Tracking the trends 2018 - The top 10 issues shaping mining in the year ahead -

Tracking the trends 2018
The top 10 issues shaping
mining in the year ahead

Changing for the better		                    03

 1. Bringing digital to life                 04

 2. Overcoming innovation barriers           10

 3. The future of work                       16

 4. The image of mining                      22

 5. Transforming stakeholder relationships   28

 6. Water management                         34

 7. Changing shareholder expectations        40

 8. Reserve replacement woes                 46

 9. Realigning mining boards                 52

 10. Commodities of the future               56

Out with the old, in with the new		          63
Harnessing the winds of change
                    THE T
                          RE        “The last 10 years have seen the rollercoaster of

                                     highs and lows in the mining sector continue. During

                                     this time, we have seen an emergence of innovative



                                     companies adopting transformative practices. As
         EA                R

               R ANNIVE

                                     we now stand in the middle of what appears to be
                                     another bull run for some commodities, the next
                                    10 years will see the continuation of rapid change
                                     in the industry against a backdrop of declining ore
                                     body grades, decreasing availability of tier one assets,
                                     and continued focus on shareholder returns. To
                                     thrive amid this volatility, companies must rethink
                                     the traditional mining model. Change is coming and
                                     mining companies must find ways to remain relevant.”

                                    Philip Hopwood
                                    Global Leader – Mining
                                    Deloitte Touche Tohmatsu Limited
Tracking the trends 2018

Changing for
the better
This 2018 edition of Tracking       to strengthen balance sheet         image. It is also resulting in a
the trends heralds a milestone,     performance, reduce debt,           more disciplined investment
marking our tenth year of           exercise capital discipline, and    approach—one that may
publication. Over the past          simplify portfolios, this has       ultimately expose the dark
decade, commodity prices            resulted in improved valuation      side of conservatism as supply
reached both historic highs         metrics, record free cash flow,     shortages begin to loom.
and historic lows, mining           and stronger shareholder
companies engaged in both           returns. In many respects, the      In this tenth anniversary
significant acquisitions and        mining sector is once again         report, Deloitte’s global mining
consolidation, and operational      poised for growth.                  professionals once again share
realities shifted irrevocably in                                        their experiences to help
the face of a digital revolution.   However, unlike previous cycles,    identify strategies companies
For an industry considered          mining companies appear to          can take to smooth out the
staid, change has been              have learned from the lessons       recovery and minimize the
surprisingly constant.              of the past. In paving new paths    industry’s historical boom
                                    for the future, the aim now is      and bust cycle. This year,
That theme holds true over          to change for the better. This      our professionals also share
the past year as well. After        goal is driving their ongoing       their outlook for the future
hitting the bottom of the cycle,    investments in innovation           by identifying, in some cases,
prices for many commodities         and digitization, inspiring their   potential industry disruptors
have been slowly recovering,        approach to the workforce of        which may be on the horizon.
driven by Chinese government        the future, manifesting in their    Thank you sincerely for
stimulus and improved               commitment to strengthen            your years of support. We
demand in both developed and        government and community            look forward to your input
emerging economies. Coupled         relations, and guiding their        and feedback.
with the industry’s commitment      efforts to repair their public

“As the mining industry’s value proposition is increasingly called into question,
mining companies are beginning to see that they cannot succeed into the future
unless they change the way they operate. This is about more than enhancing
efficiencies. It’s about re-establishing trust with stakeholders and collaborating
to devise better responses.”

Glenn Ives
Americas Mining Leader
Deloitte Canada


digital to life
Using data–driven
insights to drive value
In recent years, mining              waste in the areas of execution,
companies have come to realize       process, structure, and design.
that value, like beauty, may be      Now, however, it is becoming
in the eyes of the beholder.         clear that success for mining
Once measured by how well a          companies isn’t truly about
company extracted resources,         adopting the latest applications
the industry’s value proposition     (apps) and technologies, which
may be shifting to how well a        will continue to evolve. Instead,
company acts on information          it’s about embedding digital
to optimize production, reduce       thinking into the heart of their
costs, increase efficiency, and      business strategy and practices
improve safety. In short, data—      to transform the way corporate
and the ability to organize,         decisions are made. To succeed
manage, and process it—is            in this effort, miners need a
rapidly becoming a competitive       clear vision of how the future
differentiator and may even          digital mine might transform
spur new business models.            core mining processes, the flow
                                     of information, and supporting
The adoption of new                  back office processes.
technologies initiated this shift,
as miners recognized the power
of digital solutions to remove

Tracking the trends 2018

The future digital mine                                       network that uses Internet of               optimize their systems, from
Transitioning to the future digital                           Things (IoT) sensors to capture             pit to customer. The aim is to
mine typically begins by focusing                             data in real time.                          create an information layer, or
on core mining processes with                                                                             digital “nerve center”, that brings
the goal of automating physical                               Yet, the real value comes                   together data across the mining
operations and digitizing assets.                             from unlocking the insights                 value chain in multiple time
This includes the adoption of                                 within this data. To do so,                 horizons to improve planning,
autonomous vehicles, drones,                                  companies must rethink the                  control, and decision making
three-dimensional (3D) printing,                              way they generate and process               (see figure 1).
and wearable technologies, all                                information. This involves
operated through a connected                                  using data–driven analytics to

Figure 1: Integrated operational planning, control, and decision support

                                              Integrated operational planning, control and decision support

                 Real time                                                                                                 Data platforms
         Real time sensor data to                                                                                      Integrated well governed
 drive short interval control in execution,                                                                      data platforms support all processes
      reduce variability, and shorten                                                                                    and all time horizons
              planning cycles

