Bas Mutsaers

Global SVP Mining Industry

Solutions

Ventyx, an ABB company

The 2012 respondents selected workforce safety and managing capital projects as their top challenges, followed closely by maximizing production effectiveness. This is a significant shift in priorities compared with 2011. Key changes include:

• “Ensuring workforce safety” emerged as respondents’ top concern in 2012, moving up from second spot in 2011
• “Managing capital projects” has jumped from fourth to secondhighest priority
• The highest-ranking challenge in 2011, “maximizing production effectiveness”, dropped to third in 2012, displacing “recruiting and retaining a skilled workforce”, which dropped to seventh.

 Ensuring Workforce Safety

While this consistently ranks as one of the primary concerns of mining executives, ensuring workforce safety is somewhat of a surprise as the top-ranking priority in the 2012 survey. In previous years, mine safety incidents in Chile and the US were prominently featured in the global media, and it follows that the industry would identify safety as one of its highest priorities given the intense public and media scrutiny. Despite the recent lack of similar high-profile stories, the issue continues to be high on the agenda.

At first glance, the emphasis on safety seems to be at odds with the low ranking of “recruiting and retaining a skilled workforce”. After all, a well-trained and skilled workforce is also a safer workforce. However, the 2012 survey included a question that identified the ways in which companies are investing to improve safety. More than two-thirds of respondents chose “development of skills, best work practices and situation- based decision making for the workforce” as their top safety initiative.

We know that workforce turnover is down, which is motivating organizations to protect their investments in skilled workers. Clearly, mine operators are continuing to educate and train their workers, but they are doing it in a way that overturns traditional assumptions about how mine workers analyze and resolve the challenges they face every day. As companies equip their workforces with new technologies such as mobility solutions that enable quicker access to information – regardless of location – they are finding that they can change their traditional approach to training and skill development as well.

Rather than training workers for every possible scenario they might encounter, companies can provide them with the necessary information on the spot. This new emphasis on best practices, situational analysis and on-demand access to information improves both worker safety and efficiency. It is also an effective countermeasure against the impending wave of retirement among highly skilled and experienced older workers.

A look at the top priorities that emerged from the 2012 survey and the shifts they may imply.

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Top Challenges for Global Mining Companies.

Managing Capital Projects

Around 25 % of survey respondents chose “managing capital projects” as their top priority for 2012, making it the second ranking concern in this survey. This is a noticeable shift from the 2011 result, where capital projects came in as the fourth-highest priority. This suggests a more optimistic outlook for mine operators previously focused on maximizing the output and efficiency of existing operations and assets (the numberone concern in 2011).

Industry observers note that current investments in capital projects tend to favor the expansion of operations at existing sites. Bringing new sites online involves more regulatory hurdles and longer lead times. The capital-intensive nature of developing a completely new site also translates into significant risk.

At the same time, lenders have tightened the requirements for securing financing. All of these factors combined have also dampened the appetite for mergers and acquisitions, which have been a key driver of industry growth in the past.

Given these dynamics, it is not surprising that many operators see greater near-term value in investment targeting existing sites. In the push to contain costs and increase output, companies are ramping up operations and considering new projects that extend current operations rather than starting from scratch at new locations.

New technology is key to this. Expanded capabilities in mobile technologies and asset management are enabling innovative practices that accelerate production and increase the life and return from assets. Better co-ordination of efforts within the company and throughout the value chain also helps companies adapt to fluctuating demand and meet their commitments with greater confidence, despite regulatory uncertainty and tight credit markets.

Maximizing Production Effectiveness

As noted, “maximizing production effectiveness” moved from the top spot in the 2011 survey to the third spot in 2012. This does not necessarily mean that the issue has taken a back seat to other priorities, though. Many operators see improving worker safety and effectively managing capital projects as prerequisites for boosting production.

Given that production effectiveness is one of the recurring themes of the annual survey, the 2012 edition included several questions intended to shed more light on operators’ strategy in this area. Digging deeper, when asked to rank their challenges in improving operational performance, respondents identified:

• adjusting mining operations to the dynamics of demand and supply in the commodity markets (40 %)
• the ability to manage the whole value chain as one operation, from mining to customer warehouses (28 %)
• inability to access real-time information for operational and asset performance (27 %).

In capital projects, better integration, co-ordination and visibility across the value chain are key to keeping pace with market volatility and addressing production and asset-management issues. The opportunity to leverage new IT and mobile capabilities to maximize production has never been higher.

Conclusion

Today’s top industry priorities – worker safety, driving more value from existing sites and maximizing productivity – highlight the need for mining organizations to accelerate the move from manual processes to automation, and to improve integration and synchronization across the mining value chain.

As mining groups continue to be challenged to deliver high returns to shareholders in the face of depleting reserves, declining grades and increasing costs, the advance of automation and IT across all facets of operation (particularly asset management) is mission-critical. New capabilities in mobility, analytics and value-chain integration and co-ordination underscore the ways that information and operational technologies are converging and altering the industry’s competitive landscape in the process.

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