To truly achieve a sustainable productivity improvement, we believe that an integrated end-to-end business transformation is required, and that can be accomplished only through a mine-to-market approach.
We couldn’t understand why miners were not focusing more on this area, so we interviewed global mining executives. Listening to the sector helped us understand the specific steps miners can take to significantly reduce the integration gap.
During the super cycle, productivity fell to its lowest rate in more than 30 years, with the sector focusing on production at any cost because of an unprecedented boom in commodity prices. Productivity has been the number one operational risk for mining companies for the past three years.
Many of the mining executives we interviewed observed a decline in productivity levels as their operations expanded. This was primarily due to the challenge of managing complexity, compounded by the talent challenge, and lack of appropriate skills development.
Integration gap may contribute to 20% productivity loss
While mines were scaled up to maximize production, mine managers were not provided with the tools to manage this increased complexity. The scale of these larger mines and the related complexity resulted in an increased pressure on the functional departments to manage these burgeoning workforces.
A silo mentality has crept into the management of mining companies. We refer to the gap between the creation of silos and the desire to eliminate them as “the integration gap.”
The integration gap in the mining sector can create productivity loss of 10% to 20%. So why has the sector not placed much emphasis on it?
Data indicates that asset productivity has barely changed over this time, and this appears to be the hardest area for the mining sector to increase productivity. So we looked at how the leading industries, such as manufacturing, have gone about solving this issue.