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Article: Mining in the Transformation Age

Updated: Dec 15, 2022


The transformation age? Wait, did we just coin a term? Probably not, as the saying goes, “there is nothing new under the sun”. Yet from our perspective, transformation encapsulates most of the opportunity and challenge that characterises the mining sector right now.

Mining has always had to deal with the cyclical nature of resource prices. It has always been a feast or famine industry. The difficulty of sustaining performance while ramping production up and down in a capital intensive business is not to be under-estimated.

Opportunities to harvest the energy transition windfall

General consensus is that so called green metals, that the world needs to meet the Paris climate goals, will be buoyed by supply and demand dynamics. “Copper is the new oil”, a common refrain. Mining media is awash with news, and we see a plethora of mining houses expanding exploration programs, re-commissioning old assets, pursuing acquisitions and re-positioning their commodity mix for the energy transition. This is a transformative market dynamic that (you would think) spells a prosperous future for mining.

This looming windfall, however, has come at a time when the industry is also facing an unprecedented coincidence of transformative challenges.

Below are 5 opportunities to address key challenges from our perspective, and which focus our attention as solution providers.

1. Increasing productivity

Mining has endured a widening productivity gap compared with other industrial sub-sectors, as is illustrated in the McKinsey Productivity Index data below.


One of MMS’s clients conducted a staff survey, with one of the key focus areas: data generation and reporting. A key finding was that as much as circa 60% of their time was spent on data generation and reports. A lack of automation and integrated digitalisation not only translates to time costs and lost productivity, but also drastically increases error propagation from manual data collection, entry and handling.

Times are changing, our clients show a commitment to achieve operational excellence, they invest in improving their performance data in the short term, and in positioning themselves to be able to adopt benefits-lead change on an ongoing basis. Continuous improvement. The scope for end-to-end productivity improvement and process optimisation in mining operations is large, and integrated digitalisation is a key enabler.


2. Digitally transforming

There has been sharp increase in investment in digitalisation for good reason. Effective, integrated digitalisation can be cross-cutting enabler across a range of topical issues.

Mines are increasingly looking to the internet of things (IoT), to create connected workers, centralise data, leverage calculation engines or machine learning to optimise their production output, improve governance, reduce down time and attract and retain talent. This creates a durable platform to evolve with new technologies and sustain performance into the future.

“CEOs and boards that see the urgency of transformation have potential to gain an early advantage in navigating the rigorous demands of a decade of unprecedented challenges.” Navigating a decade of challenges: Five winning initiatives for mining CEOs, Mckinsey & Company, June 2022.

3. Reducing cost

In an environment of inflation, rising energy costs and supply chain disruption, surviving the lean times and prospering during the good times requires a keen focus on cost reduction. Having digital operational oversight of all material movements and multi-node reconciliation during pit-to-port operations have demonstrated cost reduction benefits. Examples abound, but in one case, a client of MMS has been charged more than USD 1 million in demurrage fees in a single calendar month. In this case, digital oversight of large operations, and optimising material handling and logistical planning equips managers to intervene for immediate and material savings, in a complex and dynamic environment.


4. Attracting talent and institutionalising knowledge

Transitioning to the “future of work”, or “Mining 4.0”, is much more than pandering to industry trends or buzzwords. It is imperative to overcome the progressive retirement of the industry’s most experienced workers that the industry has faced. There is a very real skills shortage in the mining sector. Young people are less inclined to come into mining if they are forced to permanently relocate to remote locations. Integrated systems institutionalise knowledge, and the Internet of Things enables remote working and distributed teams, which will be key to gaining a competitive advantage in human capital. Working in a technology enabled organisation future-proofs employees’ careers, and protects knowledge.


5. Improving ESG performance

Environmental, Social and Governance (ESG) is now integrated into strategy, but ESG places an ever-evolving burden on mining companies to improve reporting and transparency, and to pursue inclusive innovation in their business models.

Water management, tailings management and biodiversity protection loom large in an industry keen to shake its image as an environmental degrader, with net zero, or even net positive impacts key to maintaining a social and regulatory license. Decarbonisation efforts require data collection and reporting, and fundamental shifts in operations and sources of energy.


At MMS our WIRE platform and architecture creates transparency and auditability, creating compliance with the AMIRA P754 code, and the ability to build out environmental monitoring and reporting functions, like water balance models, tailings management and scope 3 emissions data.


Conclusion

Mining companies that embrace opportunities for innovation, technology and change will be able to manage, or even skirt, many of the defining challenges of the times, and gain clear competitive advantage and sustainability benefits.

MMS has positioned itself uniquely to partner with mining companies to optimise now, and prepare for the future of work in mining.

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