               Historical                                                                                                         Future
   Reporting and analysis of historical                                                                                Future insight derived from
      data and insight gained from                                                                               historical analysis to improve planning,
     analysing trends, patterns and                                    Digital mine nerve centre                  simulate the integrated supply chain,
    opportunities for improvement                                   Data driven insights drive improved               and predict future outcomes,
        learned from experience                                       planning control and decision                    using analytics and AI tools
                                                                        support across the mining
                                                                                value chain

Source: Deloitte1

                                                   Integrated Enterprise planning and support processes

    Maintenance              Supply             Energy management   HSE & Community            Finance    HR                                 Marketing

      Digital in action
      A major global miner in Australia moved its short–term production, planning, and control
      activities from its mine sites to a new remote operations center. The operations center
      implemented a supply chain visualization tool that provides an end–to–end (pit–to–port) view
      of the company’s iron ore supply chain, showing key operational metrics in near-real-time,
      permanently displayed on large screens, with data sourced from 16 disparate systems. This
      was the first time the company could see its total supply chain in one place, assisting decision
      making for the whole business.2

Tracking the trends 2018

To be sure, analysis of historical       Central to enabling this will be an
data will continue to enable insight     integrated and well governed data
from trends and patterns to              platform to support analysis across
identify opportunities for progress.     all time horizons, and a center of
At the same time, however, miners        excellence in data management,
will rely even more on real-time         reporting, and analytics. It’s up to
data, derived from processing            individual companies, however,
equipment and sensors during             to determine the best operating
operation, to identify key drivers       model for realizing this vision. While
of process variability and drive         some organizations are building in-
rapid operational improvements.          house analytics capabilities, others
Access to more timely data from          are outsourcing their data analysis
across the value chain will allow        to third-party partners. There is no
companies to update their ore            optimal model, it depends on how
body models, mine plans, and             the business plans to transform
financial models more frequently,        into the future.
while shortening planning cycles.
Additionally, historical analysis will
inform future insight to improve
planning and predict outcomes.

     Digital in action
     A major global miner was looking to identify latent system
     potential across its pit, rail, and port network. Data-driven
     analysis generated over two million scenarios to identify
     significant unrealized value in the system and tested each
     one against operational reporting data to measure the
     feasibility of the proposed changes (i.e., based on historical
     performance, the analysis determined if it was possible to
     process, move, or operate in each scenario). This determined
     the most achievable scenario with the greatest potential
     increase in value. The analysis highlighted that higher
     production and greater shareholder return could be achieved
     by adjusting traditional assumptions in mine and system
     planning, all within a system that was previously considered
     to be “at maximum capacity”. This rapid scenario-based
     analysis is now being used to augment planning decisions on
     an ongoing basis.3

Tracking the trends 2018

Decisions informed by data         Convergence of information           “Many mining organization
Many mining companies have         technology (IT) and operational
                                                                        are not yet using all of the
already realized the value         technology (OT) can further
of tracking data on specific       enable automation and                data they are capturing
pieces of equipment. The real      digitization—allowing work to        from operational systems,
payoff, however, will come as      be moved to locations which
                                                                        or are still struggling to
they begin to uncover insights     can support a more diverse and
capable of informing their         inclusive workforce. Similarly,      improve reporting from
operational decisions in areas     more mature cybersecurity            legacy ERP systems.
from maintenance, safety, and      programs can help address the
                                                                        However, some are now
compliance to mine planning,       potential threats introduced by
fleet movement, and resource       exponential technologies.            realizing that capturing
allocation. Achieving this level                                        and managing the right
of insight will require miners     This vision of the digital mine is
                                                                        data, and using the latest
to go beyond automating core       based on existing capabilities
processes and setting up a         already being applied in             analytic tools, can deliver
digital nerve center. They will    other energy and resources           significant improvements
also need to re-imagine their      companies, although no
                                                                        in operational productivity,
support processes for functions    organization is yet doing it in an
ranging from supply and human      integrated way. Those that do        maintenance of assets,
resources (HR) to finance.         embrace this ideal stand to see      and safety of employees.”
                                   more than productivity benefits
In many cases, this is already     (typically 10 to 20 percent).
                                                                        Paul Klein
resulting in companies replacing   They also gain the opportunity
                                                                        Consulting Partner
their enterprise resource          to use data-driven insights
                                                                        Deloitte Australia
planning (ERP) systems             to forge closer relationships
with cloud-based solutions,        with stakeholders, facilitate
adopting robotic process           knowledge sharing and training,
automation (RPA) to automate       drive new revenue streams,
repetitive tasks, and using        access new markets, and
artificial intelligence (AI) to    enhance operational safety.
support knowledge workers.

Tracking the trends 2018

Leading strategies in focus
Develop a digital strategy         updated more frequently,          with data from sensors and
Digital initiatives are often      and shorten the planning          location-aware mobile devices
focused on technical solutions     cycle. AI tools can improve       to enable better planning,
and are not always driven by       planning, simulate the            prediction, and simulation
a well-articulated strategy        integrated supply chain, and      of future outcomes. As an
or a direct link to business       predict future outcomes.          initial step, companies can
value. For instance, without a     RPA can replace some              assess their engineering data
vision, a company may equip        tasks currently performed         management capabilities
operators in the pit with a        by humans, presenting an          and maturity to highlight
tablet or headset rather than      opportunity for cost reduction.   any gaps so they can focus
considering how to remove          Each form of analysis can         their digitization efforts on
people from the pit entirely. To   be enabled by an integrated       the areas of greatest value
avoid unintended outcomes,         data platform, supported by       and impact.
digital transformation should      data scientists and analysts—
first define the desired future    either in-house or on an          Become an insight–driven
state and the value of the         outsourced basis. Yet, even       organization
initiatives to the organization    while driving digital in “bite    To deliver on the digital mine
as a whole. Properly conceived,    sized chunks”, it is important    nerve center, companies
a digital strategy can enable      to work against a plan or         need the capacity to use
organizations to quickly test      broader roadmap to ensure         data to resolve a wide range
new approaches in a pilot or       that the system ultimately        of business problems. Yet
sandbox environment, and           integrates effectively.           currently, most organizations
either roll them out in phases                                       only use a fraction of the data
or shelve them easily.             Create a digital twin             they collect, let alone the
                                   Most asset-intensive              potential real-time volume
Start small                        organizations have difficulty     they could capture via the
Delivering on the digital          managing their engineering        Internet of Things (IoT), and
mine nerve center does not         and asset information             many still struggle with
need to be an all or nothing       throughout the asset lifecycle,   limited business intelligence
proposition. Organizations         including data integrity          capability from historical
can start small by investing in    issues and time wasted            ERP environments and
improved visualization tools,      looking for documents.            non-integrated operational
integrating data from multiple     Creating a digital twin can       systems. To change this
sources, and reducing reliance     help address this issue. A        equation, miners must embed
on fragmented systems to           digital twin is a digital model   data science and analytic skills
enable better analysis of          of the physical environment       throughout the organization,
data. Real-time data captured      constructed using geological,     by either hiring or partnering
from processing equipment          engineering, and asset            with scarce analytic talent, in
and machinery sensors              information—such as ore           a bid to rapidly uncover the
can help identify drivers of       body models, engineering          insights they need to drive
process variability to enable      drawings, parts catalogues,       intelligent business decisions.
operational improvements,          and service manuals. The
allow financial models to be       model is continually updated

