GX Er Tracking The Trends 2019

Tracking the trends 2019

The top 10 issues transforming
the future of mining
1
Contents
Solving the value conundrum 03
Trend 1: Rethinking mining strategy 04
Trend 2: The frontier of analytics and artificial intelligence 10
Trend 3: Managing risk in the digital era 18
Trend 4: Digitizing the supply chain 22
Trend 5: Driving sustainable shared social outcomes 28
Trend 6: Exploring the water-energy nexus 34
Trend 7: Decoding capital projects 40
Trend 8: Reimagining work, workers, and the workplace 46
Trend 9: Operationalizing diversity and inclusion programs 50
Trend 10: Demanding provenance 56
Holistic, dynamic, and integrated:
Devising a grand strategy for the future 61
Contacts 62
Endnotes 64
“It appears that the mining industry is poised
for greater growth than it’s seen in a decade,
but today’s market realities are very different
than those of the past. We’re now dealing
with geopolitical tensions in the form of trade
wars and tariff concerns, as well as looming
asset shortages. Rising commodity prices
should fuel expansion, but could also result in
a return of inflation and the costs that go with
it, eventually eating into margins. Disruption
and volatility has become the new normal and
the pace of change is outpacing our ability
to adapt. This makes it imperative for mining
companies to clarify how they plan to drive
value into the future and how they intend to
respond when prices inevitably drop again.”
Philip Hopwood
Global Leader―Mining & Metals
Deloitte Touche Tohmatsu Limited
02
02
Solving the
value conundrum
We all know that what goes world order, miners will not In Tracking the trends 2019,
up must come down, but attract talent, investment, or our eleventh annual edition,
the reverse isn’t always true. community support if they only Deloitte’s global mining
This explains why the recent focus on communicating the professionals once again
resurgence of the mining value that they currently bring draw on their knowledge and
sector comes as a great relief. to communities – miners will experience to provide mining
With a cyclical recovery in the need to go a step further and companies with insights they
commodity markets, there has articulate what they stand for can leverage in their ongoing
been an uptick in corporate by developing differentiated pursuit of productivity,
earnings, cash flows, and credit business models designed capital discipline, strategy
ratings, and a corresponding to drive long-term value. development, and sustainable
drop in debt levels. As a result, growth. In addition to sharing
spending is again on the Solving this value conundrum real-world case studies and
table, with mining companies mandates them to best practice examples,
considering investing in capital re-envision their corporate our professionals identify
projects and engaging in strategy, strengthen their potential industry disruptors
mergers and acquisitions. risk management, and find that may be coming “from left
better ways to engage with field”. As ever, we welcome
Mining companies now need stakeholders, push the your input and feedback
to determine how to operate boundaries on their digital and remain deeply grateful
in a market characterized by transformation, attract truly for your years of support.
constant disruption, volatility, diverse workforces, and avoid
rising stakeholder demands, a the capital project mistakes of
widening talent gap, dwindling the past. It also requires them
access to key inputs such to make technology a strategic
as energy and water, and a priority by acknowledging its
Chinese economy growing at role as an enabler across every
under seven percent, rather facet of their business.
than 12 percent. In this new
“To thrive into the future, mining companies will need to challenge
the status quo—and the only way to do this is by soliciting a
diversity of opinions and taking the risk to do things differently.
The fourth industrial revolution represents a new era of business
that can only be harnessed by leaders who have the courage of
their conviction.”
Glenn Ives
Americas Mining & Metals Leader
Deloitte Canada
03
Rethinking trend 1
mining strategy
Embedding the discipline to deliver
measurable value across the cycle
In the not-so-distant past, mines in pursuit of superior Hearing voices
mining companies, large and returns, underpinned by the Yet the industry is in fact
small, typically anchored expectation of constantly-rising shifting, in ways that many
their strategic planning commodity prices. This led to executives never anticipated.
around producing the large amounts of debt being
highest volumes of ore at incurred to fund these projects Consider, for instance,
the lowest possible cost. In with significant write-offs. the rising voices from a
the process, the concept of consumer contingent that has
“low cost operations” was Although that bubble has historically been silent. Unlike
recalibrated—becoming long since burst, many mining retailers, telecommunications
a function of prevailing companies are still grappling companies, or other consumer-
commodity prices rather than with its strategic legacy. In facing businesses, mining
a relentless focus on radically essence, they have not yet companies have never truly
shifting the cost base. By sufficiently broadened their answered to the broader
now, everyone is familiar with strategic outlook to take a “public”. That’s now changing
the result of this approach: range of critical industry shifts as users of smart phones
the drive to build ever-larger into account. (which contain more than 62
04
Trend 1: Rethinking mining strategy
different metals1) and drivers of May the best asset win by 23.5 percent, to
electric vehicles (EVs)—which A similar strategic struggle is US$1.64 billion by 2019.4
rely on increasingly in-demand taking place at the portfolio level Hindered by fluctuating
commodities such as lithium, as mining companies attempt energy prices and the difficulty
graphite, cobalt, copper, to select the “best” assets. The of placing a true value on
titanium, aluminum, nickel, and trouble is that, while certain water, mining companies
manganese2—start questioning assets look good on paper, their must continually readjust
whether the metals and return profile is compromised the relative value of their
minerals in their end-products in practice. A case in point are individual assets—especially
have been ethically sourced. world class ore bodies located where their carbon and water
in politically risky geographic footprints vary from mine to
Consumers are not the only regions, where government mine and region to region.
stakeholders irrevocably demands are taking the form The strategic implications of
altering industry dynamics. of higher royalties, resource this cannot be underplayed.
Governments and communities taxes, growing requirements
have also become more for local beneficiation, and Making complex choices
vocal over the years. Both even reclassification of key In fact, looking at these factors
governments and communities commodities as “strategic”. alone—consumer awareness,
have the power to delay or social license to operate,
even shut down projects if An equivalent challenge exists in geographic risk, and access to
their needs are not adequately regions where key inputs, such input commodities—it becomes
addressed. As a result, as energy and water, are scarce. clear that mining companies
corporate social responsibility Energy alone can account for must take an ever-expanding
(CSR) initiatives, which were up to 30 percent of a mine’s range of issues into account
once approached as mere total cash operating costs, when when setting corporate
compliance exercises, are now the consumption of grid power, strategy if they hope to create
morphing into stakeholder diesel, liquid natural gas (LNG), competitive portfolios robust
engagement programs, and and compressed natural gas enough to generate value
social license to operate (CNG) are taken into account.3 across multiple scenarios.
is becoming a pivotal At the same time, global capital This is especially critical as the
strategic issue that will either expenditure on water and industry shifts into a new stage
differentiate mining companies wastewater by the mining of growth.
or derail them. industry is expected to rise
Strategic thinking in action

In a bid to structure asset portfolios geared towards changing market demands, several
diversified miners are making bold investment, and divestment, decisions. In March 2018,
Rio Tinto completed its exit from coal5 and has since been looking into bulking up on
copper, where high demand is anticipated due to its use by the EV and renewable energy
industries.6 Barrick in its merger with Randgold, has pivoted its portfolio towards tier one
assets defined as low cost assets producing more than 500,000 ounces, with more than
10 years of life.7
05
It’s time for management teams and boards to put their portfolios to the test by asking some
hard questions:
• Are we relentlessly • Do we have a response plan • H

ow actionable is our
focused on ensuring and contingent scenarios strategy? Have we delineated
the cost competitiveness should the regulatory consistent actions to create
of our assets? To what extent environment alter? value across each operating
are we embracing digital division? Or, is our strategy
technologies to control costs? • D
o we have a sufficiently confined to the level
differentiated strategy of aspiration?
• A
re we the best owners for that describes how we
these particular assets? create value for each of • H
ow confident are we in
Can we prove that our our stakeholder groups, our underlying life of mine
portfolio of assets creates such as our investors, models? Are our models
more value in our hands customers, communities, static and based on imperfect
than it would in someone and governments? Why assumptions? Or, are they
else’s hands? would a stakeholder group sufficiently dynamic to
align with us rather than with take commodity, grade,
• A
re we thinking about the a competitor? and ore body fluctuations
future of mining? Can we into account?
identify ways to generate • C
an we consistently and
returns more quickly or optimally operate our mines, • H
ow are we planning to
respond with more agility to while adopting necessary rehabilitate our assets,
shifting demand factors? local variations? Or does our and how clearly is this
model result in a different articulated in the market with
• Is
our portfolio robust operating model for each of our stakeholders?
enough to withstand the our mines?
complex array of industry,
community, and government
risks we face?
Strategic thinking in action

Dundee Precious Metals, a Canadian-based gold mining company, acquired a majority
interest in MineRP and combined it with Terrative Digital Solutions, a division of Dundee
Precious Metals, to create a leading technology provider that is well positioned to
further capitalize on rapidly growing demand for digital innovation and integrated
technical mining solutions within the mining sector.8 Goldcorp has partnered with other
mining companies to run a series of hackathons called Disrupt Mining, designed to both
solve mining challenges and spur the growth of an innovation ecosystem within the
mining sector.9
06
Delivering on the promise “When done well, strategic planning cycles

In rethinking mining strategy, it
consider a range of issues in addition to
is also important to recall that
while value is created at the producing at lowest cost, including the role of
portfolio or asset configuration individual assets in the portfolio, the path to
level, it is only delivered
value creation, the balance between risk and
through rigorous operating
and capital discipline. Although return, and how the company is differentiating
exceptions exist, the industry itself in the eyes of its stakeholders. These
has traditionally lacked the tools
key choices should ultimately drive a mining
and capabilities required to
sustainably improve productivity company’s investment allocation strategy,
and capital efficiency per unit of the partnerships it creates, and the kinds of
output. Without a super cycle to
capabilities it decides to build.”
lift performance, value must be
found internally.
Andrew Swart
Notably, some mining Global Mining & Metals Consulting Leader
companies are taking steps Deloitte Canada
to reposition for the future
by revisiting their underlying
business models and making
new strategic investments. While
it remains to be seen whether
those moves will be sufficiently
far-reaching or radical, one
thing is clear: management
teams serious about long-
term value creation must put
strategy at the heart of their
board-level conversations.
07
Leading strategies in focus

Use data to drive strategy strategy will be at particular robustness of their portfolio
Intuition only goes so far in risk. To close strategic gaps, strategy using AI to consider
setting strategic priorities. companies should stress test and monitor multiple market
That’s why mining companies their strategy by clarifying signals. By evaluating multiple
must rely on data to mitigate their understanding of their scenarios, on both the upside
unanticipated risks and most coveted customer and downside, companies
overcome longstanding biases. segments, their stakeholder will generally make smarter
From a strategic planning value proposition, their key funding, asset allocation,
perspective, this means performance metrics, and their and investment decisions,
using data to answer causal risk tolerances. Take some particularly if scenario
questions designed to align time to answer the questions planning is conducted as a
the management team on the posed on the previous page to continual practice.
issues it must tackle. Reliance surface any issues that should
on data to drive strategy also be considered.
allows companies to shorten
the strategic planning cycle Consider a range
and set up feedback loops of scenarios
between geological planning Scenario planning, enhanced
and financial planning, with artificial intelligence
reducing project risks at a time (AI), can give executives a
when many miners are looking structured way to consider
to expand their capital spend. a range of unpredictable
futures, equipping them
Put strategy to the with information they can
stress test use to make more flexible
In an age of disruption, strategic choices. This makes
mining companies that fail to it particularly useful to mining
expose weaknesses in their companies eager to test the
08
From left field

