CRU Consulting is the group's managment consultancy arm and focuses on three main practice areas:
Covers general business, operating, marketing, and purchasing strategies. We often answer the apparently simple but frequently frustrating question “What do we do next?”
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Market Studies and Market Trends
We have a deep understanding of our industries and their associated value chains; our objective in many projects is to effectively assess how a market will react to changes in supply and demand.
We deliver value to our clients through practical strategic road maps designed for the implementation of corporate strategy – we don’t do high level ‘blue-sky’ pieces with little or no practical applicability.
When looking at markets, data is king and the CRU Analysis databases and models provide us an important competitive edge.
Understanding my Competitiveness
CRU is often asked to evaluate the competitiveness of assets or parts of assets by a wide range of clients. We understand costs at all stages along the value chain and over a wide breadth of commodities.
Benchmarking is often a starting point for some projects and these can progress to a diagnostics review of a particular asset.
Within many bulk commodity markets, competitive advantage can be derived from location as much as geological quality or management efficiency. There are not many iron ore projects left that CRU has not evaluated from a value-in-use perspective and placed onto the global cost curve.
The Impact of Mining on my Business
More and more, CRU is approached by clients who are recognising the strategic importance of the mining, metals and fertilizer business to their success. Whether you are a drilling rig manufacturer, a chemicals company supplying flotation reagent or a global engineering contractor; your success is closely tied to the future of the mining industry. Our databases contain an incredible breadth of information and can be interrogated to provide consumable specific information to determine, for example, flotation reagent requirements on a regional basis over the coming decade.
CRU is unique in providing deep commodity coverage across dozens of commodities and products – we can help you make better decisions.
Improving my Performance
CRU Strategies has completed a number of performance improvement projects – primarily focussed on rolling mills and mining operations. We have looked at risk-based assessments of operations and evaluated the benefits of sub-contracting various aspects of the mining operation. We often work with respected technical sub-consultants to deliver a project that economically interrogates the technical issues.
More traditional performance improvement work at mills and plants continues to be an important part of our work for the metals industry.
Assists companies and financial institutions at various gateway points in project development and provides input for IPOs, feasibility studies, lenders market reports, refinancing, and mergers and acquisitions. We have developed robust, risk-adjusted valuation models to assist in the assessment of internal business plans.
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IPO / Finance Raising / Restructuring
Across a wide range of commodities, CRU Strategies provide a variety of services related to the raising of finance. Industry overviews, market outlooks and supporting statements for an IPO or Bond Issue can all be delivered.
We understand how to execute these projects and we have significant experience in all the markets; including Hong Kong, Singapore and Shanghai, where more and more commodity related transactions are taking place in recent years.
Price Discovery / Forecasting
Providing transparency where none currently exists is a valuable proposition and CRU provides price discovery formally for a number of steel products (CRUSpi) and on an ad-hoc basis for minor metals and bulks where the value-in-use issues are important and any consumer price estimate needs to include a view on freight charges.
For forty years, CRU has been analysing markets and taking a view regarding future prices – our approach relies on quality data and focussed analysis. The same macro-economic drivers are used across all the commodities we cover and the interaction between them is inherent within our analysis, providing a consistency of approach that you will not find elsewhere.
CRU Strategies gets heavily involved in due diligence projects and understands the importance of delivery. Sticking to markets we know well, we can add value to the team (we will happily work with investment banks and other consultants) through our industry insight.
In many instances, our due diligence contributions extend beyond market outlook or price forecasts and include management interviews (commercial and market related), rapid plant assessments (for benchmarking), risk review and stochastic valuation models.
Selling / Buying a Project
CRU is an independent company and as such, we don’t work on a success fee basis as we believe this compromises our ability to remain objective in our approach to the assessment of assets or portfolios. We are often contacted by sellers and buyers and can offer services related to a business review or valuation.
For sellers, we can prepare an information memorandum or assist in the preparation of a business plan that will benefit from a 3rd party assessment. For purchasers, our service offering is more varied – ranging from workshops to assist clients identify their preferred commodity class to detailed due diligence.
Valuation / Risk-adjusted Valuation
“How much it is worth?” is an innocuous question with a wide variety of answers. The CRU Strategies approach is always to consider the position of the client and determine how much the asset is worth to them. Whether the question arises from an internal business review or benchmarking exercise, or part of a potential acquisition – we will consider the synergies (or lack thereof) available.
Our risk-adjusted valuation models can be complex but our objective is always the same – identifying the major issues and presenting the options in a way that facilitates the decision making process.
Delivers value to clients by providing transparency where none exists, assisting on strategically important contracts and issues of public policy. Our independence is often sought to both mediate and arbitrate. The focus here is to help clients create mutually beneficial and sustainable relationships with their stakeholders.
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Infrastructure / Power
The resource industries require significant infrastructure and are often major power consumers (particularly the aluminium industry) and CRU Strategies has completed numerous projects for electricity generators and rail / shipping companies.
Understanding how to develop contracts and the mitigation of counterparty risk is a valued service for these companies who are exposing themselves to commodity price risk.
Our work on power tariffs is extensive and we have been involved in contract negotiations on approximately 35% of the world’s primary aluminium smelting capacity; working to define the bargaining zone and seeking win-win solutions based on a systematic evaluation of risk. CRU Strategies is well respected in this field and we encourage you to consult with us on these and similar issues.
Transfer Pricing / Transnational Corporation Issues
CRU understands the mining industry and our regulatory advice is sought by both governments and mining companies alike; our independence is respected and our pragmatic approach valued. Examples of work include advising multi-national companies on real market value for management and marketing agreements, and using bargaining zone analysis to construct market prices for internal trading of copper concentrates and blister.
We are not tax consultants but have often worked with both parties in a tax dispute to agree on market prices, where no visible market exists.
Economic Rent (Royalties)
In many countries, the mining industry is high profile and politically sensitive. Recent events in Australia have clearly shown that all governments face a huge challenge to share the revenues from the exploitation on non-renewable natural resources equitably so that the host can benefit from its endowment and mining companies are sufficiently incentivised to invest large sums and engage in the risk business that is mining.
The cyclical nature of mining results in variable revenues and from a public finance perspective, it is critical to differentiate between sustainable revenue sources and windfalls due when commodity prices (and mine revenues) soar. Models vary across country – our cost models require us to stay on top of these vagaries, making us well-placed to advise both government and the mining industry.