Tracking the trends 2018

From left field
Mining companies operating with no
back office
Could effective use of data evolve to the
point that miners can operate with no
back office? Some of the major disruptive
competitors in the financial services space
have turned that industry on its head by
running with just a fraction of the overhead
required by legacy players. Arguably,
unconventional mining competitors could
run their entire operations out of the cloud,
virtually eliminating the expenses traditional
companies face to maintain a back office.
This vision may not be so far in the future.
After all, many companies already fully
outsource their back office functions—
such as finance, human resources, IT, and
procurement—to shared service centers.
Similarly, many senior mining executives
currently spend a good portion of their
time away from head office, visiting mine
sites, meeting customers and governments,
and attending investor meetings and
conferences, a trend that could ultimately
see them running their businesses virtually.

Charting a path towards
innovation maturity
Mining executives understand       comes to innovation4. Part of
that innovation is necessary       the reason is because mining
for the industry to transform.     companies continue to face
This isn’t confined to just        a number of organizational
technological innovation; it       barriers to innovation.
includes the adoption of more
innovative approaches to           Identifying the roadblocks
engaging with stakeholders, re–    First, mining companies are
envisioning the future of work,    traditionally averse to take on
and identifying the commodities    new risks that may impact their
that will be in greatest demand    cash flow or license to operate,
going forward.                     reducing their propensity
                                   to pursue transformational
Despite the imperative,            innovation. This is due in part
however, industry players          to the way their processes are
cannot yet be considered truly     structured. When innovation
mature innovators. Deloitte        initiatives must compete for
research across Canada,            capital against projects with
Australia, Africa, and Latin       a shorter–term payback, the
America shows that the sector      latter generally wins. This makes
still lacks systemic consistency   sense in an age of intense
and strategic focus when it        shareholder scrutiny.

Tracking the trends 2018

   Innovation in action
   In December 2016, Vale opened its largest iron ore mine, in Brazil. The Eliezer Batista S11D
   Complex includes a mine, plant, railroad, and port logistics designed to vastly reduce the
   company’s environmental impact. By locating in an already–deforested area outside the
   Carajás National Forest, Vale reduced vegetation clearance in the forest by roughly 40
   percent. The company also adopted a range of technological innovations that promise
   long–term environmental benefits. For instance, rather than using trucks to transport
   ore to the plant, Vale installed mobile excavators and crushers, a system that will reduce
   fuel consumption by over 70 percent and reduce waste from used tires, oil filters, and
   lubricants. Additionally, the ore is being processed using the moisture it naturally contains,
   cutting down water consumption by 93 percent relative to the conventional process. The
   company also anticipates saving 18,000 MW of electricity per year—enough to power roughly
   10,000 homes.5

It just may not bode well for the   potentially business–altering       distrustful of collaboration
mining sector’s sustainability      innovations that majors resist      and hampers the juniors’ and
over the long term.                 adopting given the challenges       service providers’ efforts to
                                    associated with calculating         co–create or co–invent in
Second, mining companies’           the lifetime value of new           partnership with the majors,
propensity to favor short–          innovations.                        despite the fact that this type of
term cash flow generation                                               collaboration can accrue to the
often works to the detriment        Third, mining companies             benefit of shareholders. Mining
of creating longer–term             often lack a clear vision to        companies are also accustomed
net present value. As such,         guide and enable longer–term        to treating access to capital as
innovations that may reduce         transformation. Without this        a competitive advantage, which
costs over a product’s or           vision (i.e., to become the         was true when the industry was
process’s lifecycle are often       lowest cost operator, minimize      able to rely on high quality ore
dismissed if their initial          the mining footprint, build a       bodies and economies of scale
costs exceed current costs.         fully automated mine, etc.),        to drive down costs. Today,
Frequently, operators are           they struggle to tackle and         however, the technologies that
dis–incented from pursuing          derive value from innovation.       can make a marked impact
initiatives unlikely to deliver     Innovation needs focus and          on mining performance are
rapid returns. Procurement          companies need to take their        evolving rapidly and mostly
practices are often so focused      vision and align their innovation   outside the mining industry.
on lowering per unit costs          efforts against a series of key     As a result, capital is no longer
that there is an unconscious        thematic areas.                     the constraint. Instead, the
bias against innovators whose                                           companies most constrained
costs exceed the lowest cost        Fourth, mining companies            will be those unable to
competitors—even if they’re         are historically inclined to        collaborate with technology
delivering superior offerings.      operate in isolation. Concern       leaders and integrate
This has become a sticking point    around intellectual property        that technology into their
among service companies and         (IP) rights and competitive         operations.
juniors that have developed         advantage makes companies

