EY refers to the global organization, and may refer to one or more, of the member firms of Ernst & Young Global Limited, each of which is a separate legal entity. Ernst & Young Global Limited, a UK company limited by guarantee, does not provide services to clients.
Recent Searches
Mining considerations for Africa in a post COVID world.
Executive summary
- What are some of the major challenges the mining industry is facing today and how will these changes play out in future?
- Unlocking digitalisation and upskilling your workforce holds some of the major opportunities to tap into growth.
The mining industry has been the bedrock for entire civilisations since time immemorial. Even today, mined resources are our future, with the growth of electronics and green energy resources increasing the need for extensive mined resources.
But while the mining industry has changed significantly in the past few decades, some things never change. One of the industry’s major challenges remains productivity: in other words, how do you get more out of your operations for less investment. The older operations get, the harder it becomes to extract metals and minerals from the ground.
To achieve sustainable productivity improvements – and meet a host of additional challenges, including decarbonisation and ensuring the safety of their workers - mining companies must adopt digital strategies that give them a holistic view of their operations and improve decision-making.
That’s another significant challenge in itself. In general, the mining sector is battling to navigate digital disruption. Effective implementation of technology is slow in the sector, and the industry is poorly rated for digital intensity. Most miners realise that digital can be a key enabler of productivity by enabling more effective loss elimination and execution of operational strategies and plans, but they don’t always know how to pull it all together.
But the single biggest challenge facing the industry right now, as highlighted in EY’s Top 10 business risks and opportunities for mining and metals in 2021, is the need to earn its licence to operate. There is greater pressure than ever on the mining sector to demonstrate the long-term value it is contributing to local communities, national economies and broader society.
Stakeholders are looking to understand value beyond the financials. That means the industry should be thinking differently about its value chains and business models, and how those business models create, capture and deliver value to a broader set of stakeholders than ever before.
To meet these challenges, and pursue longer-term sustainability, mining companies must think about how they can ‘future-proof’ their business models. To do that, they need an innovation mindset. In other words, innovation is essential to pursuing longer-term sustainability. That includes a digital agenda that is part and parcel of the business strategy, and not a separate, isolated topic.
At EY, we’re often asked what long-term value and sustainability looks like in the mining industry. There’s no simple or glib answer. It includes aspects like safeguarding the longevity, health and safety of the workforces that these massive companies employ. That opens a new conversation around the future of work: what does the mining operation of the future look like, and how do you ensure your workforce is ready and equipped for that future?
Sustainability is also all about returning value to the communities in which mines operate. How does the community benefit meaningfully from the presence of the mine? What happens to the community when the mine closes? These are questions being asked of miners daily.
And, of course, no discussion about sustainability in the mining sector is complete without a clear focus on the long-term impact of mining operations on the environment. Issues like decarbonisation and the green agenda are becoming ever more prominent as social responsibility and broader stakeholder demands intensify in the wake of the pandemic.
The pressure to reduce greenhouse gas emissions remains the biggest environmental issue for mining and metals companies, and while leading companies are setting out their approaches to decarbonise direct emissions, few miners fully comprehend the true environmental impact of their entire value chain.
The mining sector is at an important inflection point. COVID-19 has created massive uncertainty and shone a new light on existing issues like the license to operate, environmental concerns, safety and governance and corporate responsibility. At the same time, it has acted as a catalyst for greater collaboration across the industry to develop creative, agile solutions to problems. There’s never been a better opportunity for the sector to accelerate its transformation journey and make the structural changes to its business model that will reframe the sector. Its future depends on it.
Summary
The mining industry is one with untapped potential and has been of the pillars of growth for the African economy. What are some of the opportunities that business leaders can unlock to inform their long-term value and sustainability agenda?
