Академический Документы
Профессиональный Документы
Культура Документы
PwCs future
insight series
pwc.com/futureofmining
The trick to seeing the future...
is knowing where to look for it.
PwCs future in sight series brings
together our insights and perspectives
on the disruptive forces we believe will
have a transformative impact
on the future.
2 | PwC
Contents
Is mining really ready for the future?........................................ 4
Navigating uncertainty........................................................... 18
1
esla in stand-off over lithium supply, Sanderson Henry in Financial Times,15 DEC 2015
T
2
https://exchange.telstra.com.au/2016/06/23/telstra-invests-mining-technology-solutions-services/
4 | PwC
Keeping up with the pace Engaging a divided and And how will miners respond to people
oftechnological change skeptical public on the other side of the divide: socially
conscious and tech-enabled consumers
Technology is not just a factor in the Disruptive change is not limited to demanding greater transparency about
future of mining operations, its also technology; there are major shifts what they buy? Whether its diamonds
impacting the market for minings taking place in the social landscape as from Sierra Leone, power generated
outputs, often faster than companies well. A major one is the fracturing of by thermal coal or the source and
can respond. For example, the public attitudes towards established sustainability of the metals in the bike
growing use of smartphones, tablets, institutions. Brexit and the election or car, bus, train, ship or plane they use
and batteries has seen shares in rare of once-derided US presidential to go about their day or take vacations?
earth and lithium miners skyrocket, candidate Donald Trump are evidence These stakeholders are highly engaged
while the price for thermal coal was of a growing willingness to buck and motivated to share their opinions
recently bumping along at historic conventional wisdom and pursue with others on peer-to-peer social
lows. The once reliable foundations untested options. The impact of this networks, often mobilizing others to
for competitive advantage in the mindset on the mining sector cannot their cause. What if their demands
mining sector are shifting under be underestimated. Companies are and advocacy continue to grow? And
companiesfeet. already struggling to build trust and how will the stance of governments
secure their privilege to operate. and regulators towards mining
Technology is also leading to
What if the public becomes even more changeinresponse?
competition from unexpected quarters.
immune to reasoned argument or
Consider the dramatic rise of the
expert advice? What if they just tune
sharing economy, where consumers
out to miners all together?
use their smartphones to share goods
and services such as accommodation,
car rides, and finance, as well as
music, TV, and staffing. What will be
the impact of the sharing economy on
mining? Will demand for commodities
drop as asset utilization increases?
Will mining companies share
assets amongst themselves or with
otherindustries?
6 | PwC
Low trust others control
privilege to operate
1. Constrained 2. Non-miners in
success ascendency
New entrants
Incumbents
change
shape sector
the game
3. Mining 4. Mining
superpowers transformed
High trust
miners in charge
8 | PwC
When breaches are detected, automatic Its a long, long checklist. CFOs seeking In many countries, a rise of resource
fail safe switches are activated by capital a place where its hard to please nationalism in response to social
regulators, and operations come to anyone. Its pretty much impossible populism leads to increasing caps
an undignified halt until regulators to attract significant tranches of new on mining returns. A greater portion
are satisfied appropriate standards capital in thermal coal or uranium. of profit is taken in the form of taxes,
have been reinstated. This high level Which commodities will be next? rents and duties, with little left for
of external scrutiny keeps the sector shareholders. Mining companies are
on tenterhooks, and bad mining is no Making a profit in this high cost, low- forced into wholesale hedging as their
longer tolerated, anywhere in the world. return future is extremely challenging. only means of protecting downside
The cost of regulatory compliance could Project progression is slow, and it takes pricerisk.
become the single largest expense longer to move into the production
item in some miners results. Executive phase. Regulatory stage gates make it In this future, only the largest miners
time is consumed by responding to impossible to accelerate development can afford to survive as operators of
stakeholder concerns, dealing with cycles when economic conditions are assets. Smaller players dont have the
compliance and securing funding. The ripe. Mining companies struggle to bring means to support all the necessary
role of Chief Regulatory Officer emerges new mines online to replace depleted overheads required to ensure
with direct accountability to the Board. operations or to take advantage of compliance. Mid-tier miners are forced
increased demand. As a result, company to either sell assets pre-production to
valuations, share prices, and the ability global companies or SOEs, or go into
Capital is constrained, profits to attract new capital suffer. Indeed, non-operatorship settings as minority
under pressure some miners might forsake public partners. Single asset players are rare.
