The Business Unit Model for Mining Companies

The complexity of large geographically diverse or multicommodity mining companies requires a corporate structure, which provides the maximum long-term effectiveness. Structure models exist along the spectrum of centralization to decentralization. This paper examines the trade-offs of flexibility, cost, decision making, consistent strategies, and corporate control associated with different structural models as applied to mining companies. The mining industry typically lends itself to a business unit model. However, the degree of decentralization depends on size, proximal operations, technical complexity, product mix, geographic spread, mining methods employed, and the inherent capabilities of an organization.