May 17, 2020

Trendsetting: a Q&A on the mining industry of today, and tomorrow

mining
Investing
China
commodity prices
Dale Benton
7 min
Who are you and what does your role entail?

My name is Phil Hopwood, I’m Deloitte’s Global Mining industry leader. Our group encompasses practices...

Who are you and what does your role entail?

My name is Phil Hopwood, I’m Deloitte’s Global Mining industry leader. Our group encompasses practices based in Canada, US, Australia, Middle East, South Africa, Russia, UK, China, South East Asia, Chile, Colombia, Brazil and Peru. I lead a core leadership team of 80+ Mining professionals, growing relationships with key global clients in the Mining sector, developing eminence and thought leadership, and supporting geography-based practices. I’m also a part of Deloitte’s Global Energy & Resources industry group executive team.

How does Deloitte engage with the mining industry?

Deloitte’s Mining practitioners talk regularly with our clients to understand the challenges and opportunities the industry is facing. We work hard to keep ahead of the curve and deliver unique and forward-looking insights via our research and thought leadership, drawing on our 10 Mining Centers of Excellence across the globe.

Technology and innovation is key to the future of the mining industry, but looking at the mining industry of today and over the last five years, how much of a role has it played?

With the hit the industry took in terms of falling commodity prices, finding ways to cut costs and improve efficiencies was paramount. But there’s only so much you can do to drive out costs.

The important thing is for companies to keep at it even when commodity prices rise and take innovation beyond isolated technology solutions.

Over the last few years it can be said that the industry has faced significant downturns, with large focuses on reducing costs and increasing productivity –  how has this attitude been reflected across the industry?

Cost-cutting can only take you so far before you hit diminishing returns. This means the low-hanging fruit is gone and so are the easy wins. Many players in the industry recognized this and sought out new technologies to improve efficiency and boost productivity. But to truly get to the next layer of efficiency gains, miners will have to foster innovation by adopting the right systems, technologies, and culture.

With technology & innovation, risk is inescapable, do you feel that this is evident in the industry, after all – in the bid for a successful and cost effective future, being the first adopter could very well end badly.

As mining companies reinvent themselves through technology—specifically the use of digital, the Internet of Things, and the cloud—the threat of cyber-attack will naturally grow. Increased digital integration between systems, while essential these days to enhance efficiency, open up companies to cyber risk. Many (if not all I would suggest) major mining companies have experienced cyber-attacks in the past several years.

But that doesn’t mean abandoning advanced technologies—it just means companies need to invest in security at the same pace as they invest in innovative solutions. If you are hacked, you should have processes in place to quickly respond.

With the Tracking the trends report recently released is now the time for optimism across the industry?

The demand for commodities is not going away anytime soon. Given the fluctuation of commodity prices, the key to success for mining companies is all about learning to live at low commodity prices and then taking advantage of upticks as a time to invest in exploration and new projects.

One particular trend that is emerging more and more is joint ventures and partnerships, this was identified as much in your report, how can this “ecosystem” approach bring forward a positive and more prosperous industry?

Governments and miners have continually struggled to maintain open and cooperative dialogues. Resource-rich countries are now trying to balance their desire to attract mining investment with their need to raise the funds to support local economic and social development.

Mining companies need to act on this movement by governments and work to understand their concerns and build better relationships. They need to communicate more effectively and foster cooperation among communities, labor unions, businesses, governments, special interest groups, and investors. It won’t be easy: all over the world there continues to be confrontations between governments and miners. But companies that crack this code stand to win in the long run. Beyond de-risking their projects and helping the communities at large, they turn stakeholder management from merely a compliance effort into lasting competitive advantage.

The mining industry is a dangerous industry, both for those who operate the mines to the impact it has on the local communities and environments. Being a responsible miner can often prove key in determining the success of a mining company -  more and more mining companies are striving to do more on this front, but how big a role do you feel it will continue to play in the future of the mining industry?

There is no doubt that concerns about mining have been and continue to be on the rise. From clean water to safety to greenhouse gas (GHG) emissions, the issues communities are raising are ongoing and the mining industries’ response will be critical in determining how big a role it will play in their futures. Miners must sharpen their focus on environmental sustainability and energy management. A lower energy footprint represents more than the right economic answer; it’s also the right solution for the communities and environments integral to the mine.