Tokenization
Tokenization involves converting rights to an asset into
a digital token on a blockchain—and it’s already making
inroads into the mining sector. Goldcorp has begun
to use blockchain to make direct sales to dealers and
banks,10 disrupting the downstream value chain. In
theory, any asset with ownership (e.g., equities, debt,
real estate or commodities) can, and will be tokenized,
raising the prospect of a future where complete mines
or smaller units are tokenized, enabling them to be
traded, and boosting liquidity for miners, far in advance
of actual production.
Mining as a service
The past few years have been characterized by
traditionally asset-intensive businesses transitioning
towards more service-like models (e.g., taxis). Is there a
version for mining where companies sell their technical
know-how and data as a service rather than owning the
underlying assets and infrastructure?
09
The frontier
of analytics and
artificial intelligence
Moving up the maturity curve
Industry 4.0 and the increased adding insight, and raising As mining organizations seek to
connectivity between the analytical challenges many enhance their analytics and AI
physical and digital worlds, organizations are unprepared maturity, they are asking three
represent opportunities to for, both from a technology and key questions:
explore massive amounts talent perspective.
of information, do it quickly, • What are the global trends
and distribute knowledge Mining organizations have in other industries, and how
wherever it needs to go. Yet, started tackling this challenge. are they relevant for us?
as information floods into They are exploring and investing
businesses, data volumes in analytics and AI in a bid to • What are the specific use
are going through the roof. leverage the data they generate cases in mining, and what
Every day, the world creates and use it to sharpen planning value do they deliver?
2.5 quintillion bytes of data,11 and decision-making across the
ranging from structured data mining value chain—to improve • Where should we focus our
to more truculent forms of safety, increase productivity, investment, and how do we
unstructured data from sources reduce cost, or enhance the approach the work?
such as video, photographs, employee experience.
and text. These shifts are
not only driving operational Yet, despite these
improvements, they are also improvements, there is still
changing expectations for a long way to go.
10
Trend 2: The frontier of analytics and artificial intelligence
Global trends: Three horizons of AI To date, most organizations are working in

AI can be simply defined as machines performing Horizon 1, where machine intelligence requires
tasks that require human intelligence. As we human assistance and interpretation (e.g., robotic
enter an era where intelligent machines work process automation). Yet leaders in this space
with humans, rather than replacing them, three are moving towards Horizon 2, where machine
horizons of AI are emerging (see figure 1). learning is used to augment human decisions and
drive cognitive insights.
Figure 1: Three horizons of AI
Horizon
3
Horizon
2
Horizon
1
Autonomous intelligence:
Augmented intelligence: AI decides and executes
Assisted intelligence: Machine learning augments autonomously
Required human assistance human decisions (e.g., Fully autonomous vehicles)
and interpretation (e.g., Intelligent automation,
cognitive insights)
(e.g., Robotic process automation)
Source: Deloitte Analytics and Cognitive practice
But first, some definitions:

. Artificial intelligence (AI)—machines performing tasks that require human intelligence,
where data interacts with analytic algorithms. Examples: understanding language, decision
making, learning and problem solving.
. Machine learning—an approach to building AI that involves “training” algorithms with large
volumes of data which evolve the algorithm without it needing to be explicitly programmed.
Examples: clustering and segmentation.
. Deep learning—a machine learning technique where “learning” algorithms use deep
neural networks that mimic the brain’s ability to respond to varied stimuli. Examples: image
recognition and voice recognition.
. Natural language processing—machines that extract or generate meaning and intent from
text in a readable, stylistically natural, and grammatically correct form. Examples: translation
software and virtual digital assistants.
11
To move up the analytics assess why production fell off Only with this foundation in
maturity curve into Horizons 2 during a particular shift, day, place can organizations answer
and 3, organizations must or week; why safety incidents the third question: “what will
gain the ability to answer spiked; or why environmental happen?” This is the key that
progressively more complex performance slipped (was it empowers organizations to
questions. The first is “what operator inefficiency? time of predict variability, mitigate
happened?” and, because it relies day? weather-related? something emerging risks, and manage
on retrospective data analysis, else?). To answer the “why” stakeholder expectations.
it tends to be the easiest question, mining companies It is also the springboard
to answer. must be able to integrate organizations can use to move
multiple and typically, disparate from predictive analytics
The second is “why did those data sets to identify the internal to prescriptive analytics,
things happen?” and allows and external levers that positioning them to answer the
organizations to identify root influence these outcomes. “how” question (see figure 2).
causes—for example, to
Figure 2: From descriptive to prescriptive analytics
Data
Descriptive
Descriptive analytics
Encompasses statistical methods
to understand the trends and
Information patterns in the data.
Predictive analytics
Predictive
Employs machine learning

algorithms to learn from the patterns
Knowledge in the data and forecast future trends.
Prescriptive analytics
Embeds the predictive models into
Prescriptive
an organization's analytics layer

Insight to enable decision support.
Source: Deloitte12
12
Analytics in action: trucks between shovels. Maintenance

Mining use cases This resulted in longer cycle Using real-time monitoring
To see what type of value or times and truck bunching. and machine learning for
business outcomes analytics Through the adoption maintenance planning
and AI can deliver, and which of machine learning and A major miner mounted
processes across the value Internet of Things (IoT), a camera on its trains to
chain they can affect, it’s truck cycle efficiency was monitor its railway tracks’
helpful to review several improved, resulting in condition in real time. By
mining-specific use cases. greater capital utilization uploading these video
and increased annual images to the cloud and
Mining operations material movement. using machine learning
Using machine learning to to analyze this constantly
optimize blasting operations Processing changing data, the company
Processing plants need to Using prescriptive modelling can now generate daily
be set up to deal with the to optimize process plants reports on the status of its
high variability in the size Process plants require train tracks, allowing it to
of fragments created from constant operational both fix immediate issues
blasting, and consistent adjustments to maintain and schedule preventative
fragment sizes enable more steady process performance maintenance in advance of
efficient processing. A drill and quality output given potential breakdowns.
and blast operator used varying inputs. Deloitte
machine learning to identify has worked with several Using machine learning to
geologic similarities with resource companies to predict car dumper faults by
previously blasted deposits build prescriptive models anomalous behavior
and the results of those that optimize a range of At port, the ore unloading
blasting operations, allowing process plant activities— process is carried out by
classification of rock mass including predicting input car dumpers. For one
to be improved to optimize ore quality, recipe selection, major mining organization,
blast design and achieve a operational set points, and the clamps represented
more consistent particle size process outputs. Operating one of the biggest failure
distribution. This greater plants optimally also leads modes of the car dumpers.
consistency enabled more to reduced downtime Hydraulic unit failures were
efficient plant operation, and improved equipment directly associated since
increased capacity, and utilization. Across various the clamps are hydraulically
reduced operating costs. projects, observed results actuated. The low and
have included reduction high pressure bands that
Using machine learning and in unplanned stoppages, increased the probability
IoT to manage haul truck accuracy improvement in of mechanical, hydraulic,
movements input grade prediction, and electrical failures
A global miner’s haul trucks reduced variance in were identified, allowing
that operate within the production output and models to be built to detect
pit were often observed processing time, increased pressure anomalies and
queuing at the crusher throughput rates and generate alerts, reducing
and shovels. Analysis of processing yields, and unscheduled equipment
truck fleet data revealed an energy cost reductions. delays and increasing
uneven distribution of haul production capacity.
13
Safety were then leveraged to Using machine learning

Using advanced analytics to identify patterns and gain and neuro linguistic
identify patterns in safety pertinent insights. The programing (NLP) to auto-
data and gain insights analysis identified the classify tax deductibles
Safety observations and extent to which factors A global mining and metals
reports are typically such as the day of the week, organization is now using
collected and stored in a hours worked, or weather analytics to support its
semi-structured way and are conditions increased income tax compliance
then archived, while actions likelihood of a safety processes and enhance
based on root case analysis incident occurring. its tax governance.
typically only occur after The analytics solution
the accident has happened. Other use cases automated transaction data
By applying advanced Using wearable sensors and extraction, automatically
analytics techniques to machine learning to improve classified transactions for
a range of data sources, workforce performance income tax purposes, and
it is possible to process ThoroughTec Simulation—a presented the analysis in an
hundreds of thousands of global supplier of surface easy to understand visual
observations and detect and underground mining, format that could be easily
relevant patterns, leading military, and construction interrogated and adjusted.
to more proactive safety simulators—leverages By using machine learning
approaches. A major machine learning as part of to mimic human cognition,
global miner applied this its workforce performance the digital tax solution
approach to its capital analysis tool, which uses automatically classifies 97
projects—various data wearable sensors to analyze percent of transactions
sets, including rosters, mine operator performance with a high level of
risk registers, and weather in real time and generates accuracy. The solution
patterns were identified, insights mine managers does the hard, repetitive
sourced, and combined, can use to identify gaps in work, freeing up time for
and a range of advanced operator capabilities and the tax teams to focus on
analytics techniques, adjust training to meet each higher value activities.
including machine learning employee’s needs.13
and predictive analytics,
14
Where to invest and Another important new skills is taking on urgency,

how to work consideration for all and new approaches will be
As mining companies move up organizations embarking needed in talent attraction
the analytics and AI maturity on digital transformation is and development, and
ladder, success will hinge on the “talent crunch”. We are organizational planning.
their capacity to: observing talent models
increasingly tilting toward data After selecting the right use
. Think big: establish a clear
science and business partnering cases, and considering the
vision and strategy, driven by skills. As companies seek to talent issues, there are several
desired business outcomes; upgrade their workforces in strategies described below
. Start small: design and deliver all areas, they are placing a which will help organizations
in rapid agile sprints, starting premium on people who have “think big, start small and scale
with a minimum viable product relationship and analytical fast”. The key is to get on with
or solution; and skills, combined with an solving real problems and
. Scale fast: rapidly scale up understanding of the business. delivering value as quickly as
successful projects that have Many organizations do not possible, while keeping the big
demonstrated value (and kill- have the right people in place picture in mind.
off those that don’t), and focus to make this shift. Training
on embedding the change and development can help,
operationally. but the need to recruit for
“Experience shows that the majority of early analytics use

cases have been targeted point solutions, which deliver
value in only one part of the value chain or at only one
operation. Increasing analytics maturity requires greater
integration of data from multiple sources, and delivery of
end-to-end planning and decision-making solutions that
span multiple processes and operations.”
Paul Klein
Consulting Partner
Deloitte Australia
15

Integrate and evolve The latest generation of
Increasing analytics maturity these ERP systems now
requires greater integration offer increased reporting
of data from multiple sources, and analytics capabilities,
and delivery of end-to-end and the integration of ERP
planning and decision-making and non-ERP data will be a
solutions that span multiple critical consideration in the
processes and operations. delivery of more mature
This ultimately requires analytics solutions.
a data and infrastructure
platform with the ability Embed the change
to capture consistently The successful adoption
sourced and reliable data, the of more mature analytics
responsiveness to support capabilities requires top-
a complex network of data down leadership support if
flows—including internal and changes are to be embedded
external data available in both in operational processes.
structured and unstructured Equally important is buy-
formats—and the scalability in from operational and
to enable deep-dive analytics functional people whose
across large data sets, while roles will be affected—they
still evolving in tandem with need to be sufficiently
business needs. Although it is involved and engaged in the
necessary to have a big picture delivery of the solution to
to work towards, it is better understand and believe in
to build the foundational data the benefits of the change.
and infrastructure platforms
in an evolutionary way while Create a virtuous circle
delivering specific use cases, To build analytics maturity,
rather than trying to build it it makes sense to roll out
all up-front. Legacy attempts analytics initiatives in a way
to do the latter which can take that develops capabilities
too long to deliver value. within the organization. Use
cases can be selected to
Leverage next-gen leverage and enhance internal
ERP systems skillsets—supplemented by
The big picture referred to specialist external expertise
above should also take into where necessary—so that,
account the current state over time, the company gains
and future migration path the capacity to execute on
of back-office systems, progressively wider-ranging
including the move towards and more complex initiatives.
cloud-based ERP solutions
and in-memory computing.
16
From left field

