Trend 9: New business models
Six models can help mining and metals companies operate within a more volatile environment.
Amid ongoing uncertainty, miners have an opportunity to assess whether existing business models are fit for purpose. Six models may better help miners capture value amid volatility:
- Shared value model: Delivering greater returns directly to host communities and governments
- Circular business model: Minimizing waste and reducing emissions
- Vertical integration: Acquiring or integrating into downstream companies such as automakers
- Horizontal market integration: Moving into adjacent businesses, e.g., tech providers, to drive innovation
- Joint ventures: Potentially delivering more value to stakeholders and improving access to reserves and capabilities
- Offtake agreements: Providing low-risk access to capital
Determining which model fits best requires companies to first identify where value, risks and opportunities lie in the current model, then conduct in-depth scenario planning and future market assessments.
Trend 10: Productivity and costs
Balancing short term gains and long term value can drive sustainable cost reductions.
The COVID-19 pandemic means demand is up, but so are the costs of inputs, shipping, talent and decarbonization programs. Reducing costs and improving productivity is a balancing act for miners that must achieve short-term gains while creating long-term value.
Variability is a key impact on miners’ productivity. Managing this requires:
- Improved geological modeling to alleviate uncertainty
- Analytics around asset performance to enable predictive maintenance and improve reliability
- Operational discipline to deliver consistent results
- Integrated operating models that align with markets to enable rapid response to change
Productivity initiatives centered around people and enabled by technology can help miners achieve sustainable, end-to-end improvements without having a negative impact on LTO.