African Mining Indaba - my takeaways

It was a pleasure and a great time spending the last week at African Mining Indaba in Cape Town; unfortunately, not much time was spent enjoying the great weather. Several meetings with past and potential future clients, partners, and even competitors yielded interesting discussions and provided some interesting points of view on the future of the mining industry, both from a South African and wider Africa view point, and a holistic view on a lot of topics, topics that are applicable to the industry independent of the geography where one operates.

It continues to be clear that through all the different angles you look at it, the future of mining is still about people. Whether those people are the industry’s workforce, the communities in which mining operates, the government entities, or the service providers for the industry, they all point to a common fact: This is a business about people, and how you unlock power throughout the full value chain is critical for the success of the mining industry.

Below are some of the my key takeaways from last week’s discussions held in one-on-one meetings and in the open discussions held at the Proudfoot dinner on the future of mining with 26 executives of the industry.

INVESTMENT IN MINING IN AFRICA

One of the trends over recent years has been a perceived reduction in investment in Africa. Investors will always be attracted towards good orebodies and in that aspect certain African regions still hold such interest. Clearly, where the money goes will tend to move toward the perfect scenario of higher-grade orebodies, low technical risk, low start-up capital, and short payback periods. While the perfect scenario is easy to describe on paper, reality will probably prove more difficult when it comes to providing such a perfect outcome. And because some of these components are not found in the same project, one of the critical factors to attracting investment will be the individual countries and their positioning towards mining. Their critical role will be to provide a stable and business-friendly operating environment that considers key aspects for investors, such as an increase in transparency and predictability.

There was a clear sign last week that we are moving towards this business-friendly environment as  there was a heavy presence of several countries in Indaba and a set of panels where the message was towards such positive outcomes. In the future, countries and institutional bodies will need to define their roles and whether they want to go down the route of pure industry regulation or to position themselves as a partner in defining the operating models for the industry in a similar way to what happened in Canada with Towards Sustainable Mining.

SOCIAL LICENSE TO OPERATE

One of the hot topics for the industry over recent years is the ability for mining companies to engage with local communities and ensure their operating license is, and will remain, a key component for the future of mining.

Some of the discussions held at Proudfoot’s future of mining dinner were around whether the existing community engagement models are the appropriate ones and how these models need to widen to tackle broader components, such as artisanal mining (not to be confused with organized crime mining) and local community business capability development, as well as the current approaches to finance schooling, hospitals, water management, and sustainability aspects.

Again, governmental bodies could and should play an important role by, for example, incorporating these in the operating model frameworks for the mining industry. 

TECHNOLOGY

This is the topic and buzz word of the moment worldwide and cross industry. The need for the mining industry to improve its safety track record, coupled with the reality of spiraling energy and labor costs, has set the perfect framework for the adoption of digital technologies across the value chain of the mining industry. Most of this focus is currently on employee safety, performance management, and business visibility.

It was amazing to listen to several success stories and different approaches, as well as Dr Molixsi Mgojo as he explained his team journey in digital transformation at Exxaro over the last couple of years and how different levels and generations of the organization were involved in it.

From the discussions held, a couple of points confirmed some of the approaches we at Proudfoot have been taking and discussing with our clients:

1. How you design the digital transformation journey to keep people at the centre of it and ensure you maximize user adoption is paramount to getting the positive outcomes expected. The ability to engage the workforce, provide alignment and transparency on what’s in it for them, make them part of the process, and do it on a testing and “the sky’s the limit” environment just confirms that extraordinary things happen at the intersection point between people and technology.
2. While the above point is true, how can junior and mid-tier mining houses get the full power of digital into their day-to-day reality? Without the economical power of the major players, is the ability to create networks to learn and test in different environments, or even partnering with some of these majors, a possibility? For the players with less financial capability, our approach has been to focus on selective digitization and analyzing (as this provides the best return for each dollar invested) and have this as the foundation of the digital transformation roadmap design and implementation.
3. Another interesting angle that I haven’t seen much discussion about is how do you tackle the accelerated widening gap between the exponential technology transformation curve, where change in the last 10 years has been higher than in the rest of the planet’s history, and the linear management transformation where no significant changes to basic management has occurred over the last 50 years. Today’s leaders need to take this into consideration to allow them to become organizational enablers of a workforce which is changing in terms of work habits, with employee levers moving from job security and long-time career prospects to a company’s approach to sustainability, diversity, and environment.

CAPITAL PROJECTS EXECUTION

One of the benchmarks that the mining industry is clearly not proud of is the past performance on delivery of capital projects: it’s neither on time nor on cost. I have shared some of Proudfoot’s success track record on this field over the last couple of years and our approach to the Risk Schedule Management System. There are a series of levers that can be acted on to improve the outcome of such projects, but I will leave that for another time.

One of the interesting discussions about this theme has started an approach at Proudfoot that I love: what if we could? It’s clear that the industry needs to look at capital projects in a different way, where the silos between areas, owners, and service providers are removed and all work together for the same outcome. While there are a lot of tools and claims out there on how to make this work, the “what if you could” discussion led to a brainstorm around a disruptive model on approaching this key part of an asset life cycle with a focus on partnership, scalability, and revenue acceleration without obviously putting aside safety and community engagement. There are good initial thoughts so stay tuned for more to come on this in coming weeks.

TALENT GAP AND DIVERSITY

This is an expected topic to be discussed given the poor track record of attracting new talent into the industry. The numbers talk for themselves, with a decreasing amount of people going into mining engineering schools worldwide and millennials staying at arm’s length (and big arms I would say) of this sector.

From our discussions last week, a common view is that the industry needs to do a significant change to its PR approach. Mining needs to be perceived as the positive force it is as it contributes to reducing poverty worldwide by extracting and transforming minerals and metals that are part of our day to day. Is there a full understanding of the impact of mining on today’s world or on our daily life, where most of common items we use start at mining a metal or mineral? Do millennials really know how much mining is present in their mobile phones, for example?

Obviously, a lot of mistakes and poor practices have existed in the past, but a lot of industries operate close to communities with similar impacts and risks on environment. The difference? A lot of those industries have great PR around them.

If I now close with one of my initial points: Engaging your community and your workforce as your first line of positive PR is critical and, one would say, common sense. I recall some of the work we have done at Indonesia, the Amazon jungle, and Africa where a positive and differentiated approach to community engagement has yielded impressive results from an operational and financial point of view, supported by a community which understood and was the first line of defense for those companies and for the good it created.

It therefore seems obvious that people will have a large part to play in shaping mining’s future, as our discussions last week showed and continue to prove. But be this through people’s engagement with the mining industry at a communal and technological level or their effect on changing how it operates financially and operationally, ultimately the industry needs to be capable of handling the positive change people can bring and be ready for a successful future.

The points above represent a personal view and are food for thought. I’m happy to discuss and elaborate more on each of them.