Imagine a future where mining companies can
identify ore bodies in greenfield and/or remote areas
without access to pre-existing geological data. Thanks
to the power of AI, that future is here. EARTH AI uses
machine learning to analyze geophysical data to
identify unexplored mineralization opportunities in
Australia. Since April 2018, it has discovered 18 new
greenfield prospects with significant copper, zinc,
lead, and vanadium mineralization.14
17
Managing risk
in the digital era
Exploring a new approach to
controls and risk management
Risk. It’s rare that four letters social media campaigns, and the Zambian government
can embody a spectrum of the geopolitical perils that of the past six years of
such unpredictable and sudden come with operating in less mining company financial
shifts. Yet these are precisely stable regions. statements, resulting in First
the conditions that prevail in Quantum Minerals receiving
today’s mining industry, where In just a rough sampling, recent a controversial US$7.9 billion
the current risk landscape is months have seen the U.S. tax bill.18
characterized by mounting impose tariffs on US$200 billion
tariffs and sanctions, potential of Chinese goods, including The velocity of risk further
trade wars, cyber threats bismuth, titanium, and complicates matters. An
arising from unexpected attack cobalt;15 increased royalties interconnected global
vectors such as equipment imposed on copper, gold, economy means risks are
sensors, uncertain tax and and cobalt, which has been rarely confined to national
royalty regimes, rising input declared a strategic metal by borders, mandating a rapid
costs, heightened scrutiny from the Democratic Republic of and coordinated response.
the investment community, Congo;16 the introduction of two
environmental disasters and new laws in Tanzania asserting Despite this, many mining
infrastructure breakdowns that the government’s “permanent companies continue to address
can result in mine shutdowns, sovereignty” over its natural risk as a tractable concern,
public protest spurred by viral resources;17 and audits by using risk registers to rank risks
18
Trend 3: Managing risk in the digital era
from high to medium to low, A new value proposition At the heart of this next
taking a compliance-based To stem this tide, it’s time for generation of internal audit and
approach to risk assessment, mining companies to take their risk, lies analytics and a range of
using cyclical three-year plans cue from organizations that AI and cognitive tools that are
to identify trouble spots, take a more holistic view of now available and accessible to
and relegating internal audit risk. Increasingly, these leaders mining companies.
to a mere policing function are moving towards the next
responsible for risk assurance generation of internal audit, Rather than use people to
rather than the anticipation of Internal Audit 3.0. perform audits on a rotational
emerging risks. basis, internal audit firms
As with any useful new release can now use digital assets,
The danger here is obvious. of an operating system or such as analytics, robotic
Risks unidentified are risks application, Internal Audit process automation (RPA),
unmanaged, leaving exposures 3.0 offers new features and and AI. Core assurance can
that could compromise functionality, and retains the additionally be automated
a company’s financial best of past versions. Internal and non-conformance
performance, health and safety Audit 1.0 was marked by the identified where controls
record, and social license to founding of the Institute of can be flagged in real time.
operate. It doesn’t help that Internal Auditors in 1941.
many risks were inconceivable Internal Audit 2.0 grew from the With unparalleled access to
just a few short years ago. For impact of Sarbanes Oxley on enterprise-wide information
example, a mining company the accounting profession. and growing capabilities to use
that decides to enhance external data, management
transparency by providing real- Internal Audit 3.0 is being and boards should use these
time results on its emissions shaped by a range of other tools to anticipate risks, moving
data might find itself at risk of drivers, including the speed firms from a backward-looking
having that data manipulated at which organizations are view that reports on what
by malicious parties. Similarly, now expected to evolve and went wrong to a forward-
the prospect that automated innovate as we enter the fourth looking function that prompts
equipment, from vehicles to air industrial revolution. This awareness of what could
vents, could be hacked raises greater pressure to create and go wrong, and what to do
risks that are all too real. deliver value compels internal about it, before it happens.
audit to adopt a new vision of its
role, one centered not only on
delivering assurance and advice,
but also on anticipating risks
and helping the business craft
preventative responses.
19
The complexity of geographic, Ultimately, this approach should

regulatory, environmental, help mining companies address
operational and compliance risk at an enterprise-wide level,
risks have never been greater. rather than assessing isolated
While temptation on the risks at the functional or mine
part of management is to site level, and allows companies
add additional cost to their to develop appropriate
overhead structures, it is controls to both mitigate
important that the digital and manage the expanding
trend that is taking hold in the array of risks they face.
operations of mines is extended
into the back-office, and the
use of analytical and AI tools
are embraced to re-invent how
mining companies manage risk.
“In today’s broadened risk landscape, where

traditional assurances around risk are no longer
effective, boards, investors, and communities expect
mining companies to have a forward-looking view
on risk. Rather than simply defining risks, companies
should revisit their approach to risk management to
ensure that all lines of defense are empowered to
manage risk on their behalf.”
Sandeep Verma
Global Mining & Metals
Risk Advisory Leader
Deloitte US
20
Trend 3: Managing risk in the digital era

See the future causes and effects. This allows Organizations struggling to
Leading organizations management to take proactive attract this caliber of talent
increasingly rely on risk steps to avoid or mitigate may want to borrow internal
sensing platforms to monitor risk events, while positioning audit staff, source subject
risk indicators based on internal audit to conduct matter experts for specific
internal and/or external proactive assurance work engagements, or even co-
data. For example, many related to those steps. source or fully outsource their
organizations monitor social internal audit function.
media for customer sentiment Raise accountability
and reputational risks, or One way to link risk Go outside
newsfeeds and regulatory management to real-world Risk registers are often
filings, and apply analytics controls is by making developed at the operating
to identify themes and management and the board level, which raises risks of its
trends. Industrial companies directly accountable for own. Often, operators either
monitor central bank policies risk assessment. This could do not or cannot provide an
to anticipate interest rate take the form of asking objective view of prevailing
movements. Others look for management for a signed risks, due to ingrained biases
financial, operational, or cyber declaration, similar to financial or the role they personally
trends. Risk sensing, which statement certifications, played in adopting less-than-
combines advanced analytics providing assurance that effective controls. To overcome
with human judgment, appropriate systems and this challenge, consider
provides a panoramic view of controls are in place to asking external auditors or
risk, extending well beyond mitigate specified risks. While risk advisors to conduct an
traditional risk registers of this represents a major shift in independent risk assessment.
identified risks. It focuses on how executives and the board
emerging, often unknown, think about risk management, Learn to share
risks to enable anticipation of it makes the process real in a Within mining organizations,
issues, as well as real-time and way that mere reliance on an risk management expertise
continuous risk assessment. enterprise risk management tends to be dispersed across
(ERM) system does not. functions and geographic
Reduce the level of locations. To strengthen their
unknown unknowns Skill up risk management culture and
Risk learning, or cognitive risk To effect true change, internal better mitigate common risks,
anticipation, applies analytics audit functions need, what we companies should aim to share
to risk events to tease out call ‘purple people’—people lessons learned and leading
causal relationships. If a risk with a mix of business and practices across mine sites.
event occurs, analysts can technology skills that allow This cultural shift is key.
examine what else occurred them to understand new
before, during, and after cognitive technologies in a
the event. Over time, by business context. They may
applying pattern recognition also need access to polymaths,
and root cause analysis to a experts who can ask the
growing database of events right questions, understand
and factors, the organization stakeholder needs, and
can isolate correlations, embrace new ways to
sequences of events, and provide assurance.
21
Digitizing the
supply chain
Why innovation
requires integration
Conversations around the A haphazard approach as their trucks or trains—they
fourth industrial revolution, or Unlike industries such as have not extended these
Industry 4.0, revolve around manufacturing and automotive, efforts across the entire supply
the ways in which physical and the mining sector still lags chain, from pit to port. As a
digital technologies—such in its efforts to digitize the result, the data they generate
as analytics, AI, cognitive supply chain. Despite the from the technology they have
technologies, robotics, cloud challenges associated with installed exists in a vacuum—
computing, and the IoT—are accessing critical materials hampering their capacity to
combining to create digital and equipment, particularly generate true insights that
enterprises that are both in remote locations, mining could otherwise enable them to
interconnected and capable companies rarely approach reduce inventory costs through
of more informed decision- their mine site planning, asset just-in-time procurement,
making. To harness the maintenance, and materials enhance asset utilization rates,
power of this shift, however, processing and transport in an and improve their production
organizations must determine integrated fashion. outcomes by making their EPC
precisely where to invest to relationships more dynamic
maximize their returns. One Although many companies and responsive.
area ripe for transformation is have begun digitizing discrete
the mining supply chain. pieces of equipment—such
22
Trend 4: Digitizing the supply chain
In essence, a supply chain stop thinking in linear terms decisions about how to
paradox exists. Although most and imagine instead a circular streamline their supply chains
mining executives agree that system that we call the digital by investing in targeted physical
the supply chain is a top priority supply network (DSN). The technologies like robotics,
for digital transformation distinguishing characteristic drones, additive manufacturing,
investments, supply chain of a DSN is that it is capable and autonomous vehicles. It’s a
leaders are generally not of integrating information virtuous loop, one that employs
consulted when it comes to from a wide variety of sources real-time data to accelerate
making decisions about those (e.g., IT/OT sensors, GPS data, decision-making, enhance
investments. As a result, wearables, core operations transparency, and enable
supply chain improvements data, partnership data) to collaboration across the entire
remain incremental rather than predict specific outcomes— supply network.
delivering innovations designed such as equipment wear and
to optimize mining operations. tear, shifting demand signals,
operator behavior patterns, or
The digital supply network inventory levels.
To create a more interconnected
and responsive supply chain, Armed with this data, companies
mining companies need to can make more informed
Figure 3: Shift from traditional supply chain to digital supply network
Traditional supply chain Digital supply networks
Synchronized planning
Dynamic Connected
Cognitive planning fulﬁllment customer
Quality sensing
Digital
Develop Plan Source Make Deliver Support Core
3D printing
Sensor-driven replenishment
Digital Smart
development factory
Intelligent
supply
Source: Deloitte analysis Deloitte university press dupress.deloitte.com
As figure 3 shows, digital is at For example, drone video

the core of the interconnected monitoring of remote work
lattice of the DSN model. There sites enables site optimization
is potential for interactions analytics to detect emerging
from each node to every other issues, while on-site 3D printers
point of the network, making rapidly replace needed parts to
communication multidirectional. reduce downtime.
23
The digital supply network in action

To reduce costs and enhance supply chain agility, EasyJet employs augmented reality smart
glasses to enable two-way communication between its network of remote maintenance
technicians and its central engineering team. Virtual step-by-step walkthroughs in real
time enable technicians to effectively perform complex maintenance tasks and reduce
downtime. EasyJet also uses drones to perform efficient and immediate visual safety
inspections of the exteriors of its plane bodies, reducing the time the plane is out of
service, how much hangar space is required, and the amount of inspection labor.19
The last mile capable of adapting to and incremental improvements, a