Tracking the trends 2018

A bold new vision                  Ecosystems and the role of         in isolation. The research and
To some extent, these              mining services in fostering       development (R&D) groups at
innovation barriers exist          greater collaboration              most mining majors have been
because the design of mines        A review of the innovation         hollowed out, both in terms of
and processing plants hasn’t       barriers in the mining industry    human resources and budgets
changed in decades. Although       reveals that collaboration is      (see figure 2) since their apex
the equipment is more modern,      frequently not within mining       in the 1990s. As a result, the
miners from 50 years ago           companies’ DNA. Why? In            model for innovation has
would find little has changed      some cases, organizations          fundamentally shifted.
if they entered today’s mines,     have not clearly defined which
a situation that certainly         innovations to collaborate on      Increasingly, original equipment
doesn’t hold true in other         and which to retain in–house. In   manufacturers (OEM) and
industries. That means that        other cases, legal agreements      supply companies have access
actual transformation requires     between potential partners         to more innovation capital
a new vision for the future, one   become so complex that             and resources and hence a
bold enough to drive a step        their value is diluted—making      challenge for the industry is to
change in performance and          collaboration more difficult.      figure out a way for miners and
enable more ambitious results      The very structure of many         the service sector to collaborate
from innovation.                   mining companies also makes        more around innovation. This
                                   it difficult to drive synergies    will however require companies
The upshot is that mining          across mine sites—resulting in     to move beyond traditional
companies can only achieve         siloed operating approaches        procurement relationships.
true innovation maturity if        rather than fostering a culture
they go beyond the basics of       of collaboration.
operational improvements
to embrace innovation in a         Critically, the nature and scope
broader sense and embed a          of the industry’s challenges are
series of capabilities within      making it less viable to operate
the organization.

“Although commodity prices have begun recovering, mining executives are still
feeling the sting of the recent downturn. As a result, they are collectively more
cautious than their peers likely were just five years ago. While this is spurring
ongoing focus on innovation, it also means their innovation efforts are increasingly
constrained by the need to demonstrate near–term returns. The catch is that,
unless you are trying new things, you are not learning, and if you are not learning,
you will fall behind.”

Andrew Swart
Global Mining Consulting Leader
Deloitte Canada

Tracking the trends 2018

Figure 2: Mining consistently underspends in
innovation relative to other sectors


             Mining                 Consumer goods           Technology

 2005     2006     2007     2008   2009   2010   2011
 2012     2013     2014     2015   2016

Source: Deloitte analysis

While collaboration is not the             in collaborative development      The general idea is reciprocity.
only approach to resolving                 projects, a process that          If juniors, for example, work
the innovation conundrum                   reduces innovation costs          on improving exploration
among mining companies,                    while empowering industry         performance with a focus on
it can go a long way towards               stakeholders. Collaborative       high–quality deposits, they will
encouraging the steady stream              ecosystems can even enable        increase their value to majors.
of innovations needed to                   cross–border collaboration        If majors work on improved
build sustainable business                 by uniting mining clusters        recovery with a focus on lower–
models over time. Structured               with similar challenges across    grade deposits, they will reduce
deliberately, collaborative                geographical boundaries.          the pressure on juniors. That’s
ecosystems allow mining                                                      a win–win where everyone has
companies to reduce risk in the            These types of ecosystems         increased cash for investment,
innovation process.                        make it clear that innovation     juniors to adopt/commercialize
                                           does not require prohibitive      innovations and develop assets,
Through open industry forums,              budgets. As service companies     and majors to buy juniors.
for instance, suppliers and                and juniors have amply
other members of the mining                demonstrated, it can often
ecosystem can work together                be accomplished with
to resolve mining company                  constrained funds, particularly
issues. Similarly, events such as          when external partnerships
“hackathons” encourage large               are leveraged.
numbers of people to engage

Tracking the trends 2018

Leading strategies in focus
Develop a systematized            implement governance                to champion innovation by
approach to innovation            systems to empower decision         enabling them with the right
To determine the types of         making throughout the               tools, processes, technologies,
innovation to pursue so as        organization. To become             and know–how.
to realize transformational       embedded in the organization,
change, mining companies          innovation needs the support        Develop metrics and
must define their innovation      from senior leadership              incentives to guide
strategy and rally their          together with an acceptance         performance
people around it. This            that not all innovation             Before innovation can be
includes articulating the         succeeds and that failing fast is   delivered as a discipline,
dimensions of their vision        okay. Organizational support        organizations must have the
so they can assess where to       should also not only occur          ability to both measure its
innovate (i.e., by focusing on    from within, but collaboration      effectiveness and incentivize
automation, reducing their        needs to include external           appropriate employee
carbon footprint, partnering      parties like competitors,           behaviors. This means
with stakeholders, etc.). From    suppliers and communities.          companies should aim to
there, companies should                                               monitor innovation from
manage innovation as a            Secure the right resources          concept to prototype to
portfolio against the thematic    and competencies                    pilot. Similarly, metrics and
areas and have a defined way      To progress towards more            incentives should be aligned
to move innovations from          mature innovation, corporate        to a company’s innovation
concept all the way through       innovation efforts must             strategy and reward people
to commercialization. It          be adequately funded and            for their accomplishments.
involves adopting structured      supported with the right            One global company is tackling
innovation processes that         resources and capabilities to       this challenge by setting aside
cut across business units         deliver. In some cases, this may    small portions of its mine
and support innovative ideas      involve hiring ambitious talent     sites as innovation testing
that arise from every level of    from the technology industry,       grounds where operators are
the business                      cultivating the types of skills     not held to stringent quota
                                  required for different kinds of     and production requirements.
Build the                         innovation, making creativity       This frees them up to think big,
organizational support            related processes more              test small, fail fast, and iterate
To turn innovation into an        flexible, and designing more        quickly before scaling proven
organizational core capability,   inspiring work environments.        innovations to other parts of
companies must make it            Mining companies also need          the mine or to other sites.
a leadership priority and         to empower their leaders

