Mining Industry encounters many financial risks like volatile commodity prices, currency fluctuations, and operational costs variations. The mining sector in Oman is facing a challenge to mitigate the volatility in commodity prices. Previous literature has debated the benefit of hedging as a tool to preserve financial health. Thus, the aim of this research paper is is to investigate how Omani mining sector hedge and why it does so. This study employed a descriptive-deductive research approach (DDM). The research design for this study is a qualitative case study design, using Minerals Development Oman (MDO) as a case study. The empirical data collected through primary and secondary data. Two semi-structured interviews were conducted with the Chief Financial Officer (CFO), and Director of Treasury at MDO in order to get their expertise and opinions of hedging. The sampling population was selected because they have the most and relevant information and expertise that the researcher needs to analyse and answer the two research questions. The findings of this study indicated that Omani mining sector is currently working on hedging against future prices of the copper metal. In addition, the findings showed that the factors for heading at Omani mining sector are for financial, market, and investment reasons. The main theoretical contribution of this study is the new knowledge of how and why Omani mining sector hedge as part of its risk management practices. Future qualitative research may involve all related shareholders and stakeholders to obtain more in-depth information about hedging.

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Sustainability of Risk Management Practices in the Mining Industry: The Case of Using Hedging Strategy in Oman

  • Ahmed Al Wahaibi

摘要

Mining Industry encounters many financial risks like volatile commodity prices, currency fluctuations, and operational costs variations. The mining sector in Oman is facing a challenge to mitigate the volatility in commodity prices. Previous literature has debated the benefit of hedging as a tool to preserve financial health. Thus, the aim of this research paper is is to investigate how Omani mining sector hedge and why it does so. This study employed a descriptive-deductive research approach (DDM). The research design for this study is a qualitative case study design, using Minerals Development Oman (MDO) as a case study. The empirical data collected through primary and secondary data. Two semi-structured interviews were conducted with the Chief Financial Officer (CFO), and Director of Treasury at MDO in order to get their expertise and opinions of hedging. The sampling population was selected because they have the most and relevant information and expertise that the researcher needs to analyse and answer the two research questions. The findings of this study indicated that Omani mining sector is currently working on hedging against future prices of the copper metal. In addition, the findings showed that the factors for heading at Omani mining sector are for financial, market, and investment reasons. The main theoretical contribution of this study is the new knowledge of how and why Omani mining sector hedge as part of its risk management practices. Future qualitative research may involve all related shareholders and stakeholders to obtain more in-depth information about hedging.