To enable this multidirectional learning from changes to the cultural shift must take place—
communication, the flow of environment (see figure 4). one that empowers executives
information across the nodes to make decisions by relying on
of the supply network must Although most mining data outputs rather than on gut
occur through an iterative companies have the first stage experience. This is ultimately the
series of three steps, known of the PDP loop in place, and nirvana of the DSN—the ability
as the physical-digital-physical many have the second, far fewer to leverage advanced algorithms,
(PDP) loop. In a nutshell, are yet able to harness the last, AI, and machine learning to
here’s how it works: most important stage—the turn data into insights that
ability to act on the data they allow companies to reduce
First, information is captured have analyzed. In fact, some their capital expenditures,
in the physical world—through research shows that miners respond to changing project
ERP or CRM systems, or even may use less than one percent requirements on the fly, and
email—to create a digital record. of the data they collect from optimize mine planning to
Next, that data is analyzed to their equipment.20 integrate real-time changes.
draw meaningful insights. Finally,
those insights are used to spur Before the industry can use the
action in the physical world. The supply network to fuel growth,
result is a more flexible system rather than merely driving
“The mining sector is at the earliest stages of building a digital supply

network—which is both a risk and an opportunity. Those organizations
that crack the code around fully interlinking their supply chains can do
more than break down operational silos. They can also gain the end-to-end
visibility they need to enhance their asset utilization, operational efficiency,
and productivity—realizing hard dollar savings as a result.”
Kevin Xu
Mining & Metals Leader
Deloitte China
24
Figure 4: The physical-digital-physical loop
2. Analyze and visualize

Machines talk to each
other to share information,
allowing for advanced analytics
and visualizations of
real-time data from
multiple sources
2
1 Digital
Physical 3
1. Establish a
digital record
Capture 3. Generate movement
information Apply algorithms and
from the physical automation to translate
world to create a decision and actions
digital record of the from the digital world
physical operation into movements in the
and supply network physical world
Source: Center for Integrated Research Deloitte insights deloitte.com/insights
The digital supply network in action

To gain an integrated view of its entire operation, Australian iron ore miner Roy Hill
implemented an IoT-based platform that streamlines its demand chain planning,
inventory tracking, quality management, and capacity simulation. By interconnecting
its systems across pit, port, and rail, the company has optimized the flow of parts,
contractors, and equipment to maximize availability and improve supply chain
performance. It also centralized its maintenance planning and engineering services, and
brought all its supply system functions together—vastly enhancing collaboration across
its extended enterprise.21
25

Think big Start small Although this may require
Often the first step in To make the transition to DSNs additional investment in digital
transforming a supply chain manageable and realistic, it technologies, many companies
into a DSN is understanding often makes sense to start can likely leverage the tools
what drives the need to with smaller stakes, where already at their disposal—such
differentiate. This positions strategies can be tested and as IoT data collection, ERP
organizations to examine refined with relatively fewer systems, social media listening,
the supply chain applications consequences. Selecting and predictive modeling. To
best suited to their business projects at the “edges” maximize their return on
objectives. The key here of the organization can investment, organizations
is to understand the art provide greater latitude for may want to first build on
of the possible before building DSN capabilities. these existing capabilities so
determining how to build they can identify areas where
the digital maturity required Close the PDP loop targeted investments are
to reach the organization’s The true power of a truly required.
goals. It can be useful in DSN comes from its
this regard to build a digital capacity to integrate data
committee, foundry, or factory generated across all areas
responsible for defining the of the enterprise—from
organization’s data acquisition geographically dispersed mine
approach, core platform, sites to back office functions
and project milestones. to the executive suite.
26
27
27
Driving sustainable
shared social
outcomes
Finding value beyond compliance
For several years, we have Mining companies have long economies, local communities
featured variants of this trend recognized the imperative remain vehemently opposed
in this publication. In the past, of earning a social license to mining activities, and
we have highlighted the need to operate. To gain the trust continue to demonstrate their
for companies to put their of local communities in opposition through refusals to
Corporate Social Responsibility regions around the world, negotiate, lockouts, protests,
(CSR) efforts at the heart of companies have invested and outright violence.
their strategy, we raised the billions of dollars building
need for different engagement local schools, hospitals, and Clearly, there is a disconnect
models and we have spoken infrastructure, and supporting here, which may stem from
about the holistic nature of communities through local miners’ historical approach to
the resources that need to be procurement and employment. corporate social responsibility.
optimized in relation to the The issue? Until recently,
community. This year we focus Yet recent years have amply mining company social spend
on the need for the creation demonstrated that these has been seen as a cost of
of shared value, a concept that investments frequently fail compliance, rather than a way
has been around for a while, to yield their desired results. to deliver measurable and
but one which has yet to be In many regions across both sustainable benefits to host
embraced by the wider industry. developed and developing countries and communities.
28
Trend 5: Driving sustainable shared social outcomes
If mining companies hope to license to operate, but expose They will also need to take steps
drive different social outcomes, themselves to financial risks as to help sustain community value
that dynamic has to change. well. In fact, operating delays beyond a mine’s closure. The
caused by social conflicts can approaches adopted to make
The rise of the social cost mining companies more this happen will necessarily
enterprise than US$20 million per week.22 vary from region to region.
This profound shift is not Conversely, mining companies Some best practices include
confined to the mining sector. that enter community educating local communities on
Today, organizations across benefits agreements—in health-related issues so they
industries are being assessed which communities consent can reduce the incidence of
on metrics that extend far to new investments in return preventable illness and disease;
beyond financial performance. for tangible benefits, such as providing communities with
Rather, they are being judged on revenue sharing—can see their financial training to build viable
the basis of their relationships market value double under businesses; leveraging existing
with their workers, customers, certain conditions.23 infrastructure to create new
communities, and regulators— economic activity and reskilling
as well as their impact on society Common ground local workers in alternative
at large—transforming them Yet finding value beyond industries, such as agricultural
from business enterprises compliance is no easy task. It production, which can help
into social enterprises. requires miners to listen more them thrive once local mines
closely to their constituents to shut down.
A social enterprise is an determine what stakeholders
organization whose mission truly want, and then to shift
combines revenue growth and their operational processes in
profit-making with the need response. Rather than trying
to respect and support its to “buy” a social license to
environment and stakeholder operate through community
network. This may sound like investments, for instance,
altruism, but it’s not. Mining mining companies may need to
companies that fail to live up integrate local manufacturers
to these expectations not into their supply chains or alter
only stand to lose their social their water use policies.
Shared value in action

Acknowledging that mining companies are frequently perceived by communities as
being part of the problem, not part of the solution, Rio Tinto recently announced plans
to reshape its image. Through a series of local campaigns, the company is working
to tell a more compelling narrative about its contribution to society in recognition of
the fact that miners cannot secure a future without strong community support.24 The
company is already taking action to stand by this commitment, becoming the first
major mining company to support the public disclosure by host governments of their
mining contracts.25
29
A new age of collaboration interactions with government.

To deliver on the social breadth For instance, rather than
of these programs, mining lobbying local governments
companies cannot work in for favorable tax treatment,
isolation. Instead, they should mining companies may want
look for opportunities to to look at the tax incentives
collaborate by pooling resources governments already offer
with other companies working in to stimulate local activities—
the region. such as industrialization, job
creation, manufacturing, and
They should also aim to agriculture—and align their
strengthen their relationships investments to help meet these
with local governments and public sector priorities, giving
regulatory bodies. This may see them an alternative route to
them change their traditional spur lasting social value.
Shared value in action

Deloitte conducted a study of six manganese and four iron ore mines in the Northern
Cape of South Africa, a region that struggles with high levels of youth unemployment
and low levels of education. While the mining companies were eager to address the
dire socio-economic conditions across the four municipalities where they work, the
effort was too great for a single-company mandate. Through collaboration, however,
the companies have gained the scale required to improve delivery success and increase
the impact of their programs, which has enabled them to start making strides towards
improving quality of life across the region by contributing to local job creation and
social upliftment.26
30
The litmus test to lower healthcare costs for the

Although these changing more than one million people
expectations put greater who receive health insurance
pressure on mining companies from the three companies.27
to address social problems, they
also create an unprecedented Beyond driving sustainable social
opportunity to fill the void on outcomes, and boosting financial
issues from income inequality outcomes in the process, this
to healthcare. Leading approach can also help mining
organizations are already rising companies positively answer a
to the task. A case in point is question that is becoming more
the not-for-profit organization vital: when we look in the mirror
started by Amazon, Berkshire held up by society, do we like
Hathaway, and JPMorgan Chase what we see?
“By taking the time to understand local community concerns

and social objectives, mining companies have a unique
opportunity to devise uncommon solutions to intransigent
problems. This positions them to form true collaborative
partnerships, change negative perceptions about the industry,
avert social conflict, and play a more proactive role in helping
local governments deliver on their developmental outcomes.”
Andrew Lane
Deloitte Africa
31

Make direct connections traditionally done a good job Plan now for the future
Building relationships with engaging people’s hearts and There are few certainties in
communities is akin to building minds. This needs to change. life, but in mining we know that
any other relationship—it Mining companies must every ore body has a limited
takes both time and personal work harder to display the lifespan. Mining companies
attention. This makes it positive contributions they need to understand how
critical for mining company make to community stability, they can create a sustainable
management to engage directly environmental rehabilitation, economic environment
with key stakeholders to build and global economic growth— post closure. The actions
consensus and brainstorm so that politicians are properly and investments taken now
solutions to shared challenges. informed. They should spell out can help spur new areas of
Notably, ongoing technological the huge range of consumer economic activity which can
innovation is introducing a products, applications, and sustain these communities
range of solutions miners can services that wouldn’t exist long after the ore body has
use to connect directly with without minerals and metals— been mined out. In many cases,
community stakeholders. and this isn’t just cell phones, this is about leveraging existing
Cloud-based stakeholder cars, airplanes, and roads. infrastructure, but doing so
engagement platforms, It’s anything that relies on with closure in mind.
for instance, allow mining electricity, which wouldn’t
companies to more rapidly run without copper or other Be transparent
address time-sensitive conductive metals. They should Many countries report
complaints or grievances, while work to make their reports experiencing Gross Domestic
enabling more transparent more user-friendly, digestible, Product (GDP) leakage as a
stakeholder engagement. and emotionally relatable. And result of illicit financial flows
Similarly, the proliferation they should encourage their and unauthorized commodity
of mobile phones in remote people to spend more personal exports. To build goodwill and
communities gives companies time changing minds—by enhance transparency, mining
another avenue to connect visiting local schools, speaking companies could begin to use
with local workers and keep the at non-industry conferences, blockchain to track the flow of
lines of communication open. and inviting university students both their minerals and their
to not only tour mine sites but royalty and tax payments,
Correct misperceptions to shadow their professionals providing governments with
Part of the mining industry’s who are working at the immutable evidence of their
challenge in fostering more leading-edge of technological compliance with local laws.
effective community and innovation.
government ties links to its
bad reputation. Simply put,
mining companies have not
32
Share ideas Prove it

Given the frequency with One of the ways mining
which lockouts and protests companies are demonstrating
interrupt mining operations, their commitment to local
it is clear that community community initiatives is
dissatisfaction directly affects through the release of
shareholder value, creating sustainability reports,
a business case for investor which outline not only their
relations and sustainability environmental programs, but
teams to collaborate in the also their local community
identification of strategies contributions, health and
for engaging communities safety performance, and global
in more effective ways. tax payments. To add a further
This may mean redirecting layer of credibility to these
investment to various local reports, some companies seek
initiatives, arranging for out third-party assurance
executives to spend more time for their claims, providing
communicating directly with unbiased proof that they are
key stakeholders, or identifying walking their talk.
opportunities to partner with
other organizations to deliver
greater community value.
From left field

