sophisticated operations in this way. This approach significantly reduces the capital expenditure required to get started in the mining business, as you do not have to invest in expensive equipment that will only be used for a short time before it is replaced.
The appeal of this model to mining companies is that it allows them to access a larger pool of skilled labor, and enjoy the benefits of high-quality equipment that is usually built to last. The use of contractors has significantly increased since the 2008 financial crisis, and these days, it is quite common to see major mining operations in countries all over the world that are heavily reliant on contract labor.
The Benefits Of Purchasing An Independent Operator
A lot of the appeal of the MPP acquisition for Canaan is the ability to purchase an independent operator with considerable expertise and experience in scaling up a large-scale operation in a short amount of time. The team at MPP will be able to help Canaan integrate their technologies and expertise into an efficient and cost-effective operation, which will no doubt reap great rewards in the long run.
While it is certainly feasible to take on a large project yourself if you are a well-capitalized company with the right amount of experience, it is usually not a good move for brand-new entrants into the market, as these companies tend to be highly dependent on the resources they utilize, and do not yet have the ability to spread the cost of their operations over a sufficiently large base. This also makes it more difficult to balance their books, as the price of metals and commodities is often volatile and subject to significant change, and the risks of investing in new projects can be high.
The acquisition of an independent contractor removes a lot of the risk that comes with investing in a new project, and allows mining companies to reap the benefits of their efforts in a much sooner manner. The ability to purchase equipment that is proven and reliable is also an important aspect of this business, as you will not want to be investing in brand-new technologies that are untested and may end up being costly headaches in the long run. Once again, this greatly reduces the risk associated with new project development, and allows mining companies to focus on what is important to them – mining