                                                                   thetrends  2017
                                                                       trends 2018

From left field
With slowing global mine supply growth and a
shortage of world–class deposits in key commodities
like copper and gold, innovative exploration
strategies are needed. One option is undersea or
deep sea mining, prospecting for minerals on the
ocean floor. According to the World Economic Forum,
the world’s undersea reserves include 10 billion tons
of polymetallic nodules.6

Despite the resource potential, deep sea extraction is
very challenging. Yet, technical advances are making
it more commercially viable. Deep sea robots, used
extensively by the offshore oil and gas industry,
are being used in undersea mining. Innovations in
surveying technology may also allow miners to better
locate and identify undersea ore bodies.

Critically, complex environmental and access issues
will need to be balanced against the likelihood
of untold and largely untapped mineral wealth
lying beneath the waves. Environmental concerns
include the impact of plumes of dust, stirred up
by excavation of the ocean floor, on a delicate
ecosystem. As a result, some companies are
pursuing less intensive exploration techniques.
DeepGreen Resources, for example, is focused on
the exploration and development of polymetallic
nodules from the seafloor, which lie on the top part
of the seafloor. Due to their distinct mineralogy,
polymetallic nodules lend themselves to
metallurgical processing solutions that offer the
potential for significant environmental benefits.
DeepGreen’s patented process is aiming for zero
tailings, representing an important step change for
the minerals industry.


The future
of work
Re–envisioning talent
management in the digital age
As the digital mine becomes         support the mobile workforce
a reality, the nature of work is    across all platforms, and
poised to change dramatically,      digital systems will simplify
at both the mine site and in        work scheduling, while
the back office. In essence, the    more robust cybersecurity
digital mine envisions that a       programs mitigate the risks.
lean set of corporate processes     These technologies will enable
will be augmented by RPA to         core mining activities to be
automate repetitive human           performed from locations that
activities, by autonomous           can support a more diverse and
equipment to reduce labor           inclusive workforce, including
intensity and enhance safety,       primary caregivers, part–time
and by AI to support knowledge      workers, and people with
workers. Fully integrated           physical disabilities.
communications networks will

     Automation is transforming the labor market. Deloitte
     estimates that by 2035 approximately 35 percent of
     current jobs in the UK will be automated.7 Similar trends
     are expected in other parts of the world.

Tracking the trends 2018

   Inside the future of work
   A global mining and metals organization was a relatively early adopter of RPA within the
   industry. After an initial proof of concept focused on the invoicing process in its global shared
   services center, it is now applying automation within its supply function. The objective was
   to automate the manual work of the supply team in expediting material orders and seek
   to increase expediting coverage beyond the top 25 vendors, which it was limited to due to
   a manual time–consuming process, high volume of work, and frequency of updates. The
   solution included automation of SAP supply data into an integrated data platform, the
   development of a dashboard for faster inventory analysis and reporting to site supervisors,
   and RPA for automation of the vendor communication process.8

Charting the implications          As more work moves to shared        as well. For instance, Worsley
While digital solutions will       service centers and centers of      Alumina—a South32 business—
augment human performance          expertise, the available pool       created gender–neutral drilling
by empowering people at            of labor will also expand as        equipment that enabled the
all levels with information to     companies begin to employ           deployment of its first all–
enhance their performance          a mix of on–shore, off–shore,       female drilling crew.9
and insights to drive better       and robotic workers located
decisions, they will also cause    anywhere in the world.              The ramifications on work
upheaval. As manual jobs                                               scheduling are similarly
are automated or replaced          The implications are equally as     significant. In the not too distant
by robotic processes, labor        dramatic for frontline workers.     future, mining organizations
dynamics in local communities      With sensors, for instance,         will be able to post available
will shift significantly.          maintenance workers can             work shifts online and enable
                                   get alerts before equipment         employees to use a mobile
On the positive side, this can     breaks down, allowing them          application to choose the shifts
translate into new employment      to improve scheduling and           they prefer to work. In this way,
opportunities as new roles         increase equipment uptime.          mining companies could attract
are created. It can deliver        Similarly, shift supervisors        a more diverse workforce,
significant safety benefits for    can pinpoint the location of        while giving frontline workers
the mining industry by literally   equipment in real time, enabling    greater freedom to manage
moving workers out of harm’s       faster decision making and          their careers.
way, and boost productivity by     improving worker safety. With
reallocating those workers to      interactive dashboards, mine        On the other hand, greater
more productive occupations. It    managers and supervisors            reliance on digital solutions
can accommodate the realities      can electronically interact with    could result in job losses, raising
of shifting global demographics    engineers with greater levels       concerns about companies’
by enabling more women and         of precision. And, by optimizing    social responsibility towards
seniors to enter and remain in     mine plans in real time, the        their existing workforce. Given
the workforce. It can position     whole nature of work and            the imperative of mining
companies to achieve greater       scheduling will change.             companies to work in harmony
diversity by attracting workers                                        with local communities, the
from historically under–           Not only can work be                industry’s shift to the future of
represented populations.           redesigned, but equipment can       work will need to be measured.

