ICV 2015

Horizontal integration in the development strategy of mining companies

Jan Kudełko 1,  
Herbert Wirth 2,  
KGHM Cuprum Research & Development Centre, Wroclaw, Poland
KGHM Polska Miedź S.A., Lubin, Poland
Wrocław University of Technology, Faculty of Geoengineering, Mining and Geology, Wroclaw, Poland
Mining Science 2015;22():101–114
Integration strategy is one option in the development of mining companies and is implemented through a connection of either processes or economic entities which operate or may operate separately. Usually this strategy is carried out by companies that occupy a very strong competitive position. Considering its direction, it may be horizontal or vertical. Horizontal integration strategy stems from a desire to increase market share by an entrepreneur or create a new company based on common know-how and combined operational processes. It can be realized in an external dimension through a merger or takeover, as well as in the internal dimension based on its own resources. The external dimension is based on capital or contractual integration of a company with external economic entities performing related or conglomerate activity. The targets of such integration have a resource, a market effectiveness, or a competence nature. In the case of mining companies, it covers all important activity areas, including geology, mining, processing, environmental protection, and waste management, and is carried out with due diligence. In the internal dimension, the strategy of horizontal integration consists in consolidating the strategic targets of all business units around the company’s (corporation’s) targets. The authors focused on two trends most relevant to pursuing a horizontal integration strategy, including increasing the company’s flexibility and undertaking joint activities. Flexibility consists in the potential ability of the company to adapt quickly to changed environment conditions. Joint activity includes co-operation of its respective units in terms of products, markets, and functions.
Joanna Katarzyna Gacek   
Faculty of Geoengineering, Mining and Geology , Wrocław University of Technology, Na Grobli 15, 50-421 Wroclaw, Poland