FEATURE: 5 Characteristics of Mining That Need to Improve for the Future
When envisioning the future of mining, everyone has a different idea. Because the public opinion sees mining as an old, dirty, dangerous and environmentally contentious industry, companies have two options: either innovate or stagnate.
“Mining companies will have to lose the rigid and ironclad business models and practices of old and become fluid, flexible and agile enterprises poised to pounce on opportunity,” according to a report by IBM titled Envisioning the Future of Mining.
“At the same time, many (if not most) of the core mining activities, practices and competencies will be carried forward from practices today. Sometimes the question is “what will be different?” and sometimes “what will we do better?”.
The one constant in the mining industry is change.
The following characteristics are a composite of all the best and brightest practices in mining. We break down what needs to be discussed, enhanced and built upon for the future of mining.
1.) Business model innovation
Historically, the mining companies have chased production growth at the expense of productivity on a volume and cost basis. Well, times are a-changin.
New business models should focus on value, both for the organization and the customer. Mining companies should focus on realigning relationships to build financial solidity of suppliers, partners and customers. This will in return provide long-standing profitable relationships that enable companies to transcend commodity-trading relationships only.
• Allow their business model to be driven by customer demand
• View supply chain holistically and optimized as an integrated process
• Make operations become geography-independent
• Learn from other industries, partners, acquisitions and other sources
• Be forward-looking utilizing smarter plans and advanced business analytics
2.) Asset management
Good asset management considers and optimizes the conflicting priorities of asset utilization and asset care, of short term performance opportunities and long term sustainability, and between capital investments and operating costs, risks and performance.
In the future, companies will need a revitalized outlook and approach to asset management. Companies should view the entire asset management life cycle and take a wider view of asset classes and how they each behave and contribute value differently.
• View assets as instrumental and intelligent, reporting their location, their status and other key metrics remotely and automatically.
• Include a broader array of asset classes, including land, fields, inventory, information technology, real estate, and infrastructure.
• Implement a centralized asset management program, leveraging sophisticated asset management practices and integrated asset management tools/technologies.
3.) Governance and workforce collaboration
According to a study in Australia, mining companies are among the worst performers in an assessment of the corporate governance standards compared to other industry sectors.
The future of mining will improve its utilization of governance and workers to drive change and improvement. Companies will adopt new strategies for collaboration among departments, geographies, phases of the supply chain, partners, customers and suppliers that will become critical to building enterprise agility.
• Collaborate with suppliers, customers and partners to work on common issues, improve relationships, improve productivity and create better and more accurate plans.
• Communicate and collaborate across the entire enterprise and across multiple mines and sites. Activities should be coordinated through a central control room or location.
• Allow research and design to be fueled by collaboration across the company; through vendors and partners; and within the industry.
4.) Energy and environment
The time is now for the mining industry to take a proactive stance in energy and the environment to make substantial societal changes as well as improve costs and attract new talent. New programs and technologies will be implemented more frequently to manage consumables such as carbon, water and fuel from end to end. Being environmentally friendly or “going green” will be more than just a marketing ploy.
• Integrate Corporate Social Responsibility (CSR) programs into as many aspects of their business as possible.
• Utilize process, information and analytical tools to manage environmental and energy consumables.
• Attract eco-friendly advocates to work and support clean mining operations.
5.) Remote operations
Although almost everyone knows automation is the future of mining, most mines are still run with a localized approach. The idea behind remote locations is to move control centers to a centralized location where mining performances can be measured across sites and locations. This allows for metrics and measurement processes to be standardized and universally adopted.
• Manage sites centrally from one location to achieve improved control of the enterprise. The reduction of redundant management reduces costs.
• Utilize automation including robotic and remotely controlled equipment and transportation when appropriate for the company.
Copper production from top ten companies to increase by 3.8%
Copper production from the world’s top companies is set to increase by up to 3.8% this year, following a fall of 0.2% in 2020, GlobalData analysis reveals. Last year’s marginal slump saw production drop to 11.76 million tonnes (Mt).
The initial impact of the COVID-19 pandemic on mining operations was immense, however, six of the ten largest copper producers succeeded in increasing output last year. In 2021, copper production from the top ten copper companies is expected to bounce back, rising by up to 3.8%, to reach 12.2Mt, according to GlobalData, a leading data and analytics company.
The highest increase in copper production was by Canada’s First Quantum, which, despite all the challenges, reported 10.4% growth in 2020. The company’s Sentinel mine in Zambia and Cobre Panama were key contributors to this growth. While the latter remained under care and maintenance between April and August 2020, it delivered record production levels during the subsequent months.
Codelco, the world’s largest producer of the red metal used in electric vehicles, also bucked the trend.
Vinneth Bajaj, Associate Project Manager at GlobalData, commented: “Despite Codelco reporting over 3,400 active cases during July 2020, the company achieved 1.2% growth in its production in 2020. The company implemented a four-phase plan, as part of the COVID-19 measures, to ensure the health and safety of its employees, while also avoiding any significant impact to its copper output.”
Although the overall impact was minimal, declines in production were observed from Glencore (8.2%), Antofagasta (4.7%), BHP (3.9%) and Freeport McMoRan (1.3%). Reduced operational workforces due to COVID-19 measures, lower ore grades and production halts due to maintenance were the key disruptors to output during 2020.
The move towards electric vehicles and clean energy from renewables sources such as solar panels and wind turbines has driven the copper price to all-time highs. Copper has been among the best performers over the last month where metals ranging from aluminum to iron ore have surged to their highest prices in years. The rally is being fueled by stimulus measures, near-zero interest rates and signs that economies are recovering from the global pandemic.