Tariffs On, Tariffs Off. CEOs Should Not Bet Companies On One Outcome.
The Mining Industry Must Embrace Scenario Planning to Thrive in a Volatile World
Commodity producers face a storm of uncertainty. Geopolitical tensions, from U.S.-China trade tensions to Middle East supply chain disruptions, have roiled markets. With the threat of US tariffs of uncertain scope, magnitude, and duration, followed by pivots to free-trade rhetoric —the future feels like a high-stakes gamble. For executives steering capital-intensive businesses, clinging to a single forecast is a recipe for disaster. Scenario planning isn’t just a buzzword; it’s a lifeline to navigate volatility and emerge stronger.
Consider the stakes in this interconnected world. A “tariffs-on” world would choke export markets for many commodities produced by many countries, spiking costs for downstream manufacturers and squeezing margins. In a “tariffs-off” scenario, oversupply risks loom as producers ramp up to meet demand, only to face price crashes if trade barriers vanish. These aren’t hypotheticals—they’re plausible futures, each demanding distinct strategies for corporate strategy, holistic workforce strategy, and broader organisational configuration.
Scenario planning forces leaders to map multiple futures and prepare battle-ready plans for each. Take corporate strategy choices. A tariffs-on scenario might push producers toward vertical integration, securing a lot more downstream and domestic customers, and/or expanding of interest into commodities that are likely to be tariff insensitive due to lack of domestic production alternatives in the country imposing tariffs. In a tariffs-off world, status quo continues, BUT if the tariffs are off AFTER being on for a while, unprepared organisations could be trapped in an inflexible strategy for a wrong scenario with no off-ramp. Scenario planning embeds agility, letting firms pivot without betting the house on one outcome.
What about the workforce? In a high-tariff environment, acceleration of automation adoption might take priority to offset rising costs, on one hand requiring rapid organisational upskilling and reskilling at speeds above any current plans, on the other hand requiring careful labor relations management and national dialogues to manage workforce transitions acceptably. A part of this might involve examining optimum workforce models for a ‘permanently’ volatile world. This could include a baseline workforce and skill complement that works for all significantly different scenarios (tested as such), plus a flexible contractor component that dials up and down as market dynamics dictate. By gaming out these scenarios, companies avoid reactive scrambles, ensuring skills levels align with market realities.
Capital intensive companies can’t afford static playbooks. Companies with scenario drills can simply pivot faster. By institutionalizing scenario-based simulations, a culture of adaptability is fostered. Teams stress-test assumptions, from supply chain shocks to currency swings, building muscle memory for rapid response. External crises can be responded to with calm, even they are not welcome.
Volatility becomes less of a threat and more a variable in chessboard where prepared players win. Great leaders don’t need a crystal ball to manage uncertainty; they need a framework to anticipate, prepare, and act. In this tariffs-on and tariffs-off worlds case, leaders can stress-test capex budgets, examine commodity price risks and how to manage those risks, and align broader organisational C-suite priorities. Optimal choices per ‘future’ can be prepared in advance.
The alternative—leaning on a single forecast—is a death trap. Commodity markets are simply too brutal, and geopolitics too erratic. We have recently seen metal prices move at the speed of meme-stocks. The tariff policy uncertainties, layered on supply chain fragility, underscores the need for dynamic planning.
Goodbye, single ‘future’ forecasts.