Market-to-mine approach needed to stem productivity loss in mining and metals sector
London, 13 December 2016
- Productivity losses from integration gap estimated at more than 20%
- Manufacturing mindset has potential to reduce integration gap and significantly enhance productivity
- Process model structure allows companies to be more agile
Research suggests that an integration gap – between the mine and production plant, maintenance and supply chain – is causing a productivity loss of more than 20% in the mining sector. To achieve the next level of productivity gains, a new EY report, How do you prepare for tomorrow’s mine today?, recommends that mining and metals companies look to other sectors like manufacturing for leading practices. While miners have made significant progress around cost reduction and labor productivity, asset productivity continues to lag.
Paul Mitchell, EY Global Mining & Metals Advisory Leader, says:
“Solving the integration gap requires miners to adopt a manufacturing mindset. We recognize that factors like geographic diversity, ore body knowledge and, at times, even weather mean that it is difficult for miners to control variability and adopt practices developed by manufacturing companies. But we believe that this variability can be managed through adopting an integrated process model approach to the business, aligning digital investments to productivity outcomes and embedding a zero loss culture in the organization supported by strong leadership and employee engagement.”
The reportoutlines the need for an integrated market-to-mine process model approach to help ensure that each element of the business, from the resource in the ground to the product being delivered to customers, is optimized as a business system.
Senior mine managers and executives interviewed for the report agreed this approach would help to reduce complexity. To date, a process approach has been implemented for back office processes but not service functions such as asset management or marketing, or core functions such as mine production or mineral processing.
Mitchell says: “Process models allow companies to be more agile, and with this, better manage variability from market-to-mine. That’s especially important in today’s market where miners face the difficult task of responding quickly and effectively to volatile market conditions.”
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About EY’s Global Mining & Metals Sector
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.
EY’s Global Mining & Metals Network is where people and ideas come together to help mining and metals companies meet the issues of today and anticipate those of tomorrow by developing solutions to meet these challenges. It brings together a worldwide team of professionals to help you succeed — a team with deep technical experience in providing assurance, tax, transactions and advisory services to the mining and metals sector. Ultimately it enables us to help you meet your goals and compete more effectively.
For more information, please visit ey.com/miningmetals.
About the report
Interviews were undertaken with senior mine managers and industry executives in association with the researchers at the Sustainable Minerals Institute and the Australian Institute of Business and Economics at the University of Queensland, and the Norman B. Keevil Institute of Mining Engineering at the University of British Columbia.