Earlier this year, Dassault Systèmes published a Special Report on Mining Innovation, which included articles, insights and a case study from both mining leaders and mining companies emphasizing the need for change in the mining industry. With the demand for operational productivity growing ever greater, leading mining executives continue to speak out on the benefits of employing innovative technologies from other industries that have been proven to achieve productivity objectives.
Standalone mining tools used to support processes in isolation of one another are not enough. Rather, a holistic viewpoint, integrated data and enhanced collaboration across the mining value chain through customer delivery are required.
Industry thought leader and Report contributor Michael MacFarlane, former Executive Vice President, Strategy and Business Planning with AngloGold Ashanti shared his insights on technological change in mining. Here is an excerpt from his article:
The downturn in both demand and price for mining commodities exposed the mining strategy of production-at-any cost. Throughout most of 2012 and 2013, commodity prices continued to fall while mining costs continued to increase at a double-digit rate. By early 2013, margins diminished – Return on Capital Employed (ROCE) and Free Cash Flow (FCF) dropped. A course correction in the mining industry’s cost structure was urgently required.
Six things companies are doing to address investor concerns:
- Stop mergers and acquisitions that destroy value.
- Bring more discipline to the capital allocations process and ensure they add value.
- Increase ROCE and fix underperforming assets.
- Sell marginal assets to increase margins.
- Grow FCF now to support an increasing dividend.
- Bring immediate fiscal discipline and cost control to operations.
While there has been a sharp downturn in investment in the mining industry, it is clear that capital projects are not going away; however, the entire capital allocation process needs to be improved significantly. The focus must be on introducing proven existing technology from other industries combined. The impetus should be on improving the planning by eliminating much of the guess work in decision making. At the same time, the industry needs to improve the speed and quality of the capital allocation by automating the process.
The mining industry is starting to look to other industries for new solutions. There is interest in the manufacturing industry’s commonplace approach of managing process information in real-time. All of the necessary technology for the mining industry to adopt the Lean Manufacturing concepts built on real-time data collection and variances management already exists. While this approach is in its early days for the mining industry, the introduction of this technology means a step change to asset performance is possible. With the current mining strategy now focused on fewer, yet larger, low cost operations, getting the most out of each operation is essential.
To read the full article and more, Download the FREE 16-page Special Report on Mining Innovation. Learn what you can do now to affect positive change, and understand how technology will transform operational productivity. You will also find several additional articles, including a real-world example of how the innovative use of technology helped to transform an underperforming mining operation.
For more information on the challenges faced by mining operations and the benefits to improving processes, download the eBook Increasing Mining Efficiency and Productivity.
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