Black Coal Mining And Mineral Exploration Make Top 10 List Of Riskiest Industries
Petroleum refining and fuel manufacturing top the list while black coal mining comes in at number 10. Fossil fuel electricity generation takes second place on the list, and alarmingly, mineral exploration comes in at number six – one spot above cigarettes and tobacco.
The list has been compiled based on IBISWorld’s industry risk rating, which measures how likely it is that creditors and investors will receive a negative return on investment over a period of 12 to 18 months.
IBISWorld bases their risk ratings on analysis of an industry’s “structural, growth and sensitivity risks”.
On a scale of one to nine, with one representing the lowest risk and nine the highest, petroleum refining’s risk rating was 7.09 with a Growth rating of -30.5. Yes you read right, that’s negative 30.5.
Black coal mining scored a risk rating of 6.44 but encouragingly registered a Growth rate of 6.4. Mineral exploration scored a risk rating of 6.53 and a growth rate that just snuck it in to the positives, at 0.4.
According to the IBISWorld report, ” The world price of steaming coal has fallen substantially over the past five years as supply has outstripped demand. Coal producers struggle to scale back production, as miners are often tied to rail and port contracts that oblige them to pay shipping costs even if they do not ship any product. This has resulted in miners continuing to put coal into the market, deflating prices further.”
“These factors are offset somewhat by high barriers to entry in the form of high capital investment requirements, a lengthy approval process for new mines or mine expansions, and the need to secure long-term contracts – all of which protect incumbent operators from competition,” IBISWorld senior industry analyst Lauren Magner said.