But some patterns are evident in the sector-wide numbers. (See Exhibit 7.). Wing hasworked with the Future of Work team on developing the digital Nerve Center solutions for the intelligent mine. Miners should develop a growth agenda. And this matters. (See the exhibit.) So when people are thinking about OK, how do I want to access sub-Saharan Africa? Although the mining industry has endured a rather rough decade and the future isnt guaranteed to be rosy, companies have a lot to be optimistic about. Since 2010, the industry has averaged negative median returns, failing to generate value for its investors. Through creative ways of working and learning, Wing wants to continue to be a part of, andbuild, high-performing teams by challenging everything we do from a personal, work, and mindset perspective. Most mining companies have made a full recovery, and the industry finished 2020 with an impressive one-year median TSR of 26%. At least, that would be the conventional wisdom by investors today. Mining industry challenges: Five initiatives for CEOs | McKinsey In many cases, its cheaper. Here are a few snapshots. Of course, adopting a pro-cyclical approach can lead to suboptimal outcomes. The top executives at Northern Star and the gold companies that pursued new business models came from outside the industry. Future of mining industry | Deloitte Insights goal.3 2 Together, these two factors determine the change in a companys enterprise value. Now, yes, you do have to do that. 3.7%: 3,500: 11,500: Agriculture, forestry, fishing and hunting: Individual and family services. Where it doesnt, you increase price. Mukani Moyo: One of the things that weve done in our research is to create the metric that tries to quantify productivity in a mining context by taking into account all of these inputs that go into a mining operation and also trying to disentangle those variables that a mining management team doesnt have control over. By the time you actually get to production, you may well be in a completely different market paradigm to where you were when you made the initial decision to invest in that asset. The evolution of technology, from advanced data analytics to artificial intelligence (AI), has always had the potential to transform the mining industry by realizing operational efficiency improvements, enhancing productivity, improving safety performance, empowering employees to do more meaningful work, and allowing communities to be more prosp. But while countercyclical moves can yield outsize returns, few companies operate in that manner. Push digital transformation further. (See Exhibit 2.) Then youve got these long lead times to invest in the capital in building a functioning asset. Next, the power supply and power generation to power all of that. Australia - Mining - International Trade Administration Clients, suppliers, and other partners that are themselves striving for diversity are reassured to see a mix of talent from different backgrounds. The global imperative to support decarbonization efforts is forcing organizations to start rethinking the skills and capabilities needed to achieve the net-zero workforcea sustainable workforce that meets and supports organizations net-zero carbonization ambitions. Concerns about overcapacity in the industry have abated because capital investment has been calm for more than five years. Numerous metals and minerals are also crucial in the production of various products you cannot imagine your life without. David Hunter: Thank you, Chris, and thank you, Mukani. Its hard to discern the shape of the industry cycle. The Big Picture: 2023 Outlook for Metals and Mining To achieve the desired value-driving outcomes, it is imperative to look out several years and understand and design for how humans could interact with the technology and with each other. Investors also demonstrated less faith in these businesses ability to achieve better financial results. Notes: Stayinformed on the issues impacting your business with Deloitte's live webcast series. The industry has seen a significant rebound in recent years, following a sharp decline during the global financial crisis. David Hunter: You mentioned technology and automation earlier. COVID-19 struck at a time when the mining industry was already grappling with multiple problems: lackluster financial performance; structural weakness; heightened uncertainty about the industry cycle; and growing pressure from investors, governments, and communities over environmental, social, and governance (ESG) practices. And when an industry recovers, businesses do not simply revert to their previous positions within it. And that had a lot of effects. And when the slowdown in Chinese demand came, there was this overcapacity on the markets that led to the mine crash that we saw. BCG X disrupts the present and creates the future by building bold new tech products, services, and businesses. The industry is expected to continue to grow in the coming years, driven by strong demand for commodities such as copper, iron ore, and coal. Being in the wrong commodity at a time of heightened ESG awareness has contributed to some companies underperformance. Theres the technology opportunity. How IoT and AI Technologies are Transforming the Mining Industry BCGs research reveals six key success factors and the steps companies need to take today. Chris Mulligan: Over the course of the past 15 years, the most pronounced trend has been what people call the supercycle, which was a Chinese-demand-driven desire for more commodities as they continue to industrialize their country. Historically, mining companies have tended to focus either on cost reduction or on throughput improvement, but not necessarily on productivity in the holistic sense. Annual rate of change and net change in employment for fastest growing and declining industries, projected 2019 to 2029; Industry Annual rate of change Net change 2029 employment Industry sector; Forestry. When we look at mining companies now, the most successful ones, yes, theyre good at the prosaic operations of getting stuff out of the ground. Similarly, BHP has launched a pilot project in autonomous shipping and deployed drones to increase onsite safety. Automation in Australia: how the future