The Australian mining industry faces many pressures. Commodity market volatility, variable demand trends and pressure for improved performance from mining assets is forcing miners to review their business processes and operations.
The ability to control costs, particularly during short-term down cycles, has become crucial.
In order for Australian miners to stay on the front foot and grow profitably in this challenging environment, companies must become agile and dynamic businesses. Advances in technology and developments in the outsourcing market provide opportunities for cost containment, capital allocation and improved return on investment.
Next generation mining capitalises on advancements in technology, such as integrated operation centres, integrated decision making using analytics and supporting performance management frameworks, provide an ability to identify improvement opportunities throughout the supply chain. Specialised software and bespoke applications can track the location and quality of materials and equipment performance.
There are also opportunities in automation and IT to deploy consistent operations maintenance, supply chain management and business support across remote operations.
The most recent commodity boom resulted in high utilisation rates of equipment. Based on average lifecycles, it is estimated that one-third of the world’s mining haul trucks need replacing. The most sophisticated mining organisations are already using analytics to aid planning, anticipate maintenance needs and prioritise their capital with more precision.
The potential cost savings offered by combining lean production with selective automation is too great to ignore. Industry leaders in Australia are already beginning to reap the benefits of remote operation centres, which streamlines supply chain processes and subsequent throughput.
The most successful operations use a decentralised operating model for consistent controls – core mining and support services, management processes for corporate and governance activities, and leadership and HR processes – but still allow for flexibility at local levels.
By standardising about 80 per cent of business processes, miners can promote continuous improvement across sites with the benefit of combined learning and efficiencies.
The mining sector must learn from other industries that have pioneered business-services models that integrate stand-alone services into multi-towered service organisations – resulting in end-to-end support. These models can be adapted for mine planning and customer order management, and pricing and risk management.
So if the benefits are so great, why haven’t we seen next generation automation and industrial systems deployed across the industry? The most common deterrent is perceived complexity and cost.
Reinventing mining also requires a significant cultural change – from the traditional structure of functional silos to modernised, integrated operations.
However, the potential for increased production, significant cost savings, decreased downtime and production ahead of schedule will become the differentiator for high performance miners compared to the rest of the market.
In the future, containing cost increases and managing through the cycle – ramping up for growth and scaling back for dips in demand – will be the key to commercial success for miners.
Integrated information systems will give leaders a stronger handle on the costs of mine management from site to site and among product groupings, which can identify room for improved practices, supplier rationalisation and scope for cost savings.
Developing a strategy for next generation mining requires both an understanding of the challenges facing the industry, and a willingness to adopt an agile, integrated business model.
All companies will need to build stronger capabilities on multiple fronts, but the ability to rapidly execute, and the capacity to optimise operations for high performance will be essential to thrive in the future.
*Nigel Court is the Natural Resources Industry Lead at management consulting, technology services and outsourcing company Accenture Asia Pacific.