markets and rely on patient private Producing assets rarely change hands
The impact of lower trust also extends capital to advance projects. State-owned due to onerous regulatory approvals,
to capital, and funding becomes enterprises, backed by sovereign capital, suppressing value.
fragmented, more expensive and harder thrive under these conditions.
to find. Pension funds, sovereign wealth
funds, insurance and lending banks, Unexpected delays to regulatory sign off Technology changes the way
as well as other institutional investors, on business-as-usual permitting result we mine
are not prepared to back certain parts in supply disruption and price shocks;
of the sector. Some will not lend to coal production is often disrupted, and assets On the positive side, increased scrutiny
projects, or to mines with particular are stranded. The ability of companies to leads to significant improvements in
environmental sensitivities (for example, mitigate risk via insourcing and alliances safety, community, and environmental
mining in rainforest areas), or to energy is severely curtailed, as regulators wont outcomes. But in the absence of new
intensive projects or those with a low allow the transfer of compliance risks entrants and new sources of funding,
proportion of indigenous workers. via contract. Share prices are volatile. innovation is incremental.
One of the keys to maximizing returns
lies in the speed of adopting new
mining techniques and technologies.
In this future, equipment has a shorter
How can you get ready? useful life as OEMs continue their
relentless drive for greater operating
Innovation is a team sport: build collaboration across your ecosystem. efficiency. Leading mines have onsite
Maintain a portfolio of mines to ensure business continuity in a world recycling facilities as machinery is
where operations can be closed at a moments notice. decommissioned and rebuilt in situ
using 3D printing technology. Drones
Invest in becoming a partner of choice. Understand what your mining
are used throughout most mines, even
company brings to the table and where there are gaps. Be willing to those underground.
share the rewards.
Miners with more agile mine plans
Build productive relationships with mining regulators and policy
and cultures supporting change are
influencers to shape the agenda.
rewarded. Mining decisions are highly
Look for sources of patient capital shift focus away from short-term sophisticated and driven by big data,
goals to long-term sustainable returns. with far greater certainty around ore
body characteristics. With technology
delivering measurements down to
the cubic meter, geological surprises
become a thing of the past, and mine
managers can effectively mine to
order. Large-scale open pit mining has
been abandoned as a result of both
environmental restrictions and improved
mining techniques. Most mining decisions
are made remotely: there are few middle
or senior managers onsite anymore.
10 | PwC
Countries with already high In this future, big brand technology new entrants, which have been less
environmental standards drive those businesses acquire diversified mining constrained in their R&D investment
standards even higher: open pit portfolios to deliver on a brand and can bring fresh thinking to old
mining is effectively outlawed and promise that the minerals that go into problems. Many entrants enjoy a
the use of water severely curtailed. their products are produced in the second mover advantage, having
Sovereign risk goes through the roof. most responsible way. learned the lessons from the first
Mining company customers, reflecting wave of non-traditional players in the
Capital flows easily to these new
public concerns about the origin of mining sector.
players, many of which have access to
materials for consumer products, are
cutting edge technologies and a track In this future, players from the
increasingly worried about brand
record of success in highly regulated health sector develop biological
risk. Legislation around transparency
environments such as healthcare, microorganisms that release carbon-
and source of origin issues becomes
finance or defense. Sovereign wealth based minerals from ore without the
commonplace. The voice of mining is
funds, which could comfortably buy need to dig up the entire ore body.
fragmented and diminished.
even the largest miner, favor the Fintech companies use blockchain
newentrants. technology to create marketable
Fertile ground for parcels in mineral reserves and mining
newentrants Innovation looking backward? outputs that are measured in kilograms
rather than tons and contracted years
While incumbent miners struggle, Given the reckless spending of in advance of actual production.