of mining could change Now, more than ever before, an integrated operations center has become critical for any mining organization to provide an integrated single source of the truth built on real-time tracking of operational data across the value chain, enhance decision-making through advanced analytics, enable remote management of resources where feasible, manage and track renewable energy demand and storage, and optimize workforce allocation and utilization, among others. The technologies are readily available, and companies can implement them on a small scale. Prices certainly went up. 4 At this time, mining companies prioritized production, oftentimes at all costs, including also making, as Chris was pointing out, heavy investments in capital to boost output. There are real opportunities to harness the information and data that we generate in mining operations. Updated with new personas, Safety experience architect, Intelligent asset care lead, Specialist rock engineer,andOperations SuperTeam lead). As a result, although revenue growth at most companies was positive, many saw EBITDA fall and in response had to issue equity and debt. Companies are in these regions for the long haul, often building out entire communities to support their mining operations. By planning for different scenarios and considering what it will take to outperform through the cyclein competitive strategy, digital advancement, and internal transformation, and in how they shape their futures societally and environmentally industry players can maximize their chances of being in the top tier of the value creators a decade from now. Companies that have had successful digital journeys so far have often placed significant emphasis on change management to shift peoples behavior and engage with their work in new ways. BCG uses a straightforward methodology to quantify the relative contributions of the various sources of TSR. Boston Consulting Group partners with leaders in business and society to tackle their most important challenges and capture their greatest opportunities. Promoting diversity also means seeking talent with backgrounds in different industries. In some cases, leadership talent and capabilities, particularly new blood, played an important role in the value creation leaders success. Many large mining companies have set net-zero targets for Scope 1 Scope 2 emissions. A focus on cash flow contributed significantly to other companies results. Fort de plus de 20 ans dexprience dans le secteur et la consultation, il est passionn par le service la clientle. https://www.spglobal.com/marketintelligence/en/news-insights/latest-news-headlines/path-to-net-zero-more-mining-companies-setting-targets-to-reduce-emissions-61626513. To support the teams when using digital tools, it is important that principles for decision rights, escalation protocols, and role accountabilities are clearly identified. Smaller companies are also successfully challenging larger incumbents, as exemplified by the meteoric growth of Northern Star Resources and Saracen Mineral Holdings, whose merger (completed in February 2021) has created a new entrant among the ten largest gold companies in the world. There are also moves to . Another element driving change in our workforces is the expected decline in the long-term demand for hydrocarbon products and the shift to cleaner energy sources. The degree of uncertainty in the current environment is especially high because demand in the immediate post-COVID-19 era and volatile trade policies have compounded uncertainty about the industry cycle. And the rollout of vaccines to counter the pandemic is helping generate optimism among consumers and businesses alike. Il a travaill dans de nombreux pays importants dans le domaine des ressources et des produits industriels, notamment le Canada, le Chili, la Russie, lUkraine, le Kazakhstan, le Brsil, lAllemagne, lInde, lAfrique du Sud, le Royaume-Uni et les tats Unis. In fact, our metric shows mining companies today are about one-third less productive at digging out a ton of dirt out of the ground than they were a decade ago. Bad though 2020 was, its price swings were far less daunting than those seen during the global financial crisis. Net zero and the energy transition will drive demand for metals. Although most mining companies had a great year in 2020, relatively few of them came out ahead over the past decade. Compared to a chip fab or something that will run 99 percent of the time, or maybe an offshore oil rig, which will be around 80 percent, the mining industry is more like 60 percent, and some parts, even lower. By the end of 2020, as they began emerging from the pandemic crisis, companies were able to sustain revenue growth and achieve modest increases in margins compared with 2019, even though prices did not recover to precrisis levels until the third or fourth quarter of 2020. Companies can create a diversity and inclusion agenda that establishes clear targets and initiatives. It was thinking about the logistics and the supply chain for all of the parts, consumables, and the other things that needed to run the operation. Go straight to smart. We have automated drilling. Colombia's coal production could hit 71.9 million tonnes this year, driven by favorable weather conditions in mining regions. 5 out of 20 fastest-growing industries from 2019 to 2029 are in The S&P 500 index fell during all four crises, but only the last two slowed the growth of global gross domestic product (GDP), Chinas GDP, and commodity pricesall factors that, in turn, hurt mining companies performance. 1 For more information . Bringing together people with different backgrounds, attitudes, and skills fuels creativity and encourages different approaches to problem solvingand these factors have helped foster new business models and countercyclical moves leading to stellar performance. The 20 Fastest Growing Industries for 2021 and Beyond Coal and fertilizer producers have battled pricing headwinds that cut their margins and, coupled with increases in their net debt, hurt their average TSR. Colombia coal production may grow 10.7% in 2023, industry group says . And then came the COVID-19 pandemic, presenting entirely new challenges to a sector already reeling from structural problems. Notes: You have to come to some type of a long-term agreement with the community that is going to host itthe community that youre going to help build. I think, first is restoring their balance sheets, and this means plugging the holes from business development and other endeavors that didnt quite work in this run-up during the boom. During the decade, their debt doubled, and by 2019 their median interest-coverage ratio was one-third what it was in 2007, despite the prevailing lower interest rates. 