Tracking the trends 2018

Rather than eliminating jobs       When it comes to hiring, this        use of social tools that improve
wholesale, this will likely        means mining companies will          communication, collaboration,
translate into concerted           require access to a broader          and connectivity. Leaders will
efforts to retrain people to use   array of systems experts             also require the capacity to
technology or redesign jobs        to operate and monitor               align competency frameworks
to take better advantage of        autonomous machines, and             to account for new robotics,
people’s existing human skills.    data analysts to turn growing        cognitive, and AI requirements;
To this end, mining companies      volumes of data into meaningful      deploy employees replaced by
should think through how to        insight. This quest for scarce       these technologies; and reskill
reskill and retrain people to      digital talent, including software   employees to complement
learn technology and tools         engineers and experts in             these tools.
faster, and how to design the      robotics and mechatronics, will
technology so it takes almost no   put mining companies against         Although these issues raise
training to use.                   more attractive industries in        potentially uncomfortable
                                   the attraction and retention of      challenges, the future of work
A new kind of miner                key talent.                          has arrived and companies
As automation becomes more                                              that fail to embrace this
prevalent and technology           As such, miners may have             disruptive opportunity could
transforms the nature of           to redefine roles, change            find themselves at a competitive
work, organizations will also      corporate cultures, attract and      disadvantage in today’s
be forced to redesign certain      train in new ways, and reimagine     digital age.
jobs. At the mine site, manual     traditional career paths. They
workers will need to learn         will also need to rebrand to
how to integrate technology        raise their appeal among the
into their job functions. Those    millennial talent joining the
who are more comfortable           workforce. This is particularly
working with technology will       salient for organizations that
also need to train and mentor      continue to run their back office
employees who have less digital    functions in antiquated ways. A
experience.                        lack of innovation in these areas
                                   will make it harder to attract
In the back office, the            those people who will be in
convergence of IT and OT is        greatest demand going forward.
driving the emergence of a new
kind of mining professional, one   Leadership skills will also have
that combines traditional mining   to evolve. As the workforce
skills with advanced technology    becomes more diverse,
skills. Mining professionals now   distributed, and connected,
need to be digitally literate,     mining leaders will need the
along with having strong           ability to foster and support an
problem solving skills and the     inclusive culture, manage across
ability to think creatively.       generations, and model the

“Companies need to realize that
they will not be able to recreate
previous career paths as we head
into the future. Job descriptions
and the skills required are
changing wholesale, mandating a
complete re–conception of the way
in which miners must attract and
retain talent.”

Ian Sanders
Mining Leader
Deloitte Australia

Tracking the trends 2018

Leading strategies in focus
Retrain and upskill                 Source and integrate talent       Create a new social
Gaps in employee digital            across networks                   contract with communities
knowledge are undermining           Attracting new skillsets          and governments
technology transformation           from other industries may         To prevent potential backlash,
efforts. In a 2016 global           be a particular challenge to      it is important for mining
survey of managers and              mining organizations. As a        companies to work with key
executives conducted by MIT         result, there is a growing        stakeholders to develop a
Sloan Management Review             need for miners to partner        shared vision for the future
and Deloitte, only 11 percent       with organizations that have      of work. This can include
of respondents said their           deep technology expertise.        working with schools to
company’s current talent            Companies will need to design     ensure the future labor
base can compete effectively        and evolve their partnership      force is properly trained,
in the digital economy. The         networks to access the best       explicitly discussing labor
main barriers include lack          talent for specific work and      issues with mining community
of agility, complacency, and        cultivate a continuum of talent   stakeholders, and committing
inflexible cultures.10 This         sources—on and off balance        to employee retraining.
speaks to the imperative for        sheet, freelancers, crowds,
mining companies to compare         and competitions.
their current talent pipeline
against skillsets they anticipate   Redesign work for
needing in the future and           technology and learning
hiring or retraining to close       As the future of work becomes
identified gaps.                    a reality, companies must
                                    move beyond process
Adopt new attraction and            optimization to find ways to
retention strategies                enhance machine–human
To attract and retain scarce        collaboration. This includes
digital talent, miners should       identifying areas where digital
place greater emphasis on           technology can augment
nurturing and developing their      worker performance as
people, creating interesting        employees shift to more
and purposeful work, and            productive work—for instance,
building an environment             by harnessing technology to
with career flexibility and         give workers richer real–time
tools that enable employees         information or using AI to
to collaborate and exchange         complement human judgment.
ideas transparently.

                                            thetrends  2017
                                                trends 2018

From left field
If AI technologies follow
the tenets of Moore’s Law,
then the cost of automation,
robotics, and cognitive
solutions are bound to
continue falling over time,
leading to a notable uptick
in adoption rates. As remote
operations become more
pervasive, and automation
becomes more sophisticated,
the miners of the future could
arguably use video game–
like controllers to operate
mine site equipment from
any location in the world.
The result? A mine with no
frontline workers. Should
this type of future come to
pass, the whole role of HR will
shift in the organization of
the future.


The image
of mining
Changing public, employee,
and customer perceptions
Although the sector has taken       and engage in dubious
significant strides to improve      practices abroad.
the image of mining in recent
years, in some cases, it is still   As mining companies know
operating under a legacy of         from harsh experience, negative
weak environmental practices,       perceptions can do more than
fractious community relations,      damage reputations and affect
stock price underperformance        stock prices. They can also spill
relative to other sectors,          over into community protests
and a historic lack of              and violence, and result in
workforce diversity.                the loss of a social license
                                    to operate.
Despite the significant
contribution of the mining          In a world increasingly
sector to the world’s economy,      influenced by round the clock
the industry’s reputation           news cycles and opinions aired
remains tarnished in many           in the court of social media, this
countries due to perceptions        type of backlash is only bound
that mining companies               to spiral. This mandates mining
contribute to environmental         companies to take proactive
damage, cause a negative            steps to address, and change,
impact to the community,            their reputations.

