According to the 11th edition of Deloitte’s ‘Tracking the trends’ report, the global mining sector is on track for greater growth than it has seen in over a decade, but today’s market realities are vastly different than those of the past.
Deloitte Canada’s Americas Mining and Metals Leader, Glenn Ives, said that if mining companies wish to thrive in the future, they will need to challenge the status quo – and the only way to do this is by establishing a diversity of opinions and taking the risks to do things differently.
“The fourth industrial revolution represents a new era of business that can only be harnessed by leaders who have the courage of their conviction,” said Mr Ives.
Deloitte has identified several key trends which should be on mining companies’ agenda this year if they want to achieve sustainable growth:
Issue 1: Rethinking mining strategy.
In today’s complex mining environment, Deloitte states that companies can no longer anchor their strategic planning cycles around producing the greatest amount of ore at the lowest cost.
The firm says that miners have yet to sufficiently broaden their strategic outlook to consider a range of critical industry shifts, such as the role of individual assets in the portfolio, balancing risk and return, the path of value creation etc.
Some mining companies are already taking steps to reposition for the future by revisiting their underlying business models and making new strategic investments.
While is not quite clear whether these moves are far-reaching or radical, it must be known that management teams serious about long-term value creation must put strategy at the heart of their board-level conversations.
Issue 2: The frontier of analytics and artificial intelligence (AI).
Although mining companies are exploring and investing in analytics and AI, the report states that there is still a long way to go.
Deloitte states that three horizons in AI are emerging. Right now most organisations are working in Horizon 1, where machine intelligence requires human assistance and interpretation.
To move up the analytics maturity curve into Horizons 2 and 3, mining organisations must answer progressively complex questions.
Identifying the root causes and answering all the ‘what’, ‘why’, and ‘how’ questions can help companies move the needle from predictive analytics to prescriptive analytics.
Issue 3: Managing risk in the digital era.
In a landscape characterised by mounting tariffs, potential trade wars, cyber threats and operations in less stable regions, the report states that mining companies cannot view risk management from a compliant perspective.
In order to stay on top of this, Deloitte suggests mining organisations take a more holistic outlook of risk management and deploy the next generation of internal audit – the Internal Audit 3.0.
Internal Audit 3.0 is an approach which should assist mining organisations to assess risk at an enterprise-wide level, rather than assessing isolated risks at the functional or mine site level and develop appropriate controls to both mitigate and manage these risks.
Issue 4: Digitising the supply chain.
Disruptive technologies such as AI, cognitive technologies, robotics, cloud computing, and the Internet of Things are combining to create digital enterprises that are both interconnected and capable of more informed decision-making.
To harness the business growth and create a more interconnected and responsive supply chain, it is recommended that mining companies stop thinking in linear terms and instead adopt a circular system called a digital supply network (DSN).
Deloitte explains that a DSN employs real-time data to accelerate decision-making, enhances transparency, fosters multidirectional communication, and enables collaboration across the entire supply network.
Issue 5: Driving sustainable shared social outcomes.
Until recently, mining company social spend has been viewed as a cost of compliance, rather than a way to deliver measurable and sustainable benefits to host countries and communities.
If mining companies hope to drive different social outcomes, then this dynamic must change.
Finding value beyond compliance is no easy task. It requires resources organisations to listen more closely to their constituents to determine what stakeholders truly want, and then shift their operational processes in response.
To deliver on the social breadth of these programs, Deloitte states that mining and mineral companies cannot work in isolation. Instead, they should look for opportunities to collaborate with other businesses working in the region.
A copy of Deloitte’s ‘Tracking the trends 2019’ report can accessed online here.