If miners crack the code on generating value beyond
compliance, and succeed at delivering both financial
returns and making a defined social impact, could mining
companies attract the interest of impact investors? If
so, they could gain access to an impact investing market
currently valued at over US$228 billion.28
33
Exploring the
water-energy nexus
Making the case for a
systematic approach
As one of the world’s most While there is still room which it jointly owns with
energy and water intensive for improvement, progress Barrick, will begin operating
industries, the mining sector is being made. Between with 100 percent renewable
has long struggled to secure 2008 and 2017, Rio Tinto energy by 2020—a move
uninterrupted access to reduced its greenhouse gas that will enable the company
these critical inputs. In recent (GHG) emissions intensity to reduce its annual GHG
years, this has spurred by 27 percent. Today, emissions by 350,000 tons.32
companies to action. approximately 75 percent of
the company’s energy comes As these leading companies
For instance, to reduce their from hydroelectric, nuclear, and have learned, however,
energy costs, which can renewable power sources.30 true value from energy
account for up to 30 percent of Similarly, Antofagasta’s Los management can only be
a mine’s operating expenses,29 Pelambres mine in Chile relies derived by addressing the
many companies have begun on renewables to generate triple bottom line of social,
adding renewables to their roughly 45 percent of its environmental, and financial
energy mix, and electrifying energy.31 Most recently, the performance. This requires
equipment and processes that company announced that its companies to manage their
run on fossil fuels. Zadívar copper mine in Chile, energy related projects as
34
Trend 6: Exploring the water-energy nexus
a portfolio and approach production, representing up to savings, improve environmental

energy management as an US$50 billion in annual revenue, performance, and enhance
integrated corporate initiative. could face water shortages regulatory compliance.
Companies that succeed in and drought by 2030.34
this effort can reduce their Environmental concerns around Part of the challenge lies with
energy consumption by 15 water quantity and quality the fact that mining companies
to 20 percent in existing are also exacting financial, do not yet have a business
mines, and up to 50 percent operational, and reputational case around reducing water
for new mines by rethinking tolls. Mining companies intensity equivalent to the
the mine design with energy around the world now face one around reducing energy
management in mind.33 elevated regulatory risks intensity. As a result, most
relative to their use of water companies continue to take a
What about water? and community opposition haphazard approach to water
Yet energy is not the only that has sparked protests, management—one that fails
input at risk. In fact, water operational disruption, and to integrate the health, safety,
has quickly risen to the top of heightened levels of conflict. and environmental (HS&E),
mining company agendas as sustainability, and finance
one of the greatest constraints As competition for water departments, preventing the
to supply. In regions around supplies mounts, many mining identification of cross-functional
the world, mining companies companies are taking steps to opportunities to manage both
must now contend not only reduce water consumption, water and energy in tandem.
with risks around water scarcity, treat wastewater so that it
but also those associated can be recycled, and adopt With the stakes rising, it
with excess rainfall, which innovations such as dry is becoming clear that a
can result in flooding. processing. These efforts, systematic approach to water
however, are often approached management is required.
According to the Climate as isolated initiatives rather
Disclosure Project (CDP), than enterprise-wide
25 percent of mining opportunities to achieve cost
Sustainability in action
Goldcorp continues to make strides in the execution of its Towards Zero Water (H2Zero)
strategy. The company has already created a model to calculate the true cost of water
usage in its mining operations, taking infrastructure, energy, and labor costs associated
with extracting, pumping, transporting, storing, treating, and discharging water into
account. Its EcoTails™ system blends filtered tailings with waste rock in transit to create a
geo-technically stable product called GeoWaste—a solution that may help the company
eliminate tailings dams entirely.35 Not content to rest on its laurels, Goldcorp is also
building the world’s first all-electric mine, a move it anticipates will help it reduce its GHG
emissions while saving roughly US$9 million per year on diesel, propane, and electricity.36
35
A solid foundation help streamline the regulatory only conducted periodically

The good news is that many permitting process and enable and collected data remains
companies have already companies to put systems unconsolidated, resulting in
begun laying the foundation by into place to avoid unintended delays in both analysis and
tackling energy management environmental consequences. government reporting.
at a portfolio level. Building
on these learnings, mining Armed with this knowledge, With digital technologies and
companies have a framework companies can integrate advanced analytics, however,
they can adapt to their water both water and energy mining companies can measure
management efforts. management best practices and monitor their water flows
into their mine designs. This on a continuous basis to analyze
For new mines, this generally may include relying on dry water quality, assess their water
begins by gaining a solid processing methodologies, intensity, and identify severe
understanding of available local reducing the amount of water water incidents in real time. This,
water sources by conducting required to store tailings, in turn, can help them assign a
both hydrogeological and and even mining in ways that financial value to water, allowing
surface water studies, and reduce impacts to surface them to build a business case
conducting water supply and groundwater systems. to conserve water (e.g., through
and storm water modeling, drip leaching or ore sorting),
a critical first step given that For mines already in operation, enhance efficiency (e.g., through
governments in most mining a good starting point would selective mining or high-intensity
regions lack baseline data involve measuring water blasting, which results in less
on local water availability. By consumption across different water for grinding), and find
providing mining companies sites and processes to create alternatives to the use of fresh
and regulators with an a baseline for water costs water (e.g., through desalination
understanding of how mining across the entire system. or water recycling).
operations may affect the local Currently, limited use of sensors
ecosystem, this assessment can means water sampling is
36
Sustainability in action
As part of its FutureSmart Mining™ Sustainability Strategy, Anglo American is gearing
towards the development of a waterless mine. At its Mogalakwena platinum mine in
South Africa, it is using a fibre optic solution to measure mine-wide water flows to gain
real-time insight into its water balance—empowering it to pursue the highest-impact
efficiencies. It has also deployed a fibre optic solution in Chile to monitor its tailings
dams, giving it the capacity to mitigate potential damages that could be caused by
structural movements, long-term deformation, or creeps into dam foundations.37
Riding the upside While these changes will not

There is also a significant upside be easy, they are increasingly
that has yet to be quantified necessary if mining companies
but that unquestionably exists: hope to maintain productivity,
reducing water intensity can lessen community concerns,
help to reduce energy intensity, and manage their environmental
and vice versa. By approaching risks in an energy and water
energy and water management constrained world.
in tandem, mining companies
can make business choices that
optimize the use of both.
“With a constant knowledge of how every drop of water is

being used, and an understanding of all the parameters
associated with its use, mining companies can manage
water in the way they have begun to manage electricity,
as a valuable resource.”
Patricia Muricy
Deloitte Brazil
37

Start with mine design involves the ongoing analysis
The reduction of water and of their energy-mass-balance
energy use go hand-in-hand, (EMB), which can provide
it’s essential for mining organizations with a deeper
companies to understand understanding of the energy
the system level implications flows across their business.
of their reliance on these A similar approach is possible
inputs before they begin for water. Integrated water
mine design. Armed with this and mass balance models can
understanding, they can adopt provide mining companies
design principles that factor with the level of information
in the local availability of key they need to assess water
resources, supporting dynamic management alternatives,
energy and water planning. make informed infrastructure
choices, and adapt to changing
Find balance water quantity and quality
In a bid to reduce energy conditions. Conducted in
consumption and intensity, tandem, these analyses can
some mining companies have provide miners with a holistic
begun to take an integrated view on how energy and
approach towards analyzing water intersect and shine a
their energy usage across their light on where the areas of
entire operations. One metric greatest impact lie.
38
39
39
Decoding capital
projects
Learning from past mistakes
Although the recent commodity 2012 (see figure 5). Grassroots among mining executives,
price meltdown has spurred exploration spend is at historic boards, and investors alike.
many mining companies lows, while headcount and
to operate leaner, it also internal project capacity have The worry is understandable.
whittled segments of the seen cutbacks in response to After all, this is an area that
industry down. Among the cost-reduction strategies.38 has traditionally been value
investments that fell by the destructive to the industry. Yet,
wayside were major capital Reframing reserve despite their concerns about
projects. Burdened by years of replacement realizing sustainable returns,
sub-par returns, cost overruns, The consequence was miners cannot avoid putting
and impairment charges, inevitable: supply shortages for off capital project investments
many mining companies commodities such as copper, indefinitely. Instead, they
opted to concentrate on zinc, cobalt, lithium, and gold must learn from the mistakes
maximizing output from their now loom, and no amount of of the past by approaching
existing operations rather squeezing of current deposits capital projects with a new
than investing in new mine will cover the shortfall. frame—one that sees them
supply and exploration. honing stronger organizational
With the cycle turning, mining capabilities across their entire
As a result, industry capital companies will need to engage portfolio of projects rather
expenditures in new in a wave of new capital than reinventing the wheel
developments in 2017 fell by projects to offset production and assembling new teams on
almost two-thirds compared declines and meet demand, a a project-by-project basis.
to the US$80.8 billion peak of prospect that raises concerns
40
Trend 7: Decoding capital projects
Figure 5: Mining industry greenfield capex
90
80
70
60
50
40
30
20
10
0
2012
2013
2014
2015
2016
2017
2018e
2019e
2020e
2021e
Note: Mining capex has declined heavily since the US$80B+ peaks of 2012.
Our analysis, based on company capex guidance and market sentiment,
indicates that capex is increasing even with a modest growth rate,
investment could exceed US$40B in 2020.
Source: S&P Market intelligence, Deloitte analysis
Building on their strengths innovation also promises to nationalism, and putting

In fairness, they’re not starting drive operating efficiencies. pressures on project margins
from a zero base. Stricter capital and viability. Consolidation
allocation frameworks mean But the goal posts have of major engineering,
investment decisions are now moved too. A lack of shovel- procurement, construction
more rigorous, with heightened ready projects in “friendlier” management (EPCM)
scrutiny of business case risks. jurisdictions is forcing miners contractors has left fewer
More centralized business to move up the geopolitical risk suppliers to meet the growing
models facilitate greater curve, often exposing them demand. Lower headcounts
control of capex. Significant to heightened government in owner project teams is also
industry investment in digital expectations and resource leaving skills gaps.
Capital project capacity in action

The Tideway project is a near US$6 billion investment in the delivery of a 25 kilometer
tunnel, 65 meters below the River Thames in central London. To enhance delivery
success, the project team established a new standalone entity to manage the needs
of multiple external stakeholders. The target operating model design considered the
organization’s capability requirements at key phases of the project’s lifecycle, focusing
on the optimal owner’s team structure and core in-house capabilities needed. This
innovative delivery model allowed the right capabilities to be in place at the right time.39
41
Five areas of focus overruns. Notably, companies success also hinges on

To overcome these challenges, that build a unified data corporate willingness to
mining companies must build model that enables consistent deliver shared value to local
their maturity in five key areas: reporting and predictive communities and supply
analytics can realize capex chain partners. To build more
Delivery models savings of up to five percent.40 effective relationships, consider
While mining companies have monitoring and transparently
traditionally relied on EPCM and Project controls tracking efforts to provide local
engineering, procurement and Today’s major projects are communities and suppliers
construction (EPC) companies increasingly complex and under with an economic dividend,
to deliver major projects, significant scrutiny, mandating developing a detailed plan of
they have often struggled the adoption of highly-effective commitment activities, and
to effectively manage these project controls. To get this integrating them into the wider
relationships. Ultimately, the right, project controls must project scheme (see Trend five
delivery model selected should be adopted not only during a for more detail).
determine the project team’s project’s execution phase, but
set-up, where accountability lies, also during pre-feasibility and Collaboration
and how risk should be shared feasibility studies, and during Although mining companies
among delivery partners. This, the transition to operational have taken significant steps
in turn, should help companies readiness. The aim should be to to optimize their portfolios,
align incentives with project apply owner-led project controls they still struggle to respond
and operational outcomes, across all operating model to shifting macro-economic
consciously build the right layers—including organization, trends, which make long-cycle
level of capability to deliver process, technology, data, megaprojects particularly
on the project strategy, and and governance—and to risky. Yet rather than sharing
adopt collaborative contractual continuously use them to the burden of this risk through
mechanisms to drive continuous monitor project performance collaboration, many mining
improvement throughout the so emerging issues can be companies continue to “go it
project lifecycle. remediated before they can alone”, tying up more capital
derail the project. over the long term and missing
Data and technology potential opportunities. To
Although mining companies License to operate better share risk and drive
have the technological capacity Even with the best delivery innovation, mining companies
to capture a wealth of project models, data insights, and should aim to expand their
information, siloed information project controls, mining partnership ecosystem
systems hamper their efforts to industry capital projects can by pursuing grassroots
effectively share this data across still be rushed due to poor partnerships with juniors and
the supply chain. Without a environmental performance, entering into joint ventures to
standardized, cohesive version troubled community relations, uncover new deposits.
of the truth, decision-making is or regulatory non-compliance.
compromised—resulting in cost This means capital project
42
Capital project capacity in action

