Global mining and metals sector faces digital disconnect
London, 11 April 2017
- 15% of survey respondents say digital isn’t on the agenda in their organization
- Digital is a key enabler to achieving the next level of productivity improvement
- Companies must apply the same rigor to digital transformation that they would any other change program
Future digital transformation of the mining and metals sector will be a critical enabler to addressing the industry’s productivity and margin challenges, according to the EY report The digital disconnect: problem or pathway? However, the current rate of digital progress is out of sync with the scale of opportunity for many companies, the report finds.
Just 31% of 700 respondents in the sector say digital is high on the agenda at their organization, while 15% say it is not on the agenda at all.
Paul Mitchell, EY Global Mining & Metals Advisory Leader, says:
“Productivity remains the top operational risk facing the sector and companies know that traditional cost cutting isn’t enough to address this challenge. Embracing new digital technologies is crucial to improving productivity and commercial outcomes.”
The mining and metals sector has a long history of adopting new technologies, including plant control systems, GPS technologies, automated haulage and data storage. And, yet, many companies face substantial challenges in turning their long-term digital vision into a reality finds the report.
The concept of digital mining is not new despite the sector’s reputation for falling behind other industries in embracing digital. Companies have been quick to take advantage of technological developments in the past. However, we now see a disconnect between the potential from digital transformation and the poor track record of successful implementations.
A number of common pitfalls are driving the digital disconnect between mining and metals companies’ vision of a digital future and ability to actually achieve it, the report finds. They range from a perception of high costs to an ill-defined business model and a lack of detail on the implementation pathway.
Mitchell says: “Companies are nervous when it comes to digital investments. Many have experienced failed attempts in the past, and they don't want to go down that road again. Many do not have a clear view of what their current capabilities are or where they want to go in the future. It’s navigating this path that is key. Those miners that are working toward defining their digital future are on the right track. It’s those that do not take advantage of digital advances that are putting their future at stake.”
The report outlines how digital can: optimize plans and productivity rates across all operations and manage variability under any conditions; enhance asset availability and reliability; help understand true end-to-end capability and systems bottlenecks and support loss elimination; and increase agility and responsiveness to changes in market factors.
Mitchell says: “Companies need to apply the same rigor that underpins other change programs to their digital transformation. Only then will miners achieve the end-to-end process change the sector needs to achieve the next level of productivity.”
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With a volatile outlook for mining and metals, the global mining and metals sector is focused on margin and productivity improvements, while poised for value-based growth opportunities as they arise. The sector also faces the increased challenges of maintaining its social license to operate, balancing its talent requirements, effectively managing its capital projects and engaging with government around revenue expectations.
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