Tracking the trends 2018

    Raising the bar
    In recent years, Rio Tinto set a new bar for tax transparency by voluntarily disclosing details
    of the taxes and royalties it pays on an annual basis. BHP followed suit in 2015, committing
    to develop detailed taxes–paid reports—making the two companies industry leaders in their
    goal to enhance public accountability and improve corporate credibility.12

New behaviors                        Rio Tinto all passed shareholder     of radical transparency
Notably, companies are coming        resolutions regarding increased      encourages companies to keep
to realize that this is not simply   disclosure on climate change.11      themselves honest, creating
a public relations (PR) issue. To                                         an environment of shared
rebuild trust with employees,        “Mining companies are                responsibility.
investors, communities,              coming to realize that radical
governments, and the public,         transparency is now a                In other instances, mining
mining companies must back up        prerequisite for trust,” explains    companies have begun going
their messages to these groups       Carole Cable, a Partner at           beyond philanthropic donations
with action. This mandates a         Brunswick, a communications          that typically end once a mine
change in behavior.                  firm focused on helping              site shuts down. Instead, some
                                     companies build trusted              miners have begun contributing
Increasingly, leading companies      stakeholder relationships.           a portion of their local revenues
are taking more decisive public      “This requires them to marry         to foundations that empower
stances around corporate social      their social purpose with their      community members to allocate
responsibility. For instance,        financial purpose and craft a        funds based on local needs.
in addition to enhancing the         narrative that clearly articulates
transparency of their tax            the value they bring to society.”
disclosures and anti–bribery
stances, many have begun to          This imperative is playing out
demonstrably reduce their            in interesting ways. In some
exposure to countries where          instances, mining companies
the perception of corruption         now enable local communities
has been on the rise. Several        to test the quality of a site’s
mining companies have                water emissions by setting
begun adhering to voluntary          up CCTV cameras or apps
sustainability standards,            that provide citizens with
including those set out by the       online access to water quality
Taskforce for Climate–related        data. Others give community
Financial Disclosure, the Global     members the option to
Reporting Initiative, and the        physically visit water discharge
Carbon Disclosure Project.           sites to conduct their own tests.
Additionally, in the past year,      In addition to empowering
Anglo American, Glencore, and        local communities, this type

Tracking the trends 2018

Re–engaging employees              If companies truly hope to repair
These efforts to regain trust      their reputations, however,          Raising the bar
are also happening internally,     they must also recognize that        The BHP Foundation
as companies work to create        new operational realities are        was established to
a new culture to support their     required, especially if they         help address some of
visions for growth and             hope to attract the talent of the    the unprecedented
re–engage employees.               future. This likely means making     development challenges
                                   structural changes at the mine       society currently
One indicator of this shift        site to automate the physically–     faces. Through its
is the mounting focus on           challenging or dangerous             Natural Resource
mental health as mining            tasks that may not appeal to a       Governance program,
organizations work to address      new generation of workers. It        it aims to reduce the
the pressures many employees       also means fostering a culture       potential for corruption
face both within and outside       of diversity and inclusion so        and bribery across
the workplace. The Mental          typically under–represented          the resource value
Health Commission of               employee groups feel a sense         chain by enhancing
Canada, for instance, recently     of belonging.                        transparency. Its goal is
began offering a mental                                                 to provide citizens with
health first aid course to the     Although some companies              access to information
mining industry in Northern        have begun to embark on              that shows the flow
Ontario.14 In Australia, as part   the arduous task of shifting         of funds related to
of a state–wide campaign to        perceptions, there is little         natural resources in
generate awareness of mental       doubt that much work remains.        their country, giving
health issues and the support      The alternative, however, is         them both the data and
available, Rio Tinto’s Hunter      untenable. Miners simply cannot      the tools required to
Valley mines traded their          hope to sustain their license        hold local institutions
standard yellow truck trays for    to operate, cultivate employee       to account.13
blue to indicate their improved    loyalty, or win the hearts and
capacity to provide peer           minds of other key stakeholders
support and related mental         if they don’t engage in a
health programs.15 Glencore        concerted, and multi–year,
also introduced the Mates in       effort to repair their reputations
Mining program in Queensland       and regain public trust.
to encourage more open talk
about the risk of suicide.16

“If mining companies truly hope to repair their image, they must do more than
change their messaging. They must also fundamentally change their behaviors
around the way they mine how they engage with communities, attract talent,
and deliver on their promises.”

James Ferguson
Global Mining Tax Leader
Deloitte UK

Tracking the trends 2018

   Reimagining reputations
   When the ePrix, the electric vehicle version of the Grand Prix, makes its debut in Santiago in
   2018, it will be sponsored by Antofagasta Minerals. The company’s decision to put its name
   on this first edition of the all–electric race was not simply a PR exercise. In fact, its aim was
   to bring attention to the company’s commitment to help contribute to a cleaner world by
   reducing carbon emissions. Antofagasta is demonstrating this commitment in myriad ways,
   not least by using renewable sources, including wind and solar, to generate 45 percent of its
   power at its Los Pelambres mine.17

Creating a new image                begin offering products over          Mamba ores with higher
with customers                      which they can exercise more          phosphorous Brockman
In addition to rebuilding           control, particularly relative to     ore, Rio Tinto created a
trust externally and among          pricing. China’s new modern           premium product to meet
employees, some companies           steel furnaces, for example,          the unique demands of steel
are trying to reposition            are configured to run on              mill customers. Since its
themselves in the eyes of their     high quality iron ore and             introduction into the market
customers by demonstrating          met coal, encouraging steel           roughly one decade ago, the
their capacity to deliver           mills to favor higher grade           Pilbara blend has become
greater value. As the industry      iron ore. This is true across         the world’s most traded iron
works to articulate its value       commodities. China’s drive to         ore product.18
proposition to shareholders,        reduce emissions and improve
there’s been a collective soul      the environmental footprint           As mining companies continue
searching that has led, in some     of individual processes will          to remake themselves from
cases, to the development of        underpin demand for higher            the inside out, leaders will
differentiated, higher margin,      quality raw materials. Similarly,     likely focus more diligently on
proprietary products tailored       India is structurally short of high   understanding customer needs
to meet the needs of certain        quality coal reserves.                and developing boutique or
customer segments.                                                        niche products to meet them—
                                    Some companies have already           reaping the rewards of both
With economies moving               taken steps to meet this              improved customer satisfaction
along the urbanization              demand by creating more               and higher margins.
curve and demanding more            differentiated products. Rio
sophisticated products,             Tinto’s Pilbara blend is a case
miners may increasingly             in point. By blending Marra