others seize the opportunity. New capital investment funds during the Mining assets change hands faster than
entrants, knowing they can do a better recent boom, investors are reluctant ever imagined. Some precious metal
job, and knowing that they are free to fund R&D. For the incumbent ore bodies are kept in the ground,
of legacy issues around trust, take miners, innovation is largely reactive, never mined but still traded, effectively
advantage of low valuations and geared towards keeping up with ever securitizing reserves.
asset fire sales from the major miners. tightening rules and surveillance, such
Others bring a new level of innovation as regulators using remote technology High-tech manufacturers develop new
to a traditional sector; Googles recent to monitor operations on mine sites dry mining techniques, unlocking
partnership with a global consulting and track illegal activities. the potential of ore bodies previously
firm to boost productivity in mining in thought to be constrained by lack of
Kazakhstan is a case in point.3 Theres a focus on retrofitting water supply or located too close to
innovation for compliance, as sensitive catchment areas.
Some new entrants are major users opposed to increasing productivity
of mining products that want to take and profitability in mining. Miners
full control of their supply chains. Only the best or
are at a disadvantage compared to
specializedthrive
Many of the mid-tier operators are
How can you get ready? forced out of the sector, unable to afford
the high cost of compliance and starved
Evaluate your capacity and hunger for rapid adaptation. Think like a of capital for expansion or innovation.
venture capitalist look for the next big idea that will make adifference. Those that remain specialize in niche
products, hard to mine reserves, and
Develop new ways to grow or acquire the talent necessary to execute
end-to-end customer services. Some
your strategy, taking into account realities like the distinctive needs
morph into contract mining companies.
ofmillennials.
The role of discovery and exploration
Manage brand risk and improve transparency along your supply chain. remains largely with start-up and junior
A B2C (Business to Consumer) lens can help to identify new product miners, as it is today.
enhancements. For the incumbents, advantage comes
If youre a new entrant, identify the specialist capabilities that could through frontline mine experience.
change the face of mining. Those that can show best in class for
productivity, efficiency, and mining
techniques, and have a brand built on
delivering to a mine plan, do well. But
the twin pressures of regulation and
competition have created margins that
are razor thin. The difference between
the very best performers and the rest is
measured in cents, not dollars, per ton.
3
oogle and McKinsey to mine Kazakh data,
G
Farchy, Jack in Financial Times 21 APR 2016
12 | PwC
mining sector struggles to attract new, companies, which become drivers to machines operating at the far
non-traditional sources of capital or of the innovation agenda for miners reachesofamine.
talent. Profits are not as high as they bigand small.
could be. Investors are restless. Mutual self-interest emerges,
Attack of the drones but to what end?
Mining services on the rise and
Big spending on mining-specific In this scenario, miners are largely
a new mid-tier R&D results in a future dominated left to themselves. While this fosters a
This future favors large and/or diverse by robotics and drones.More cost high degree of collaboration, there are
miners with big balance sheets, effective and versatile than helicopters unintended consequences. With only a
diverse asset portfolios and money and emitting less pollution than handful of global players in the sector,
to spend on compliance, innovation, mining vehicles, drones have replaced an inevitable sense of mutual self-
and R&D. Consolidation has left only humans for many dangerous or interest comes to dominate. Theres
super miners standing. Competition monotonous jobs across all aspects a tendency for production to become
is usually confined to things such of exploration, planning, operations over-controlled and prices to be
as identification and appraisal of andreporting. managed. Anti-trust/anti-competition
ore bodies, speed of executing new Drones are used to quickly map new challenges are a regular event,
projects, advances in production mine areas, analyze mineral samples contrasting with the social license trust
technology and ownership of different in real time, and optimize haul routes. that has beenestablished.
elements in the supply chain. They detect erosion, track changes Paradoxically, the sectors stability and
Many mid-tier miners have had to in vegetation, and search for defects strength attracts greater scrutiny from
reinvent themselves in order survive. in mining infrastructure that may outside, causing miners to work even
They are focused on in-demand niche endanger the environment. Theyre harder to maintain the trust theyve
markets and commodities and lead the used for many of the high-risk jobs, invested so much to earn.