To optimize maintenance costs and production processes for 900 kilometers
of railway, one global miner adopted technologies such as image recognition,
sensor data, text mining, machine learning, and data visualization to enable
predictive maintenance for its rail infrastructure. This allowed it to remediate
emerging issues in a controlled fashion—increasing rolling stock availability,
optimizing asset performance, and reducing the risk of accidents.41
43
The upside Some global leaders are already to business value; automating
After the challenges faced deploying new technologies operations and digitizing assets
during the last down cycle, into classic plants to test their from the outset; eliminating
there is a palpable sense of efficacy, mitigate risks, and data silos by establishing
optimism for mining companies strengthen their capacity an integrated digital mine
as commodity demand picks to standardize their global nerve center; implementing
up. Before launching into footprints. As the industry’s supporting platforms and
the next wave of investment, digital maturity grows, we may enablers; and equipping
however, the lessons of the ultimately see capital project their diverse and distributed
last cycle must be learned “superhighways” enabled by workforce with the skills to
and the industry needs to data-driven project planning operate in a connected fashion.
rebuild trust with stakeholders and execution, and an
in its ability to deliver longer- augmented workforce armed Most critically, the future is
term value. Although this with new capabilities. here. The technologies to make
won’t happen overnight, the digital mine a reality are
organizations that focus now The conceptual structure currently available, positioning
on putting the right capital already exists and would see leading miners to realize new
project capabilities into place mining companies approach frontiers of capital project
can strengthen their capacity capital project planning by efficiency and control.
to adjust supply in response developing an enterprise-wide
to shifting demand patterns. digital strategy directly linked
Right from the start:

“As capital projects begin to pick up, mining
Building digital mines from
the ground up companies will need to avoid the mistakes of
Capital project planning takes the past by rethinking their delivery models,
years, which likely explains why
adopting appropriate governance processes, and
no digital mines have yet to
be built from the ground up. ensuring they have the skills in place to manage
However, advances in finance performance across the entire project lifecycle.”
platforms, sensor technology,
autonomous vehicles,
Tim Biggs
cloud-based solutions, and
EMEA Mining & Metals Leader
analytics are changing how
Deloitte UK
capital projects of the future will
be delivered—paving the way for
the design of a digital mine.
44

Get analytical Become digital cycle investments help to
Thanks to advances in digital To deliver data-centric capital preserve production capacity
technology, tools now exist projects, mining companies and ensure portfolio agility.
that allow mining companies need to shift from “doing For mining companies, a
to monitor their portfolio digital” to “being digital”. phased approach to the largest
of capital projects at the This involves investing in investments could spread risk
operational, tactical, and data standards, embedding in a similar fashion.
strategic levels. By integrating a unified data model, and
information from planning treating data as an asset by Model
systems onto a single platform, ultimately setting up a digital Early-stage projects should
these solutions can provide twin to support project success be continuously evaluated.
insight into subcontractor during the transition to Flexible, driver-based modeling
productivity, health and safety operations. gives visibility of multiple
performance, and physical and “what if” scenarios to support
financial progress of individual Learn from other sectors decision-making in line with
projects and programs— To reduce the risk of major the overarching strategic
positioning organizations capital projects, oil and gas vision. Rolling this information
to make more informed companies often engage into a single consolidated view
management decisions. in shorter-cycle projects can help mining companies
designed to rapidly generate make decisions that properly
a positive cash flow. In assess macro and project risks
addition to reducing capital at a portfolio level.
expenditures, these short-
45
Reimagining work,
workers, and the workplace
A blueprint for the future
Mining executives are no of the current workforce, are companies under pressure
strangers to shifting workforce expected to retire in the next to more clearly articulate the
realities. The relentless drive ten years.42 With enrolment in leadership attributes they
towards digitization and mining-related disciplines down, anticipate will be most vital for
automation has altered not only filling those talent gaps will be the future.
where work takes place (e.g., no easy task. In Australia, for
remote operations/telework), instance, enrolment in mining The very nature of careers
but also the nature of corporate engineering courses fell from is also changing. Not only
talent needs. As highly 292 in 2014 43 to 171 in 2017, is job and career-hopping
repetitive transactional work and is projected to drop to an becoming the new norm,
is automated, the demand for alarming 47 by 2020.44 but a younger generation of
people with broad foundational workers now measures loyalty
skills, as well as deep technical This generational shift is to an employer in months
expertise, will only rise. by no means confined to instead of years. As a result,
frontline workers. Recent mining companies need
At the same time, the mining announcements of planned strategies for recruiting these
industry now faces a massive exits by C-suite executives so-called “gig workers”, the
generational shift. In Canada, have brought the imperative networks of people who will
50,000 mining workers, of succession planning to the increasingly form tomorrow’s
representing roughly 26 percent fore and are putting mining contingent workforce.
46
Trend 8: Reimagining work, workers, and the workplace
The future of work in action

To retain its coveted IT specialists and enhance employee engagement, Norilsk Nickel
in Russia developed an employee motivation solution based on blockchain and the
cryptocurrency WorkCoin. It has used the system to “gamify” the technology innovation
process by enabling staff to “compete” to solve complex problems and earn virtual points,
which can be redeemed for non-monetary awards, such as prizes and promotions.45
Firing on all cylinders As a second prong in this Third, organizations must

To prepare for this imminent strategy, companies will need consider what the workplace
future, mining companies are to identify the workers of the of the future will look like.
beginning to broaden their future by considering what the This means reconceiving
talent strategies. The key employee experience will look how employees will interact
is to consider not only the like, and the role that innovation with each other and conduct
shifting nature of work, but to will play in that experience. their work, be it in a physical
determine how to attract a new Going forward, companies location or conducting that
breed of workers and tailor their will have many more options work remotely. The technology
workplaces accordingly. to choose from to carry out infrastructure to enable this
specific tasks with an ability workplace will also change
When it comes to redefining the to also draw on gig economy and new collaboration and
future of work, organizations workers, crowdsourcing options interaction models will
need to clarify not only their or outsourced talent models. need to be developed.
business goals and aspirations, In making this determination,
but also the role that talent mining companies should Throughout the entire
strategy should play to deliver consider how employee needs process, companies also need
on them. This involves looking are changing and which needs to think through how they
at specific tasks within each role remain unmet. This should plan to measure success,
and whether these could be help guide the strategies they by identifying critical key
disrupted by technology, now choose to adopt regarding performance indicators (KPIs),
or in the future. It also involves how to attract and retain top setting baselines for employee
identifying any current talent talent, what partnerships engagement, and tracking how
and organizational gaps that they must leverage to access well they iterate their approach
must be bridged to support the in-demand talent, and who to easily adopt new technology
future direction of the business. should manage and lead and scale their initiatives.
the workers of the future.
47
The future of work in action

As miners grapple with the challenge of rebuilding their skill base and developing a
workforce capable of bringing the industry along the technology pathway it needs to remain
competitive, they must find new ways to motivate their workforce. BHP has approached
this challenge with its “Think Big” campaign which, among other things, saw BHP employees
filmed at their workplace and talking about their company.46 The campaign helped to evoke
a sense of pride and commitment, as well as a collective mind-set that gave employees the
authority to “own” problems and challenges, rather than delegating them to someone else.
Inventing the future back office, all roles including a tool for properly defining
In the face of AI, mobile operational, have the potential the jobs of the future. Low
platforms, sensors, and social to be disrupted. As the mining level, manual, or transactional
collaboration systems that industry prepares for the future tasks are automated or
continue to revolutionize lives of work, jobs will need to be outsourced, and whatever is
and workplaces, employees disaggregated and broken down left over—including tasks that
and organizations are more into individual tasks so that contribute to the corporate
overwhelmed than ever. For companies can identify the best mission or relate to core
the mining industry, already resources to complete each strategy—can be reconstituted
burdened with a perception task—whether that’s traditional into new job functions.
problem among young people employees, outsourced talent,
considering career choices, the or digital technology. The ideal Once each task is charted in
need for new and robust ways end state is to automate the this way, mining companies
of redefining work, workers, tasks that don’t add value, while can begin to build a vision for
and the workplace is becoming giving the right people the their future workforce—road-
urgent. Yet, if fortune truly opportunity to complete the mapping the skills they believe
does favor the bold, mining tasks that interest or challenge will be in greatest demand.
executives who adopt new them most. This allows them to become
talent approaches are not just masters of their own future—
preparing for the future of work, When jobs are broken down in designing programs that enable
but are helping to invent it. this way, it becomes clear that them to fill their talent gaps
automation is not synonymous before competitors have even
This is not mere posturing and with job loss. Instead, task- identified which gaps exist.
neither is it contained to just the level analysis gives companies
“There are countless tactical steps mining companies can take in setting the
foundation for the future of work. But none of them will be effective unless
the C-suite comes together to define their vision of the future and allocate
resources against that vision.”
Janine Nel
Global Human Capital Energy, Resources & Industrials Leader
Deloitte Africa
48
Trend 8: Reimagining work, workers, and the workplace

Build a symphonic C-suite Manage beyond Think beyond safety
Mapping out the workforce of the enterprise While safety is of paramount
the future is not a task for HR, As the nature of work changes, importance, mining companies
operations, IT, or individual the gig economy is forecast committed to retaining
mining sites. It requires the to grow. This mandates key talent must extend the
C-suite to work together mining companies to extend definition of employee well-
across functions to address their talent approaches to being to physical, mental,
each element of the challenge gig and contract workers by financial, and even spiritual
from a people, process, and giving them performance health. This expanded
technology perspective. The goals, secure communication definition could see companies
symphonic C-suite is a new systems, training and support, emphasizing new priorities,
leadership model where an and access to onboarding and which may include maintaining
organization’s top executives development opportunities. a healthy work/life balance for
play together as one team, staff, avoiding fatigue from 24/7
while leading their functional Rethink rewards work cycles (perhaps by using
teams, to drive more agile According to recent research, a “follow the sun” approach
organizations. In this model, the current reward system in running remote operating
C-suite members not only lead within most organizations centers), using wearable
their own area of responsibility, is broken. To meet shifting technologies to monitor
but also collaborate with expectations, organizations workers’ physical health,
other functional leaders, are now being called upon to providing fitness and stress
work on teams that affect offer more personal and agile management programs, and
the enterprise’s strategic rewards. This may include strengthening the culture of
direction, and influence and providing raises and bonuses diversity and inclusion.
inspire networks of teams more than once per year,
throughout the organization. offering incentives to contract Empower leadership
For instance, this could see the workers, and making salary In the face of flattened and
Chief Information Officer (CIO) decisions more transparent. changing hierarchies, leaders
and Chief Financial Officer (CFO) One European consulting firm, need the ability to handle
working with business leaders, for example, allows employees greater cognitive complexity
supply chain executives, and the to choose their preferred and must be comfortable with
Chief Human Resources Officer rewards, such as salary or failing early, failing fast, and
(CHRO) to pilot and implement stock options, an extra week learning faster. If leaders cannot
new automation solutions and of vacation or higher pay, model these new behaviors,
redesign work around these or a higher bonus based on employees will hesitate to
new platforms. results versus a lower increase embrace them, and change will
in base pay.47 be relegated to a concept rather
than helping to shape and
drive new workforce realities.
From left field

