GCC governments and mining companies need to become more strategic about their investments, operational performance and social impact if they want to be able to play a significant role regionally and globally, said an industry expert.

GCC governments and mining companies need to become increasingly more strategic about their investments, operational performance and social impact if they want to be able to play a significant role regionally and globally, said an industry expert.

“The mining industry is poised for greater growth than it’s seen in a decade, but today’s market realities are very different than those in the past,” added Bart Cornelissen, partner and Energy & Resources leader, Deloitte Middle East and Managing partner of monitor Deloitte, Middle East, a leading professional services company.

He was commenting on Deloitte Global’s 11th annual mining report “Tracking the trends”, which explores key trends facing mining companies as they navigate how to operate in a market characterized by constant disruption in the Fourth Industrial Revolution.

“Disruption and volatility has become the new normal and the pace of change is challenging the industry’s ability to adapt. In this new world order, miners will not attract talent, investment, or community support if they only focus on communicating the value that they currently bring to communities. Miners will need to go a step further and articulate what they stand for by developing differentiated business models designed to drive long-term value,” Cornelissen added.

In the past, mining companies typically anchored their strategic planning around producing the highest volumes of ore at the lowest possible cost. This led to the drive to build ever-larger mines in pursuit of superior returns, underpinned by the expectation of constantly-rising commodity prices. Although that bubble has long since burst, many mining companies are still grappling with its strategic legacy.

“Mining companies need to broaden their strategic outlooks. When done well, strategic planning cycles consider a range of issues in addition to producing at lowest cost, including the role of individual assets in the portfolio, the path to value creation, the balance between risk and return, and how the company is differentiating itself in the eyes of its stakeholders,” said Cornelissen.

“These key choices should ultimately drive a mining company’s investment allocation strategy, the partnerships it creates, and the kinds of capabilities it decides to build.”

Additional trends identified in the report include:

•    The frontier of analytics and artificial intelligence (AI): Mining companies are investing in analytics and AI in a bid to leverage the data they generate to sharpen planning and decision-making across the mining value chain. This could improve safety, increase productivity, reduce costs, and enhance the employee experience. As they consider how to move up the analytics and AI maturity ladder, miners are learning from global trends in other industries, exploring new use cases, and determining where best to focus their investment.

•    Managing risk in the digital era: In today’s broadened risk landscape, traditional assurances around risk are no longer effective. Boards, investors, and communities expect mining companies to have a forward-looking view on risk, moving from risk assurance to the anticipation of emerging risks. This will be enabled by analytics and a range of AI and cognitive tools that are now available to mining companies.

•    Digitizing the supply chain: The mining sector is at the earliest stages of building a digital supply network (DSN). The organizations that determine how to interlink their supply chains, from pit-to-port, can do more than break down operational silos. They can also gain the end-to-end visibility needed to enhance their asset utilization, operational efficiency, and productivity—realizing hard dollar savings as a result.

•    Driving sustainable shared social outcomes: Organizations across industries are now being assessed on metrics far beyond financial performance. They are being judged based on their relationships with their workers, customers, communities, and regulators—as well as their impact on society at large. Miners are no exception. They must go beyond seeing corporate social responsibility as a cost of compliance and listen more closely to their constituents to determine what stakeholders truly want and shift their operational processes in response.

•    Exploring the water-energy nexus: Water is quickly rising to the top of mining companies’ agendas as one of the greatest constraints to supply. By approaching energy and water management in tandem, mining companies can make business choices that optimize the use of both. These changes are increasingly necessary if mining companies hope to maintain productivity, assuage community concerns, and manage their environmental risks in an energy- and water-constrained world.

•    Decoding capital projects: After the challenges faced during the last down cycle, there is a sense of optimism for mining companies as commodity demand picks up. Before launching into the next wave of investment, miners must learn from the mistakes of the past and rebuild trust with stakeholders. Organizations that focus now on putting the right capital project capabilities into place can strengthen their capacity to adjust supply in response to shifting demand patterns.

•    Reimagining work, workers, and the workplace: As digitization and automation alters the very nature of work, and the mining industry faces a massive generational shift with enrolment in mining-related disciplines down, miners will need to broaden their talent strategies. They must consider not only the shifting nature of work, but how to attract a new variety of workers and tailor their workplaces accordingly.

•    Operationalizing diversity and inclusion programs: To improve diversity and inclusion in the mining industry, and to attract new talent to help meet the industries’ digitization, automation, and innovation goals, mining organizations will need to shift historical perceptions about the industry. This will involve collaboration across organizations as they recruit from education institutions and other online platforms, a focus on exposing unconscious biases that influence hiring decisions and contribute to workplace inequality, and the implementation of more flexible workplace practices.

Demanding provenance: As customer demand for battery minerals rises, so too does the demand for transparent provenance. This is exposing miners to increased scrutiny as socially-conscious consumers question the origin of raw materials in products ranging from cell phones to electric vehicles. As a result, downstream customers—such as automotive manufacturers and tech giants—are demanding ethically-sourced minerals. This is driving the adoption of technologies such as blockchain to enhance the traceability of commodities. – TradeArabia News Service