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We need to talk

About the future


of mining

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

Thinking through the future, today........................................... 6


Constrained success.............................................................. 8
Non-miners in ascendancy.................................................. 10
Mining superpowers........................................................... 12
What can blockchain do for mining?................................... 14
Mining transformed............................................................ 16

Navigating uncertainty........................................................... 18

We need to talk: About the future of mining | 3


Is mining really
ready for the future?
Mining is often considered a relatively Have mining companies really thought
straightforward business, with broadly enough about what the future
integrated value chains and strong might hold for their businesses, and
control over many of the variables what they could be doing now to make
ofproduction. sure they profitfrom it?

Or is it? Many mining companies have


a deeply ingrained, conventional view Competing in the era
of their sector and the environment ofnewentrants
in which they operate. But while its
Take the rise of non-mining companies
served them in the past, its less likely
entering the sector. Often cashed-up,
to work in the future. Miners can
technologically advanced, and brand
no longer afford to ignore the role
savvy, these businesses are appearing On the other side of the world,
they play in a much larger economic,
at a time when conventional players Australian telecommunications giant
social and technological ecosystem
are struggling for the capital, skills Telstra recently launched a new mining
an ecosystem that is growing and
and capacity to innovate, and barriers services company2, saying the timing
becoming more complexevery day.
to entry a result of depressed asset of the commodity price downturn
Consider some of the key disruptive valuesare low. means theres a different outlook
forces emerging today and the among mining customers as to how
For example, back in 2015, automotive they are going to drive process change
impact they might have on mining
and energy storage company, Tesla in theiroperations.
in the future. For instance, how
signed early stage agreements1 with
will robotics change the way we
junior mining companies to supply While new entrants bring much-
mine? How will digital enablement
their new gigafactory in Nevada with needed capital and ideas to mining,
or blockchain technology reduce
lithium, a key ingredient in batteries. what impact might it have on
costs, influence mining processes,
The fact that none of these companies competition? What if Toyota seeks to
and enhance product specialization
had any existing production did not market a really green Prius with all
and end-customer service? How will
dent Teslas plans. The deal signaled to its metals directly sourced from and
social media impact the sourcing and
the worlds incumbent lithium miners traceable to the highest ecologically-
consumption of minerals?
that new customers like Tesla are not rated mines on the planet mines the
While mining executives typically frightened to explore high-risk, high company also happens to own?
make large-scale investment decisions return alternatives when they find that
with long timeframes, the fast- current market conditions do not suit
paced, disruptive influences we their needs.
are seeing today already impacting
these choices. What needs to change
to ensure mining can benefit from
technological advances and other
disruptive influences, rather than fall
victimtothem?

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?

We need to talk: About the future of mining | 5


Thinking through
thefuture, today
So what can mining executives do You can use these scenarios to think
today to prepare for such an uncertain about where you want to be in the
tomorrow? What strategic decisions future, compare it to where you are
need to be thought through and today and consider what that means for
made now, to ensure your company your medium to long rangestrategy.
will be thriving 5,10 or 20 years
downthetrack?
Exploring four possible futures
To help you answer these questions, we formining
took a trip into the future. We brought
together specialists from across the These future scenarios are based
PwC global network and industry to on what we see as key uncertainties
explore how the sector will be affected shaping the future of mining,
by the powerful dynamics reshaping depending on how they play out. One
not only mining but also the global is the extent to which new entrants
economy and broader ecosystem that non-traditional mining companies such
minersoperatein. as finance, tech players or consumer
brands change the sector. The other
We came up with four scenarios is public trust of mining companies
that give an insight into the types of and the extent to which external
challenges and opportunities miners stakeholders gain greater control of
(and indeed todays non-miners) might miners privilege to operate.
need to deal with, and what they
can do to win. We explore not only We cant predict the future,
the kinds of strategies required but of course, but we believe the
the shift in mindset needed to make conversation about what the
thosestrategies work.
future might look like is an
important one.

6 | PwC
Low trust others control
privilege to operate

1. Constrained 2. Non-miners in
success ascendency

Miners in constant conflict Well-funded, hi-tech and


with stakeholder interests. socially savvy companies
Very little trust in the sector out-compete many existing
to do the right thing. Success players in a highly regulated
becomes increasingly and scrutinized world.
difficult; no one can
trulywin.

New entrants
Incumbents
change
shape sector
the game

Left to self-regulate, miners Mining attracts highly


operate collaboratively, with innovative entrants from
short, predictable projects. new industries. Free to set
Transparency is high, smaller their own course and flush
but sustainable profits favor with new ideas and capital,
the mining superpowers. miners transform.