Millennials value experiential travel and immersive adventures—experiences they could
arguably get working in remote mining locations. Could mining companies possibly attract a
new generation of workers by “selling” these jobs as immersive experiences, and devise more
powerful retention strategies that encourage them to stay?
49
Operationalizing
diversity and
inclusion programs
From theory to practice
Like many traditionally gender discrimination, and for a very different workforce.
male-dominated industries, sexual harassment and BHP has an aspirational goal to
mining has an inconsistent violence in the workplace, also achieve gender balance across
record when it comes to suggests that mining companies each of its global operations
workplace diversity and need to take a closer look at by 2025.49 Freeport-McMoRan
inclusion. In 2016, when their inclusion strategies. continues to work towards its
Chile’s Ministry of Mining target to increase women in
conducted a survey of 603 Positioning for change its global workforce, as well as
women in the industry, it found Many mining companies have women in managerial roles, to
that more than 40 percent arrived at a similar conclusion, a minimum of 15 percent.50 For
had been subjected to cruel and have begun setting its part, South32 aims to have
jokes and wolf-whistling, targets for gender equality women holding 40 percent of
20 percent had been groped, and greater cultural inclusivity. its senior leadership positions
and seven percent had been With advances in technology, by 30 June 2020, compared to
sexually propositioned.48 such as trucks equipped with 31 percent today.51
The recent establishment of power steering, and automation
a MeTooMining Association, that enables the remote Meeting these diversity targets
which is advocating for strong operation of equipment, new is not only the right thing to
programs against intimidation, opportunities are opening up do; it is also sound business
50
Trend 9: Operationalizing diversity and inclusion programs
practice. According to BHP, diverse talent in the mining

its 10 most-diverse mines industry. Even counting the
outperformed its other sites 1,800 women BHP hired in
by roughly 15 percent over the 2017,54 it still needs to recruit
past three years.52 Similarly, in more than 19,000 women
2016 Rio Tinto reported that by 2025 to reach its gender
both its safety and equipment parity target,55 and it must do
maintenance performance so at a time when its global
was higher at its most diverse counterparts are competing for
operation.53 Most critically, the same talent.
miners will struggle to meet
their digitization, automation, The challenge then, is not
and innovation goals if they simply cultural. It is also
cannot attract what is quickly numerical. Right now, the
becoming the most in-demand mining industry is not attracting
cohort of talent in the world, sufficient numbers of diverse
and doing that will require them candidates to truly move the
to expand their diversity and dial on its diversity and inclusion
inclusion practices. strategies. To shift this balance,
companies will not only need to
Culture and numbers change their talent attraction
Setting targets and reaching and retention policies. They will
them are two different things, also need to change historical
particularly given the lack of perceptions about the mining
Diversity and inclusion in action

To meet its aggressive diversity and inclusion targets, BHP has devised a strategy
focused on four core goals: to achieve gender parity, build a flexible work program that
meets the needs of all employees, enhance education and awareness, and develop
more diverse leaders. Rather than confining its program to head office, the company
is re-examining how work is done at its sites by analyzing hundreds of jobs to assess
if they can be performed in more flexible ways. The entire program is underpinned
by the understanding that safety must remain paramount, operational continuity
and productivity will remain unaffected, and opportunities will be generated for all
employees, not just women. After considerable discussion, the company concluded
that some of its job functions could be performed in non-traditional ways. To this end, it
formulated levels of flexible work options and will be rolling the program out imminently.
51
Getting tactical Attraction strategies should also These are the actions that are
As a first step, mining be geared to a more diverse required in the pursuit of talent
companies must adopt audience. Online platforms exist in today’s environment.
solid strategies to foster that help organizations create
organizational diversity advertisements targeted to Retention is another area that
and inclusion. It’s not that specific demographics—which needs reform. When companies
they haven’t looked at this can help them attract a more do attract women, they often
issue before. It’s that they diverse range of candidates. struggle to retain them, in part
often approach this issue because they fail to deliver
by adopting point initiatives, Gender diversity is not the only simple solutions—such as
rather than designing target that mining companies safety equipment designed
integrated programs to tackle are introducing. One mining to fit women’s bodies, higher
the challenge holistically. company is targeting to have quality accommodation, a
one percent Neurodiversity broader variety of healthy
For instance, while most in their technology team food options, and a wider
mining companies are working in a couple of years. In an range of social activities.
with educational institutions environment where data Other programs—such as pay
to interest students in the scientists, for example, are in equity, workplace flexibility,
industry, their approach is short supply, this may open parental leave, and support for
haphazard and uncoordinated. up a new stream of talent that employees who are acting as
As a result, each company is previously was overlooked. caregivers, must also become
telling a divergent story, diluting They have introduced new table stakes. To assess which
the core messages they could recruiting, coaching, teaming initiatives work, and which don’t,
otherwise convey if they came and performance strategies companies should track results
together as an industry to craft to facilitate an integrated and so they can analyze outcomes
a cohesive narrative. tailored new way of working for and adapt accordingly.
these highly talented individuals.
52

In a bid to create more employment opportunities for Australia’s Aboriginal community,
Fortescue Metals Group supports a range of programs that have made a fundamental
difference over the years. In 2011, it established its Billions Opportunities program
through which it has awarded 270 contracts and sub-contracts to 110 Aboriginal-
owned businesses and joint ventures, for a total value of AUS$2 billion (approximately
US$1.44 billion). Fortescue's Vocational Training and Employment Center (VTEC) has
helped over 1,650 Aboriginal people through employment, driving lessons, resume
creation, accommodation, and personal development since 2006. Its Leadership and
Excellence in Aboriginal People (LEAP) initiative offers 12-month formal training that
includes both offsite and onsite education, internal mentoring, and business leadership
training. In financial year 2018 alone, the company spent AUS$230 million (approximately
US$166.29 million) with 52 Aboriginal businesses and 1100 Aboriginal people worked
across their operations.56
Exposing unconscious bias being made. They must also be

Beyond the tactics, however, willing to examine the ways in
a more fundamental shift which things have “always been
needs to take place, one done”, for example, by giving a
aimed at disrupting often larger cohort of workers access
unexplored cultural norms to cross-border opportunities,
and stereotypes. This is not by expanding their parental
simply about changing the way leave policies to include both
minorities are treated. It’s about men and women, by rethinking
exposing unconscious biases how to incorporate workers
that influence hiring decisions with disabilities into the
and contribute to workplace organization, and by removing
inequality. To do this effectively, any systemic and inherent
organizations need to cascade biases that have crept into
training down to the operational their policies and processes.
level, where hiring decisions are
53
An image overhaul wearing hard hats, rather than As industry efforts show,
In tandem with shifting the women and men operating diversity and inclusion are
way they operate, mining remote equipment or engaging proving to be much more than
companies must take steps to in technological innovation. a flavor of the month. However,
amend their public image. This This representation links to the mining companies have a long
starts with the literal visual narrative mining companies road ahead before they can
image companies portray continue to tell themselves turn these programs from vision
on their reports and in their about what they stand for— into reality by permanently
advertisements. While many and until mining companies weaving new behaviors,
companies have begun to start telling different stories attitudes, and policies into the
include pictures of women on about themselves, cultural fabric of their organizations.
their marketing materials, they transformation cannot take
are still generally pictures of place (see sidebar).
women on high beams and

Antofagasta is training 400 executives in inclusive leadership and unconscious bias.
It participates in a gender-equality initiative with the IMF and the Inter-American
Development Bank, while five of its supervisors are part of the Proyecto Promociona,
a program to help women break through the glass ceiling.57
“Diversity and inclusion is a problem. The industry

has been on this journey for many years and has not
yet moved the dial in any significant way. It’s time for
mining companies to go beyond training and change
management, and explore the operationalization of
more flexible programs, especially on mine sites.”
Karla Velásquez
Deloitte Peru
54

Go grassroots manager’s leadership style understand that true flexibility
Systemic change has to or shift an organization’s is about how work is done,
happen from both the leadership model. Instead, not where work is done. In
top down and bottom up. it’s designed to help leaders other words, flexible work
By supporting grassroots adopt specific behaviors is not about creating off-site
organizations, mining that build more inclusive jobs. It’s about rethinking how
companies can help encourage environments and generate on-site jobs can accommodate
greater diversity across the change. There are six traits different working styles—
industry. International Women we believe demonstrate through such things as flexible
in Mining, for instance, is inclusive leadership, shifts, access to short-term
the fastest-growing network including cognizance, leave, or allowing people
for women in the mining curiosity, courage, cultural to come back to work after
industry.58 It aims to provide a intelligence, commitment, an extended sabbatical.
global platform for all women and collaboration. Together, Introducing these changes
in mining by supporting these traits can help leaders to an industry characterized
initiatives that improve overcome cognitive biases, by remote locations, projects
diversity and foster women’s encourage new ideas, that run on a 24-hour basis,
professional development. talk about imperfections, and health and safety rules
There are also countless and acknowledge diverse that restrict multiple rosters
regional initiatives mining cultural frames of reference. will be no easy task—but
companies can support. In Ultimately, this comes down leading mining companies are
Canada, for instance, Women to how a company’s people already demonstrating that it
on the Move is working to act every day, what they do or is possible.
bring women-led businesses don’t say, and the metrics used
into the mining supply chain to hold people accountable.
as part of an overall strategy
to encourage the science, Redesign work
technology, engineering, By creating more flexible
and math (STEM) industry to work environments, mining
procure products and services companies cannot only attract
from women entrepreneurs.59 a wider range of talent, but
they stand to gain operational
Root out unconscious bias benefits too. Before these
Inclusive leadership training efforts can yield results,
does not aim to change a however, executives need to
55
10
Demanding
provenance
EVs and battery minerals provoke
the desire for provenance
While it may not be a full-scale introducing its all-electric EQ iNEXT technology flagship
revolution, the electric vehicle brand in 2016, Mercedes has expected to roll out by 2021.64
(EV) boom stands to reshape been investing billions of dollars
numerous industries and into the EV space and plans to Driving demand
global automakers have been bring more than ten different All this is music to the ears of
positioning themselves to all-EV vehicles to market by mining executives, who are
compete in this space for years. 2022.62 Volkswagen (VW) just now positioning to meet the
recently unveiled its modular spiraling demand for EV battery
The Nissan LEAF, now in its electric drive matrix (MEB) materials, such as lithium,
second generation, is the platform to support its vision cobalt, rare earths, graphite,
best-selling electric car in the of ‘Electric for all’, and plans nickel, and copper.
world.60 Due to higher than to roll out a minimum of
anticipated demand, General 100,000 electric cars per year The demand forecasts are
Motors announced plans to by 2020 in its first German considerable. By 2035, demand
increase production of the plant slated to go electric.63 For for copper is expected to reach
Bolt, and remains committed its part, BMW is entering the 11 million tons, and that’s
to introducing at least 20 new second phase of its for EVs alone.
electric vehicles by 2023.61 Since electrification strategy, with its
56
Trend 10: Demanding provenance
An additional 1.2 million to invest US$100 million in two manufacturers and technology
tons may be needed to build venture capital funds that will giants—are demanding
charging stations and upgrade invest in companies developing ethically-sourced minerals, and
distribution lines.65 Between innovative uses for platinum.69 are willing to vote with their
EVs, global energy storage, and feet if miners can’t deliver.
nanotechnology, the global The price of poor provenance
demand for tech-grade graphite All that said, supply risks Apple stopped buying cobalt
is set to rise by 200 percent exist—and these go beyond from artisanal mines in the DRC
by 2020 and 300 percent by the challenges associated with due to their dangerous working
2025.66 Demand for cobalt ramping up production. One of conditions.71 Apple regularly
and lithium is also expected the prevailing concerns revolves maps its supply chain to remove
to double between 2022 and around an over-reliance on suppliers unable or unwilling
2025.67 cobalt originating from the to comply with the company’s
Democratic Republic of Congo ethical sourcing standards.
The good news story doesn’t (DRC), which controls roughly
stop there. The rapid adoption 70 percent of the world’s cobalt Outcomes like these are putting
of EVs may accelerate the supply and where human rights unprecedented pressure on
development of other violations, including child labor, mining companies to take the
competing technologies, such are common.70 needs of their end users into
as those fueled by hydrogen account and create a more
cells. In fact, China anticipates This presents more than a transparent interface with
having one million hydrogen risk of non-compliance with their customers. As strange
fuel cell vehicles on the roads international labor standards. as it may sound, commodities
by 2030. The country already It is also exposing mining are increasingly being viewed
has 12 hydrogen fueling stations companies to a new form as consumer products that
in operation, with 19 under of scrutiny. That’s because will only attract top dollar if
construction, and is aiming for socially-conscious millennials they possess certain quality
at least 100.68 This may heighten are now questioning the thresholds related not only
demand for commodities provenance of raw materials to their ore grade and energy
such as platinum, which is in products ranging from cell density, but also to the impact
used in hydrogen engines, a phones to electric vehicles. their extraction has on societies,
potential future scenario that As a result, downstream communities, individual
has spurred Anglo American customers—such as automotive workers, and the environment.
57
Blockchain coming of age Although blockchain can be sources, enhance transparency,