way on origin sourcing for mineral such as transporting hazardous waste
products. Smaller miners struggle to dedicated storage facilities or
to compete on their own terms. The checking for chemical contamination.
ones that do are reliant on third party Drones are deployed in emergencies,
mining services companies, which transporting medicines and rescue
can operate with a high degree of equipment and monitoring the
efficiency and maintain trust. In fact, health of injured workers until help
its an ideal environment for services arrives. They even ferry spare parts
14 | PwC
We need to talk: About the future of mining | 15
4. Mining
reinvented
In this scenario, miners have radically Trusted, transparent and
brand-savvy
reinvented themselves. Theyve opened their
Imagine a global miner superseding
doors, smartened up their act and renewed Apple for brand value. Imagine miners
trust with the public and regulators. At the are trusted in the same way as leading
consumer goods companies.
same time, a wave of new entrants has led
In this future, miners have done
to an explosion of fresh ideas, technologies, what it takes to build trust by being
techniques, and capital. In this transparent, transparent, listening to stakeholder
concerns and acting on them. And they
diverse and highly competitive future, theres maintain that trust through open and
continuous disclosure, supported by
no place for the also-rans. Only the best of advanced technology that minimizes
breed are thriving. environmental footprints and
accelerates rehabilitation. For example,
sensors monitor production processes
and keep an eye on environmental
impact, rehabilitation activities, and
16 | PwC
safety practices. Outputs are streamed But the influx of capital also brings Diversity rules
to the web so any stakeholder or new entrants and new competition.
investor can see whats happening live. In this scenario, a significant number Increased trust in the sector and the
There are no secrets anymore. of the large players are from outside influence of new entrants mean mining
the mining sector. These businesses are is better able to attract and retain a
As a result of increased transparency highly diverse workforce. Gender
adept at applying technology in new
and consumer awareness, miners and cultural backgrounds have equal
ways and extending their dominance
are far more brand-savvy. Close representation at all levels of mining
across supply chains. Big brand
attention is paid to the look of companies, from graduate to CEO.
consumer technology companies are
mining operations, as well as the
taking control of product sourcing to The greater diversity of thinking
aesthetic impact. Just as agricultural
the point of buying and running mines. has helped improve practices,
companies now think about paddock
to plate, miners consider branding Traditional mining companies must methods, and techniques to solve
across their entire operation, from compete both among themselves and long-entrenched problems like water
exploration to the point of sale. Origin with new entrants for access to capital, use, land access, environmental
sourcing becomes a critical part of talent, and communities. Only those impact, safety, and carbon. In this
this branding. And along with better with the best environmental record, scenario, miners have developed water
branding comes premium pricing. best safety record, best employee purification technology at sufficient
record not to mention appropriate scale such that water from tailing dams
capital return can prosper. can be used for irrigated agriculture:
Capital, competition, and mining helps to increase global food
ideasabound Technology and innovation play a production and well as serve the
major role as new entrants force a globes need for raw materials.
With brand risk under control, mining
rapid uptake of new ideas and new
has become an attractive place to
ways of working. But its not just about
invest, and capital is readily accessible.
mining more efficiently: companies are
Peer-to-peer policing
To attract the right sort of operators,
using new and different technology In a future where success depends
resource-rich countries are under
and methods to evaluate ore bodies on trust, the sector has moved
pressure to mitigate sovereign risk
with superior accuracy before beyond self-regulation to peer-to-
and keep fiscal settings stable. Listed
beginning their production plans. peer regulation. This means that
miners are on an equal footing with
Innovation also extends across supply mining companies look to what their
national mining companies.
chains and entire business models. competitors are doing just as actively
as they address external expectations.
Companies are not afraid to call
out bad behavior, as they know this
strengthens, rather than diminishes,
the reputation of the sector as a whole.