3. Mining 4. Mining
superpowers transformed

High trust
miners in charge

We need to talk: About the future of mining | 7


1. Constrained
success
In this scenario, trust in the mining sector Its all about compliance
has all but evaporated. A miners privilege The public no longer trusts miners to
do the right thing. Theyve stopped
to operate is no longer an enduring right, listening to companies or their industry
but a tenuous permission slip that can associations and instead put their
trust in regulators to keep the sector
be withdrawn at any time by a range of accountable. NGOs dominate the
social media landscape and forcefully
regulatory guardians. Those with this push their agendas. Regulatory
right consider it their most valued asset, scrutiny continues to rise and becomes
standardizedglobally.
more valuable than ore reserves. While the
Technology allows real-time monitoring
high cost of compliance discourages outside of compliance on an unprecedented
competition, turning a profit is extremely scale. Drones and remote sensors,
operated by regulatory agencies,
challenging. Only policy savvy operators monitor a wide range of indicators
inside the mine gates: air quality,
will prosper, those who recognise the need working conditions, temperature,
for sustainable development and who equipment loads, tailings, operator
alertness, training, medical condition,
understand the need for mutual outcomes. pit wall stability and so on. Theres
nowhere to hide.

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.

We need to talk: About the future of mining | 9


2. Non-miners in
ascendancy
In this scenario, miners have lost trust Outsiders call the shots,
customers think brand risk
and no longer control their privilege to
Reputation and trust can be fleeting
operate. Time, attention and capital commodities. As the adage goes, a
are spent responding to increased levels reputation takes a lifetime to build
and a minute to destroy. In this future,
of scrutiny, rather than on growth and miners have failed to maintain trust and
shareholder returns. This creates the ideal ceded control of the sector to regulators
and stakeholders. Growth and
conditions for new entrants to thrive, profitability are increasingly difficult,
with miners forced onto the back foot in
especially those with a record of success in the face of rising oversight.
highlyregulatedenvironments. NGOs and special interest groups are
well resourced and politically savvy,
having maximized social media avenues
to build influence. As the trusted
advisors to governments, they drive the
agenda for the sector. Poorly operated
mines are subject to regular closure as a
result of social activism, funded through
crowd-sourced campaigns.

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

We need to talk: About the future of mining | 11


3. Mining
superpowers
In this scenario, trust is high but new Trusted and collaborative, but
how profitable?
entrants are few. And although the sector
Miners have assured stakeholders and
is strong, there are plenty of casualties. The the public that they can be trusted to
high cost of earning trust, combined with get on with the job. They have built
trust all along the supply chain, from
limited access to outside capital or new ideas, mining service companies to third
favors the very rich or the very innovative. party suppliers to markets and traders.
And because accountability is in their
Mid-tier players leverage their agility and hands, miners collaborate continuously
to maintain this hard-earned trust.
low cost of doing business to specialize in
Companies outside mining, however,
smaller, niche product operations to survive. show little interest in the sector. Some
see better growth elsewhere, while
others are discouraged by the failure
of an early wave of new entrants. The
result is that any new ideas must come
from miners themselves. Technology
and innovation continue to play a
critical role, but its incremental rather
than transformative. As a result, the

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

How can you get ready?


All miners will need to collaborate more to ensure good standards of
stewardship in all mines, everywhere.
Pay attention to your brand its an important vehicle to demonstrate
your business is deserving of self-regulation.
Identify a compelling talent brand promise that attracts the kind of talent
you need.
Getting culture right will be paramount. Build a more constructive and
effective culture that rewards collaboration and encourages people to
work together.
Invest in community outreach and engagement.

