The pursuit of operational excellence will be the leading theme in the mining industry in 2015, according to Deloitte’s Tracking the Trends 2015, as mining companies push to further improve productivity against continued uncertainty in demand for most commodities.
“Unable to rely on a commodity price rally, mining executives have sharpened their focus on achieving sustainable productivity improvements,” the consultancy said the report. “Over the last year, mining companies have undertaken substantive cost reductions and are now moving forward with more streamlined cost structures.”
But despite this push, the “productivity journey” still has a way to go – particularly for bulk commodities – like coal – where miners face a “fundamental shift in global demand”.
The top 10 trends and solutions in full are:
- Back to basics: To heighten operational excellence, re-think traditional operational processes and consider cultural approach to costs.
- Innovation is the new key to survival: Overcome traditionally conservative tendencies by embedding innovation into corporate DNA.
- The new energy paradigm: Consider a new approach to energy and its cost, including the use of unconventional fossil fuels and developing renewable energy facilities.
- Dwindling project pipelines: To avert future supply constraint risk, find a better balance between meeting short-term investor/analyst expectations and maintaining project pipelines.
- Financing’s great disappearing act: While solutions are limited, juniors may be able to avert disaster by wooing foreign investors, pooling resources and exploring alternative financing.
- Survival of the juniors: To capitalise on shifting ownership patterns, juniors should take steps to get their assets in order and consider options such as joint ventures, sale and consolidation.
- Seeking new skillsets: Attract new skills, commit to diversity, explore new talent management systems, get better at recruiting talent in high demand and invest in more targeted training.
- Riding the waves of geopolitical uncertainty: Response strategies include lobbying for greater policy clarity, becoming more risk intelligent and planning for myriad scenarios.
- Rising stakes around stakeholder engagement: Work to build win/win platforms, communicate in new ways and leverage the power of social media.
- Engaging with government: To counter regulatory uncertainty, work to build better government relationships, become more vocal and help to set the policy agenda.
“In a world where volatility has become the norm, the key to future success […] lies in driving operational excellence via cost containment and productivity, and truly embracing innovation and technology, concluded Nicki Ivory, National Mining Leader – West Coast at Deloitte Australia. “With commodity prices where they are, sustainable productivity improvements and a relentless focus on cost management remain critical. In an environment of zero tolerance for underperformance, companies must rethink not only their traditional approaches to mining operations, technology deployment, and trading and marketing, but also their underlying cultural approach to costs.”
Written by Jonathan Rowland.
Read the article online at: https://www.worldcoal.com/mining/16012015/deloitte-tracks-the-trends-affecting-the-mining-industry-2015-coal/