Trendsetting: a Q&A on the mining industry of today, and tomorrow
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.
Vale invests $150mn to extend life of Manitoba operations
Vale has announced a $150mn CAD investment to extend current mining activities in Thompson, Manitoba by 10 years while aggressive exploration drilling of known orebodies holds the promise of mining well past 2040.
Global energy transition is boosting the market for nickel
The Thompson Mine Expansion is a two-phase project. The announcement represents Phase 1 and includes critical infrastructure such as new ventilation raises and fans, increased backfill capacity and additional power distribution. The changes are forecast to improve current production by 30%.
“This is the largest single investment we have made in our Thompson operations in the past two decades,” said Mark Travers, Executive Vice-President for Base Metals with Vale. “It is significant news for our employees, for the Thompson community and for the Province of Manitoba.
“The global movement to electric vehicles, renewable energies and carbon reduction has shone a welcome spotlight on nickel – positioning the metal we mine as a key contributor to a greener future and boosting world demand. We are proud that Thompson can be part of that future and part of the low carbon solution.”
Vale continues drilling program at Manitoba
Coupled with today’s announcement, Vale is continuing an extensive drilling program to further define known orebodies and search for new mineralization.
“This $150mn investment is just one part of our ambitious Thompson turnaround story. It is an indicator of our confidence in a long future for the Thompson operations,” added Dino Otranto, Chief Operating Officer for Vale’s North Atlantic Base Metals operations.
“Active collaboration between our design team, technical services, USW Local 6166, and our entire Thompson workforce has delivered a safe, efficient and fit-for-purpose plan that will enable us to extract the Thompson nickel resources for many years to come.”
The Thompson orebody was first discovered in 1956 by Vale (then known as Inco) following the adoption of new exploration technology and the largest exploration program to-date in the company’s history. Mining of the Thompson orebody began in 1961.
“We see the lighting of a path forward to a sustainable and prosperous future for Vale Base Metals in Manitoba,” said Gary Annett, General Manager of Vale’s Manitoba Operations.