Your CIMA SCS pre-seen for November

Your pre-seen for November

CIMA SCS sitters have the 22-page pre-seen for the next two sittings, so it’s time to dig down into Rotomyne, a lithium miner

Lithium mining takes centre stage for the latest CIMA Strategic Case Study preseen, which covers both the November 2024 and February 2025 exams.

The company in question is Rotomyne, which sells the lithium to manufacturers of various products, including rechargeable batteries.

You should always try to remember who you are in these scenarios – you are a senior manager in Rotomyne’s finance function, reporting directly to the Board. You are also the advisor on special projects and strategic matters.

The pre-seen then provides us with a bit of a mining and chemistry lesson. There are three ways to extract Lithium – hard rock mines, traditional brine mines and direct extraction. Any developments to potentially make the process cleaner would be very attractive to Rotomyne.

If you want to check out some real-life lithium mining companies, take a look at Albemarle, SQM and ALTM.

The pre-seen then moves onto the spot and future markets. We are talking derivatives here…

The company, quoted from 1972, now has six hard rock mines and three brine mines, located in six countries. We are told it is unlikely Rotomyne will acquire any further new mines, and at the

moment it is the world’s fourth largest producer of lithium. However, all that would change if it changes its geological criteria (more risk here). How we sustain this business long-term is a worry if its mines run out of lithium.

While seven of its mines are in stable, welldeveloped countries, two (the most recent) are in relatively high-risk countries. Although geopolitical issues don’t come up (see the front of the case study), in this case they would have a massive effect on its bottom line.

Rotomyne exports to over 90 countries, so this creates a significant risk to currency fluctuations. We also discover prices are volatile and are

affected by supply. A new supply source could drastically affect prices, as would a mine being closed.

Talking about clean, healthy and sustainable in the mission statement are a real challenge in such an environmentally damaging industry, too. Environmental protesters could come up here, so how would you deal with such actions?

Any strategic questions in the exam will mean you bringing your answer back to the mission –you need to ask whether the proposal is in line with the mission.

One company also accounts for 22% of its revenue – preserving this key relationship is key.

A quick look at the P&L shows that revenue is down and operating costs are up year-on-year. This is reflected in the final profit for the year.

We then see a competitor’s financial statements. While their revenue is also down their operating costs only rose marginally.

In the news stories section there is an interesting one about recovering lithium from batteries. We also discover lithium is the same no matter where it is produced.

The use of operational technology and industrial control systems are also looked at. And we are told connecting ICS systems to IT networks creates opportunities for unauthorised data breaches.

Risk management is likely to be tested a lot in the exam (think reputational risk), along with governance issues, financial strategy and stakeholder interests.