We need to talk: About the future of mining | 13


What can blockchain
dofor mining?
Imagine being able to securely and For example, blockchain is already The blockchain record would
irrevocably verify the provenance used with mining products such as enable anyone to trace ownership
of the raw materials in a new diamonds, which are imprinted with as well as the specific geographic
car or jewelry. Or digitally trade a tiny QR code that links to a digital location of the ore beneath the
geotagged cubic meters of gold token verifying their quality, ethical earths surface. It could also link
ore while its still in the ground? extraction, and authenticity. This to a physical tag that detects if
is helping minimize fraud, theft, the ore body is physically moved
A big challenge for miners in the future
and related insurance costs, as well or otherwise disturbed and
will be shifting from a business-to-
as creating a much more robust, communicates that information to
business mindset to one that gives
transparent end-to-end view of the a third party on the blockchain that
greater consideration to the needs of
custody of goods. can notify the ores owners or even
the consumer and other stakeholders.
lawenforcement.
But blockchain could also be used
We already see demand for
in more complex supply chains. Once tokenized, the geo-tagged
electric cars due to their perceived
Materials could be tracked and traced cubic meter could then be
environmental benefits what if that
from the moment of extraction to the sold and further traded on a
extends to knowing if the materials for
point of sale, satisfying increasing marketplace enabled by the very
those cars came from environmentally
consumer demand for both increased same blockchain that houses that
verified mines around the world?
supply chain transparency and more token. In effect, this blockchain
Discerning consumers are increasingly environmentally sound products. will have enabled the creation
interested in the provenance of their of not only a data-secure,
From the miners perspective,
products whether from a quality, monitorable record of unmined
blockchain could also be used to
social or environmental perspective ore, but liquidity and a market
provide peace of mind on products
and are prepared to pay for it. for that ore. Actual mine product
sourced in less regulated environments
could be traded without actually
But how can miners capitalize on this as well as easily identify any supply
being mined, taking advantage
growth opportunity? How do they chain weak spots or substitution risks.
of movements in commodity
change their business processes and prices and future improvements in
More radically, blockchain
outputs as well as increase revenue? extractiontechniques.
could be employed to transform
One answer may lie in blockchain the identification, trading, and
Securing the provenance of raw
technology. management of ore bodies.
materials and creating a liquid
Blockchain is a potentially For example, a gold mining company marketplace for unmined ore
revolutionary new technology could identify its ore body and are merely two examples of how
that allows for the creation and subdivide it into smaller parts, say blockchain technology could
maintenance of a continuously- one cubic meter segments. This conceivably impact the mining
growing list ofrecords, information, verified by a trusted industry. And when combined with
calledblocks,secured from on-ground third party, would other innovations in the Internet of
tamperingand revision. be recorded in a blockchain as a Things, logistics, and trade finance,
cryptographictoken. thepossibilities only multiply.
Originally designed to underpin
the crypto-currency bitcoin, The mining industry should not
blockchain is fast being used for only be paying attention to how the
myriad other applications, such blockchain space is developing but
as providing assurances around actively considering how it might
manufacturedproducts. begin to take advantage and where
to invest.

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.

We need to talk: About the future of mining | 17


Navigating
uncertainty
Miners that want to win in the future safety records, better environmental
need to adopt a different mindset to performance, better community
the one dominating the sector today. engagement and better labor relations.
Companies must be prepared to police
Currently, many see their businesses Collaborating to protect the their peers, not just themselves, and to
as integrated value chains with strong mining brand call out bad behavior.
control over most variables. But whats
increasingly apparent and what the The entire mining sector has a stake
future scenarios show is that mining in the reputation of mining. As brand
exists in a large global ecosystem awareness continues to spread along
that goes beyond its own supply the entire supply chain accelerated
chain and beyond the stakeholders by growing use of social platforms
Getting more agile
and customers that miners deal with miners will need to collaborate more
onadaily basis. toprotect the brand. To do so they Even though miners have been
will need to to emerge from efficient working hard to become more agile
So what are the key mindset shifts that converters of dirt to prominent and responsive to change, theres
need to occur? builders societal capital. still a long way to go. Technology
can become a fundamental success
Such collaboration must go further
factor. This is a world where leading
than just a coordinated public relations
practice not best practice is the goal.
effort and public policy endeavors. It
needs to result in real improvements Rapid advancements in technology
Becoming a partner of choice in technical, commercial, and social such as robotics, remote operations,
outcomes across the sector and all drones, machine learning, and
Miners can no longer afford to go it around the world. This means better blockchain mean the innovations
alone. To maximize innovation and
growth, they need to be willing to
form partnerships with elements of
the broader ecosystem. For example,
a miner might enter a co-branding
alliance with a car manufacturer to
supply the raw materials for a vehicle
with strong branding on environmental
credentials. They might also partner
with a digital company to identify and
market the car to consumers globally
based on the online habits of buyers.

But being a partner of choice is a title


earned, not decided. Miners will have
to think about what companies might
want to work with them and why.
And given innovation can lead to a
significant competitive advantage,
miners will need to face the dilemma
of ceding control to partners that may
have more power than they do.

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.

We need to talk: About the future of mining | 19


Lets continue the conversation
For a deeper discussion please contact one of our regional leaders or your local PwC partner:

Global Mining Leadership Team


Global Mining Leader India
Jock OCallaghan, PwC Australia Kameswara (Kami) Rao, PwC India
+61 3 8603 6137 jock.ocallaghan@pwc.com +91 (40) 44246688 kameswara.rao@in.pwc.com

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

Brazil Russia and CIS


Ronaldo Valino, PwC Brazil Denis Gorin, PwC Russia
+55 21 3232 6139 ronaldo.valino@br.pwc.com +7 (495) 967 6439 denis.gorin@ru.pwc.com

Canada South Africa


Liam Fitzgerald, PwC Canada Michal Kotze, PwC South Africa
+1 416 869 2601 liam.m.fitzgerald@pwc.com +27 (11) 797 4603 michal.kotze@pwc.com

Chile United Kingdom


Colin Becker, PwC Chile Jason Burkitt, PwC United Kingdom
+56 229400689 colin.becker@cl.pwc.com +44 (0) 20 7213 2515 jason.e.burkitt@pwc.com

China United States


Chong Heng Hon, PwC China Jim Moraga, PwC United States
+86 10 6533 2244 chong.heng.hon@cn.pwc.com +1 720 931 7457 jim.moraga@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

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