Mining companies need to determine how to operate in a market that is also characterized by rising stakeholder demands, a widening talent gap, dwindling access to key inputs such as energy and water, and a Chinese economy growing at under 7%, rather than 12%, just to mention some challenges. (Image courtesy of Codelco | Flickr.)
2019 could go down in history as the year mining companies stopped anchoring their strategic planning around producing the highest volumes of ore at the lowest possible cost, and understood that focusing on the composition of their portfolios to offer a unique investment opportunity was the key to success, a study published Tuesday shows.
Deloitte’s “Tracking the Trends” annual mining report, now in its 11th edition, outlines how the challenges and opportunities the industry faces and proposes way to adapt to fast changes.
Mining companies, it says, now need to determine how to operate in a market that is also characterized by rising stakeholder demands, a widening talent gap, dwindling access to key inputs such as energy and water, and a Chinese economy growing at under 7%, rather than 12%, just to mention some challenges.
“In today’s climate, miners must focus on differentiating their business models to generate long-term value, not only to attract investors, but also to remain successful in the communities in which they operate,” Deloitte’s Canada and Global Consulting Leader Mining & Metals, Andrew Swart, said.
“We believe there is a significant opportunity for mining companies to harness the power of data and analytics,” he told MINING.com. “As mining companies invest in technology, be it in the core operational or supporting processes, companies should be doing it with a view of how they will collect and utilize data going forward.”
Miners, he explained, need to ensure that they can gather data from pieces of equipment in real time or deploy sensors in key process areas, so that they can leverage the power of data to optimize those processes in real time.
The report notes how conversations around the fourth industrial revolution, or Industry 4.0, revolve around the ways in which physical and digital technologies — such as analytics, AI, cognitive technologies, robotics, cloud computing, and the IoT— are combining to create digital enterprises that are both interconnected and capable of more informed decision-making.
In today’s climate, miners must focus on differentiating their business models to generate long-term value for investors and also their communities.
For Glenn Ives, Americas Mining and Metals Leader at Deloitte Canada, it represents a new era of business that can only be harnessed by leaders who have “the courage of their conviction.”
Beyond rethinking their mining strategy, companies should pay attention to other top growing industry trends that would determine their success. According to Deloitte, they are:
The social contract between mines and communities is set to shift, Deloitte’s Andrew Swart told MINING.com. Historically, it was based around jobs, but companies will need to include how to bring value to communities as a central issue in their corporate strategies.
The experts acknowledge that blockchain is mostly being used for supply chain transparency and highlight how very few companies, such as Goldcorp, are applying it in a different way. The Canadian gold miner has begun using blockchain to make direct sales to dealers and banks, Deloitte sees more broadly opportunities in commodities trading and the creation of smart contracts.
“One of the key value drivers for blockchain applications often comes down to the volume and frequency of transactions,” Swart says. “Many companies don’t necessarily have the scale/volume of transactions to make these applications viable so it will often depend on the individual dynamics of that company and commodity. There is, however, an opportunity for companies to collaborate in this area and share platforms.”
The study also suggests miners should move their Corporate Social Responsibility function among their top priorities.
As mining companies increasingly embrace technology and automation, it is likely that they end up employing less people at the mine site, while making greater use of workers located remotely.
As a result, the social contract between mines and communities will shift, Swart predicts. “Historically it was based around jobs, but this will need to be rethought going forward. Companies will need to consider how they bring value to communities as a central issue in their corporate strategies,” he concludes.