Tracking the trends 2018

Leading strategies in focus
Enhance transparency              and the development of              disclosure. The technology
Companies have already            healthcare programs. They           required to do this may even
taken great strides to            may also need to give key           end up providing valuable
improve the transparency          stakeholders an inside              data companies can use in
of their tax disclosures. A       look at their operations,           decision–making.
similar spirit will likely need   by empowering citizens to
to pervade a broader range        monitor the quality of their        Develop a crisis
of activities going forward.      water outputs, for instance, or     management response plan
Mining companies need to          explaining the rationale behind     Mining companies must
more clearly demonstrate          changes in strategic direction      continually work to educate
the role the industry plays in    to employees at all levels of the   their stakeholders about
supporting and sustaining         company.                            the industry and keep
economic growth. Companies                                            them apprised of corporate
must continue sharing             Up efforts to build,                activities. This means
examples of the efforts they      measure, and report on              staying ahead of the curve
are making to remediate           sustainability                      by anticipating criticism and
any environmental damage          While many governments now          having a ready response. To
they cause. They must be          require certain disclosures,        repair reputations, mining
more proactive in sharing         over–reporting shows a real         companies must consistently
the impact they are making        commitment to sustainability.       be honest and upfront about
in local communities and          Companies can only do this,         any incidents and how they are
countries, not only in terms of   however, if they invest in tools    addressing them, even if they
employment, but in terms of       that can help them report           are only minimally involved.
infrastructure investments,       consistently and with the
improved access to education,     same rigor used for financial

                                                                             thetrends  2017
                                                                                 trends 2018

Align operational decisions      Work directly with
with stated commitments          governments and
To shift public perceptions,     communities
mining companies must            Most large mining companies
walk the talk. This means        already do this, but all miners
avoiding jurisdictions rife      should meet regularly with
with bribery and corruption,     key stakeholders before,
reducing safety incidents        during, and after a mine is
and fatalities, and rigorously   operational. This is about more
adhering to the most stringent   than good optics. It is good
environmental practices          business—and it will provide
possible. It may also mean       companies with confidence
shifting corporate cultures      in the face of criticism when
to ensure employees truly        they know they are actively
prioritize the maximization of   respecting and incorporating
value over the maximization      the views of the communities
of production. To turn culture   they operate in.
into a productivity lever,
mining companies should
seek out best practices from
organizations that already
understand that their real
assets are their people.

The growing need to achieve
measurable social outcomes
To expand local employment       Mounting volatility
opportunities, increase tax      These demands are taking
revenues, and meet increasing    various forms. In Russia, for
community demands for            instance, community concerns
improved infrastructure          around coal dust pollution may
and greater environmental        result in a ban on the use of
protection, many governments     grabbing cranes, which are used
of resource–rich countries       by ports to load more than 50
continue to put pressure         percent of Russia’s seaborne
on the mining industry. As a     exports. If passed, these
result, mining companies in      measures could see Russian
many jurisdictions still face    coal exports fall by up to 80
considerable obstacles to        million tons, dropping back to
investment, ranging from         2007 levels.19
high royalty rates, permitting
challenges, and uncertain tax
rules to growing requirements
for local beneficiation.

Tracking the trends 2018

    Stakeholder management in action
    Diamond producer De Beers has been operating in Botswana since 1967, the year after the
    country achieved independence. As part of a public–private partnership that has extended
    over 50 years, the company entered a 50/50 joint venture with the government to form
    Debswana, the primary producer of diamonds in the country. In recent years, De Beers
    moved both its diamond sorting operations and its international sales function to Botswana.
    An analysis of the partnership in 2014 showed that it employed almost 8,000 people, of
    whom 96 percent were Botswana citizens, including almost 85 percent of management.
    A further 12,870 jobs in the broader economy were supported through the partnership’s
    supply chain contribution. In addition, the partnership spent approximately US$6 million on
    550,000 hours of training and skills development for employees. Today, the partnership is the
    largest single contributor to the Botswana economy, besides the government itself.24

In Colombia, the mining industry     New approaches                        the mining industry remains a
has been beset not only by           Although many of these                major employer. Historically,
protests, road blockades,            regulatory risks can be traced to     the contract between mines
and new tax measures, but            politically volatile jurisdictions,   and communities has revolved
also by mining bans that have        there may also be a secondary         around job creation. As mines
forced some major miners             underlying cause. Some of             move towards more digital
to halt operations in certain        the social initiatives mining         operations, however, the basis
municipalities.20 El Salvador        companies have undertaken in          of this social contract will
went one step further, banning       the past have failed to deliver       shift. To prevent unrest and
mining entirely.21                   on their intended results.            mitigate backlash, companies
                                     Increasingly, the industry            will need to leverage the
In Tanzania, Acacia Mining was       is coming to realize that its         digital infrastructure on behalf
hit by a US$190 billion fine,        traditional approaches to             of communities, potentially
US$40 billion in unpaid taxes        community and government              using it to create new
plus an additional US$150            relations must change.                education models, improve
billion in interest and penalties,                                         communication, develop
prompting the company to             This imperative will only             suppliers, or deliver other
reduce its operational activity      heighten in the digital age.          digitally–enabled services.
in the country.22 The total bill     Despite the benefits that             This will require companies
represents roughly 40 times          automation, robotics, and AI          to be more creative in
Acacia’s 2016 revenues and           deliver, their effect on local        uncovering the real needs of
comes in at four times the size      employment is bound to                these communities.
of Tanzania’s GDP.23                 spark government concern,
                                     particularly in regions where

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