Evolving technological innovations can enhance miners’ energy transformation, with advances enabling fuel substitution (i.e., replacing diesel with sustainable energy sources), electrification of equipment, and a growing capacity for energy self-generation. Add in analytics that enable optimized energy use, and the potential for greater efficiency is multiplied. New technologies are also allowing for reduced water use, with several companies exploring dry processing mine designs that eliminate the need for water entirely. And sensor-based ore sorting is helping to identify minerals and waste prior to extraction, vastly reducing the amount of water and energy used at the pre-concentration stage.

You touch upon the mental wellbeing of mine workers often being lost amongst the issues of commodity prices and streamlining business – how important is it that the very people who have boots on the ground and conducting the work of the mine are looked after and cared for?

To help ensure sustainable productivity improvements, companies must also foster healthy workforces and inclusive workplaces. Here’s why: companies that struggle with a high incidence of mental health disorders and that fail to embrace diversity see productivity falter.

Unfortunately, the mining industry does not get high marks in this area. In addition to the stress of the mine site and its impact on workers, the sector’s weak performance and the unrelenting focus on improving productivity are putting many managers under greater pressure than ever before. The industry is seeing a rising tide of depression, along with a growing incidence of suicide and attempted suicide at the leadership levels. The mining industry also lags when it comes to inclusiveness.

Recently the mining industry has begun elevating both wellness and diversity on corporate agendas. To address mental health issues, some companies are following the framework set out by the Minerals Council of Australia. Elements include both prevention controls and preparation for recovery—including fostering a culture that supports wellbeing.

And finally, where do you see the industry heading (hopefully) over the next 5-10 years? Where do you want it to be?

There is no doubt that desire for commodities in the world is going to continue. Some say we will be in a supercycle for the next five to ten years. The response from miners and the resources sector will be interesting to watch. I believe we’ll see miners emerging who have configured their organizations to withstand volatility in the commodity markets.

Diversity is another topic that will continue to grow in importance over the next five to ten years. The mining industry has historically been male dominated. But facing a skills shortage and competing with other industries for a workforce with the right sets of skills will necessitate a shift in thinking and a push for greater diversity.

The industry will also continue to become more socially and environmentally conscious. And interestingly, I believe social media will play a big role in that process as it will push miners to be more open and transparent about their stories.

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May 5, 2021

Barrick profit beats expectations as copper, gold prices up

Barrick Gold
Copper
Gold
goldfields
2 min
Barrick Gold reports a 78% jump in Q1 profits thanks to strong performance in Zambia and Tanzania

Barrick Gold has reported a 78% jump in first-quarter profit, beating analyst expectations thanks to rising gold and copper prices, and said it was on track to meet annual forecasts.

Production in the second half is expected to be higher than the first, the gold miner said, thanks in part to the ramp-up of underground mining at the Bulyanhulu mine in Tanzania and higher expected grades at Lumwana in Zambia, reports Reuters

Barrick Gold

Barrick’s first-quarter gold production fell to 1.10 million from 1.25 million ounces due partly to lower grades at its Pueblo Viejo mine in Dominican Republic.

Adjusted profit surged 78% to $507mn in the quarter ended March 31, from $285mn a year earlier, and Barrick announced a 9 cent per share quarterly dividend.

Stronger prices helped boost Barrick’s revenue from its copper mines in Chile, Saudi Arabia and Zambia by 31% from the fourth quarter. Overall earnings per share were $0.29, ahead of analysts’ estimate of $0.27.

“We expect a positive stock reaction to the earnings beat and strong cash flow,” said Credit Suisse analysts.

Potential for South Africa merger

Barrick CEO Mark Bristow, who has championed mergers across the gold industry, said he backed the idea of South Africa-listed miners Goldfields and AngloGold Ashanti combining.

Speculation has been swirling around the two companies and Sibanye-Stillwater, whose CEO Neal Froneman floated the idea of a three-way merger.

“I’m a South African, and this country has such a great mining history and it would be great to see a real gold business come out of the many failed discussions that we’ve seen,” said Bristow.

Goldfields

Goldfields declined to comment. In a statement, AngloGold Ashanti said it was focused on delivering on its growth plan to unlock value from its portfolio of gold assets.

Bristow also said he had met with the Democratic Republic of Congo’s new mines minister and other officials and was continuing to work on getting $900mn belonging to its Kibali mine joint venture out of the country.

“We have a solution, it just needs to be sanctioned by the appropriate authorities which haven’t been around for a while,” he said, referring to a recent government overhaul by President Felix Tshisekedi.

Lumwana

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