How can you get ready? Miners that refuse to meet expected
standards are expelled from industry
Incubate game-changing technology and innovation that aligns with associations. With trust established
your overall business strategy. and maintained, stakeholders no
longer feel the need to look to special
Get your culture right to reward innovation and disruption. interest groups or NGOs to represent
New culture will need new talent what is the talent brand their concerns.
proposition to attract future employees?
Focus on the links between mining outputs and their final use:
consider end consumer preferences and demands to build
productdifferentiation.
Make industry collaboration work for you. Be prepared to police your
peers for the good of the sector.
18 | PwC
that are cutting edge today might not few critical traits and behaviors.
even exist in five or ten years time. Aligning the organizations formal Key
So how do you build that flexibility Performance Indicators with the new
into your mine plan and capital plan direction will be critical.
(as well as your workforce) if youre Building a culture for
developing a mine that will run for anewworld
20or more years?
Intrinsic to the DNA of most mining
There is a fundamental mismatch companies is the tendency to control
between the lifecycle of mining assets and manage, where a focus on the
Rethinking talent and diversity
and the lifecycle of technologies and task at the expense of people is
digital enablement that is disrupting commonplace, resulting in silos One of the biggest mindset shifts
the sector. This raises important andrepetition. that must occur in mining is the one
questions about reconciling capital around talent and diversity. Mining
But this deep-seated disposition has
commitments, which may become has traditionally drawn skills from
to change. To create an organization
redundant because of changes in a narrow pool of engineering and
that is match fit for the future, miners
mining techniques, processing, business graduates, and while this has
need to build a more constructive
marketing or customer demands. served the sector well to date, it will
and effective culture one that
not deliver what mining needs for the
Modular designs with plug and play rewards collaboration and encourages
years ahead.
components will feature strongly in people to work together towards
the mine of the future. A modular Key Performance Indicators and Talent from non-traditional sources
approach lends itself to smaller safetystandards. can provide the range of skills and
miners who may want to target a thinking that will enable miners to deal
No-one would suggest its easy. Forces
particular market, such as premium with future challenges. In particular,
must be activated simultaneously
cleanironore. an entrepreneurial mindset and a
from multiple directions: top down,
startup mentality should be nurtured
Smaller, shorter-life assets with bottom up and across the organization
to encourage innovation and growth.
lower capital costs become more to create the kind of momentum that
viable. Theres also the prospect of leads to sustainable change. Mining companies must recognize the
reusable plant and equipment thats need to change their talent strategy,
Authentic, informal leaders can drive
moved from one ore body to another open up their culture to welcome it,
the transformation by harnessing
as the first comes to the end of its and then go looking for diverse talent
positive energy and focusing on a
life. Think of a mining version of a and bring it into the organization.
FloatingLNGvessel.
Argentina Indonesia
Leo Viglione, PwC Argentina Sacha Winzenried, PwC Indonesia
+54 11 4850 4690 leonardo.viglione@ar.pwc.com +62 21 5212901 sacha.winzenried@id.pwc.com
Australia Peru
Chris Dodd, PwC Australia Alfredo Remy, PwC Peru
+61 3 8603 3130 chris.dodd@pwc.com +51 (1) 211 6500 alfredo.remy@pe.pwc.com
Wim Blom, Global Mining Deals Leader, PwC Australia
+61 (7) 3257 5236 wim.blom@pwc.com
Marketing
Jacqui Thurlow, PwC Australia
+61 7 3257 5311 jacqui.thurlow@pwc.com
20 | PwC
We need to talk: About the future of mining | 21
pwc.com/futureofmining
2017 PwC. All rights reserved. PwC refers to the PwC network and/or one or more of its member firms, each of which is a separate legal entity.
Please see www.pwc.com/structure for further details. This content is for general information purposes only, and should not be used as a substitute for
consultation with professional advisors.
At PwC, our purpose is to build trust in society and solve important problems. Were a network of firms in 157 countries with more than 223,000
people who are committed to delivering quality in assurance, advisory and tax services. Find out more and tell us what matters to you by visiting us at
www.pwc.com.
127047509