5 All qualified applicants will receive consideration for employment without regard to race, color, age, religion, sex, sexual orientation, gender identity / expression, national origin, protected veteran status, or any other characteristic protected under federal, state or local law, where applicable, and those with criminal histories will be considered in a manner consistent with applicable state and local laws.Pursuant to Transparency in Coverage final rules (85 FR 72158) set forth in the United States by The Departments of the Treasury, Labor, and Health and Human Services click here to access required Machine Readable Files or here to access the Federal No Surprises Bill Act Disclosure. So volatility is here to stay. billion.1 This speaks to some of the challenges associated with getting a mine up and running, and building all of the associated infrastructure that you need. 5 Many mines are building schools. I think a big area of focus is going to have to be in building up the capabilities around lean operations, and asset productivity. titre dassoci directeur du secteur nergie, ressources et produits industriels, M. Swart est responsable de la dfinition de lorientation stratgique et de la stratgie de mise en march. We look at how companies may be able to take advantage of recent price hikes to improve their position for the future. Global Mining Market Report 2021 - PR Newswire Chris Mulligan: For some of the reasons that Mukani spoke about beforethe time frames for making investments before earning returns, as well as the scale of those investmentsit meant that perhaps people chased the investment opportunity too long in regard to the China supercycle. Economic history Sectors Economy by state Economy by city or county Labor United States portal v t e Mining in the United States has been active since the beginning of colonial times, but became a major industry in the 19th century with a number of new mineral discoveries causing a series of mining rushes. David Hunter: Has the application of technology started to make mining operations more productive? Change your Analytics and performance cookie settings to access this feature. Some operations have, however, rapidly executed secondary control rooms, equipped with the relevant hardware and network capabilities to allow seamless handover between shifts in two separate locations. (See Exhibit 1.). Carbon intensity has a measurable effect on company valuation. Ongoing digital mine innovation is expected to transform the key aspects of mining during the next few years. Mining industry employment and talent challenges | McKinsey January 2, 2020 Reading Time: 11 minutes Based on projected employment growth, industry output and growth rates, we've identified 20 industries you should keep an eye on. Metals and Mining Industry, They needed to think about what investments were needed to rehabilitate that. Mining being an extractive industry, you regress by standing still. https://www.bcg.com/publications/2020/mining-needs-to-go-faster-on-climate. To tap the power of digitization and automation, companies can focus on automating their operations and support functions, establishing new goals for productivity, safety, and efficiency. A transparent and clear understanding as to how each role contributes to the success of the organization provides the best opportunity for teams to tap into the many resources available and the collective situational awareness that this collaborative environment brings. As of late 2019, according to BCGs numbers, Fortescue operated the worlds second-largest installed fleet of automated haulers. IOCs enlist employees from a range of functional areas as well as external parties, including suppliers such as Ford and Hyundai.) Social value and business value can go hand in hand. Boston Consulting Group is an Equal Opportunity Employer. Supply also went up, and supply going up is really the interesting part of the equation. Markets are increasingly fragmented. Colombia coal production may grow 10.7% in 2023, industry - MINING.COM Urban mining not only reduces climate change by recycling products, but it also helps to reduce conflict in various zones. Because mining is inherently a game of trade-offs, right? Lastly, its productivity, and this is mining companies improving their efficiencies and thinking about how they can get more with less. Some others have executed work-from-home capabilities by creating dispatch packs containing laptops and communication tools, enabling workers to operate and maintain control of on-site activities from the safety of their homes. It might take 10, 20, even longer periods of time, to compete over geological analysis and exploration to unpack what an ore body contains. Few mining companies have the safety of a defensible economic moat. Metals and mining companies will be expected to grow fasterand more cleanlythan ever before. U.S. mining industry - statistics & facts | Statista For those performing essential services and therefore unable to work remotely, operations have focused on providing epidemic protectionensuring sanitation, personal protective equipment, and safety of the workplace environment. The global mining equipment market size was estimated at USD 135 billion in 2022 and is expected to expand at a compounded annual growth rate (CAGR) of 5.1% from 2023 to 2030. It used to be, back in the day, that all you had to be really good at was operating a bunch of mining equipment, training your workers well, keeping them safe, and producing a lot of ore at a low price. Many of the proposed initiatives will need several departments to work together, which will be impossible if departments work in silos.
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