Embracing technology is critical for mining companies, says Deloitte
Report also flags the volatility of the macro-economic environment with trade tensions between the US and China coupled with operational uncertainty
As the global commodity market comes out of a decade-long slump, boards of mining companies face a different world with fresh challenges that threaten how they generate value for all stakeholders and not just shareholders as they did in the past, Deloitte says.
In a report, Tracking the Trends 2019, Deloitte’s mining specialists map out key areas of concern for boards to consider and offer suggestions on how to deal with them.
One of the most pressing is the volatility of the macro-economic environment with trade tensions between the US and China coupled with uncertainty at operational level stemming from disruptions coming from new technology and digital processes, as well as rising community activism, government interventions and labour demands.
The report states that the increasing importance of artificial intelligence and higher use of computers and digital applications to manage and operate mines, handle supply logistics more effectively and lower costs, will all require tech-savvy management in senior positions rather than in just mine and process engineer posts as in the past.
“The industry is starting to realise something has to be demonstrably different on the technology front. There’s an inevitability that the workplace in mining is going to change,” says Andrew Lane, the mining and metals leader for Deloitte Africa.
“The ability to make better decisions more quickly, by having full, accurate technology at your fingertips is where this is going. It’s going to be important to predict where things are going, using artificial intelligence to process huge amounts of information to get an early steer on possible future scenarios,” he says.
The industry is changing the “dynamics and ability to make decisions are different this time around”, he says.
“Historically, everyone believed in the commodity cycle, but it’s becoming increasingly clear that some of the minerals we mine today may not be relevant in the future because of the pace of innovation. Long-term decisionmaking is becoming really difficult.”
The report delves into the relationships mining companies have to form to reduce operating volatility stemming from unhappy governments and communities, arguably one of the toughest aspects to get right, manage and measure.
Investors are increasingly aware of the importance of the softer issues outside pure mining, processing and marketing and want to put their money in companies in which disruption from these traditionally underreported areas is minimised.
Mining companies have to learn to listen, Lane says.
“By taking the time to understand local community concerns and social objectives, mining companies have a unique opportunity to devise uncommon solutions to intransigent problems.”