This is driving the adoption used for a variety of purposes and improve reporting and
of technologies such as in the mining industry— regulatory compliance.
blockchain to enhance the including transfers of value
traceability of commodities. For (accounts payable, trade It can also help mining
instance, De Beers developed a finance, audit trails), digital companies instantly calculate
blockchain platform called Tracr identity (vendor management, and prove details such as
to digitally track diamonds from shareholder voting), and product origin, custodial chain,
the mine to retailers. Mined smart contracts (supplier and the end-to-end carbon
diamonds are assigned a global partnerships)—provenance footprint involved in producing
diamond ID, which records their is one of its most promising any particular ton of ore. This
individual characteristics, such applications. By facilitating will do more than position them
as carat, clarity, and color. When asset traceability from origin to benefit from the EV boom. It
fully operational, Tracr will allow to destination, blockchain will also enable them to further
consumers to confirm that can validate the source of differentiate their offerings
registered diamonds are natural specific commodities across in the eyes of consumers,
and conflict-free.72 the supply chain to reduce regulators, and investors—
the prevalence of conflict enhancing their long-term value.
Transparency in action
Produits Artistiques Métaux Précieux (PAMP), a global bullion brand and precious metal
refiner, recently entered a strategic alliance with Peer Ledger, a Canadian blockchain
company, to create responsible sourcing software for supply chains. The platform
allows customers to use an iPhone app to scan precious metal products to obtain both
provenance and authentication information. By tracing precious metals to their original
sources, this solution can help to prevent counterfeit and unethically sourced metals
from entering the supply chain.73
“As customer demand for battery minerals rises, so too does

the demand for transparent provenance. Mining companies
that can respond rapidly may see a first mover advantage that
allows them to earn a premium on their products.”
Ian Sanders
Deloitte Australia
58
Trend 10: Demanding provenance

Hedge your bets Build trust
Despite the current demand As demand for ethically-sourced
for battery commodities, commodities mounts, mining
forecasts don’t confer companies interested in earning
guarantees. For instance, potential price premiums will need
battery producers are to take steps to transparently
increasingly relying on track the provenance of their
synthetic graphite, despite commodities. This will likely
higher costs, due to its mandate greater investment in
greater capacity to hold blockchain technology, as well
a charge. This may affect as adherence to frameworks
demand for natural flake such as the Responsible Cobalt
graphite. Similarly, technology Initiative (RCI) through which
companies and automakers member companies commit
alike are researching the to tracing how their cobalt
viability of batteries that is extracted, transported,
don’t use cobalt. While these manufactured, and sold.
alternatives are not likely to
shift demand prior to 2025, Look inside
they could alter longer-term Just as consumer-facing
industry dynamics. Trends organizations prioritize the
like these could take the development of ethical supply
wind out of the sails of those chains, mining companies may
mining companies making want to look more closely at
enterprise-level bets that the EPCs, suppliers, refineries,
demand for current battery processors, and contractors they
minerals will persist. As such, work with globally to ensure
it’s important for miners to they all adhere to appropriate
continue carefully diversifying labor, environmental, and
their portfolios, taking the compliance standards.
full range of potential future
scenarios into account.
From left field

What happens if automotive manufacturers and/or major
technology companies decide they need to control the source
of their key commodities? Could we see a day where mining
companies face disruption from consumer-facing corporates, in
the same way retailers face disruption from the likes of Amazon?
59
60
Conclusion
Holistic, dynamic,
and integrated
Devising a grand strategy for the future
With commodity prices staging approach, one that considers to resolve conventional
a comeback, the mining not only the full range of challenges in non-traditional
industry is poised for a new industry shifts and risks, but ways, ultimately transforming
cycle of growth. Yet, unlike past that provides executives with their approaches to risk
recoveries, this one is unlikely an enterprise-wide view of their management, talent attraction,
to be characterized by rampant value drivers. Decisions can no community relations, supply
optimism, overspending, and longer be made in silos, without chain systems, capital projects,
unrealistic production goals. an understanding of their global portfolio structuring, and
Battle-scarred and wary, implications. Instead, data, stakeholder relationships.
today’s mining companies have processes, operations, systems, Only in this way can mining
left their adolescence behind and teams must be integrated companies position themselves
and are walking towards an to ensure that critical actions to not only enhance financial
uncertain future with greater align to corporate vision. performance, but to assume
maturity, humility, and courage. the mantle of responsibility for
This requires mining companies the social and environmental
To thrive amid the demands to be willing to do more than repercussions of their actions.
and exigencies that Industry learn from their past mistakes.
4.0 presents, mining companies It also requires them to be
will need a new strategic sufficiently open-minded
“It is now well-understood that mining companies cannot operate in isolation

from one another. It must be equally understood that they cannot thrive by
taking an isolated approach to their internal initiatives. Only by breaking down
longstanding silos can companies hope to achieve the efficiencies, enhanced
performance, and cost savings that come from working in harmony at an
enterprise level.”
Rajeev Chopra
Global Leader―Energy, Resources & Industrials
Deloitte Touche Tohmatsu Limited
61
For more information, please contact a Deloitte mining and

metals professional:
Global contacts
Global Leader, Global Leader,

Mining & Metals Energy, Resources & Industrials
Phil Hopwood Rajeev Chopra
+1 416 601 6063 +44 20 7007 2933
pjhopwood@deloitte.ca rchopra@deloitte.co.uk
Global Consulting Leader, Global Tax Leader,

Mining & Metals Mining & Metals
Andrew Swart James Ferguson
+1 416 813 2335 +44 20 7007 0642
aswart@deloitte.ca jaferguson@deloitte.co.uk
Global Audit Leader, Global Risk Advisory Leader,

Mining & Metals Mining & Metals
Glenn Ives Sandeep Verma
+1 416 874 3506 +1 214 840 7182
gives@deloitte.ca sxverma@deloitte.com
Global Financial Advisory Leader,

Mining & Metals
Dan Schweller
+1 312 486 2783
dschweller@deloitte.com
Region/Country contacts
Africa Americas Australia

Andrew Lane Glenn Ives Ian Sanders
+27 11 517 4221 +1 416 874 3506 +61 3 9671 7479
alane@deloitte.co.za gives@deloitte.ca iasanders@deloitte.com.au
Tony Zoghby Argentina Paul Klein

+27 11 806 5130 Edith Alvarez +61 08 9365 7060
tzoghby@deloitte.co.za +11 4320 2791 pauklein@deloitte.com.au
edalvarez@deloitte.com
Janine Nel Brazil
+27 11 209 8639 Alejandro Jaceniuk Patricia Muricy
jnel@deloitte.co.za +54 11 4320 2700 ext. 4923 +55 21 3981 0490
ajaceniuk@deloitte.com ajoffily@deloitte.com
62
Contacts
Canada India Switzerland

Phil Hopwood Arup Sen Sen David Quinlin
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pjhopwood@deloitte.ca arupsen@deloitte.com dquinlin@deloitte.ch
Andrew Swart Rakesh Surana Geoff Pinnock

+1 416 813 2335 +91 22 6122 8160 +41 58 279 6066
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Chile Indonesia Turkey

Patrick Hall Ali Henry Elif Dusmez Tek
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Kevin Xu Yuichi Shibata Salam Awawdeh
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kxu@deloitte.com.cn yuishibata@tohmatsu.co.jp SAwawdeh@deloitte.com
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Andres Roa Cesar Garza Tim Biggs
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63
Endnotes
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renewable energy—CEO,” by Dave Sherwood, Fabian Cambero.
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65
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Blockchain For The First Time,” by Aaron Wood. Accessed at ___
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65. Mining.com, April 12, 2018. “Impact of electric cars in medium-

term copper demand ‘overrated’, experts say,” by Cecilia
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66
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GX Er Tracking The Trends 2019

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Tracking the trends 2019

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Strategic thinking in action

• Are we relentlessly • Do we have a response plan • H

Strategic thinking in action

Delivering on the promise “When done well, strategic planning cycles

Leading strategies in focus

From left field

Global trends: Three horizons of AI To date, most organizations are working in

Figure 1: Three horizons of AI

Source: Deloitte Analytics and Cognitive practice

But first, some definitions:

Figure 2: From descriptive to prescriptive analytics

Employs machine learning

an organization's analytics layer

Analytics in action: trucks between shovels. Maintenance

Safety were then leveraged to Using machine learning

Where to invest and Another important new skills is taking on urgency,

“Experience shows that the majority of early analytics use

Leading strategies in focus

From left field

The complexity of geographic, Ultimately, this approach should

“In today’s broadened risk landscape, where

Leading strategies in focus

Figure 3: Shift from traditional supply chain to digital supply network

Traditional supply chain Digital supply networks

Source: Deloitte analysis Deloitte university press dupress.deloitte.com

As figure 3 shows, digital is at For example, drone video

The digital supply network in action

The last mile capable of adapting to and incremental improvements, a

“The mining sector is at the earliest stages of building a digital supply

Figure 4: The physical-digital-physical loop

2. Analyze and visualize

Source: Center for Integrated Research Deloitte insights deloitte.com/insights

The digital supply network in action

Leading strategies in focus

Shared value in action

A new age of collaboration interactions with government.

Shared value in action

The litmus test to lower healthcare costs for the

“By taking the time to understand local community concerns

Leading strategies in focus

Share ideas Prove it

From left field

a portfolio and approach production, representing up to savings, improve environmental

A solid foundation help streamline the regulatory only conducted periodically

Riding the upside While these changes will not

“With a constant knowledge of how every drop of water is

Leading strategies in focus

Figure 5: Mining industry greenfield capex

Source: S&P Market intelligence, Deloitte analysis

Building on their strengths innovation also promises to nationalism, and putting

Capital project capacity in action

Five areas of focus overruns. Notably, companies success also hinges on

Capital project capacity in action

Right from the start:

Leading strategies in focus

The future of work in action

Firing on all cylinders As a second prong in this Third, organizations must

The future of work in action

Leading strategies in focus

From left field

practice. According to BHP, diverse talent in the mining