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Deloitte identifies mining issues for 2016

3rd December 2015

  

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PERTH (miningweekly.com) – A new report by advisory firm Deloitte has identified the top global issues facing the mining industry in 2016, with operational excellence and innovation topping the list.

In its 'Tracking the Trends 2016' report, Deloitte also identified China’s slowing growth, stakeholder dialogue, mining finance, tax challenges and merger and acquisitions (M&As) as top priorities for miners.

“During the boom, everyone seemed to think prices would remain high forever. Now, everyone is asking ‘When will this downturn change its course?’ What’s clear is that the cycle times between good and not so good are lengthening. It could take years to adjust to current market forces, but things are still cyclical,” said Deloitte Australia’s national mining leader for the West Coast, Nicki Ivory.

“The operating environment remains volatile and complex and the imperative remains to innovate, adapt, manage costs and drive sustainable operational excellence and productivity improvements while also driving and maintaining cultural change, in the face of these challenges and around workplace safety and health.”

Ivory noted that innovation and operational excellence would remain critical in the new year, and miners needed to be more open to adopting lessons and ideas from other sectors, such as collaborative ecosystems, digital workforce engagement, enhanced asset management and three dimensional printing.

“Solutions once considered unviable or inapplicable to the industry continue to be adapted to suit the needs of mining companies – including the move to replace diesel with lower carbon fuel sources and the growing reliance on sensors to monitor fixed and mobile assets.

“Collaboration will be central in driving bold actions. Miners can no longer afford to look at industry trends and address challenges in isolation. They will need to work better together, as an industry and with their suppliers, and seriously consider strategic alliances as a way to share resources and increase their operational effectiveness.”

She added that on the M&A front, there was emerging evidence that deal activity was picking up in Australia.

Gold remained the big commodity play for midtier miners with producing assets, but this looked likely to extend to copper and nickel if buyers could shake off their lingering nervousness about commodity prices that continued to drop, Ivory said.

“Perhaps mindful of where future growth options will come from, the top end of town is also signalling an increased appetite for deal making. While the challenge will be getting investors onside, we expect to see more deals in 2016.”

East Coast national mining leader Reuben Saayman said that the overriding trends were relevant for operators across the country, and companies were starting to adapt to a longer term, low commodity price outlook and investing in strategic areas beyond just cost-cutting to gain a competitive edge.

“Creative approaches to safety and workplace health need to be at the forefront for local operators. The industry has invested a vast amount of money, time and effort in safety, for example, but incidents are still occurring, and even increasing. 

“Enhanced safety analytics, strengthening mental health policies, improving security protocols, employing risk monitors and improving crisis management are just some of the strategies that can be used to detect risks, prevent incidents and change workplace cultures."

Saayman added that cyber security and its associated risks, also needed to be a strong focus area globally, as well as in Australia.

He warned that cyber criminals engaged in corporate espionage, blackmail campaigns or malicious efforts to cause damage via hacking were using increasingly sophisticated tactics to target both organisations and individuals.

“Financial performance data, technologies used to streamline processes, strategic planning and information around potential transactions can all be exposed, with the costs to business ranging from damage to a company’s reputation and profits, to serious safety and security impacts.

“And as these risks expand, miners will come under greater pressure to tighten their processes and controls around safety and security to better protect all of their critical assets, from the wellbeing of their people to their physical facilities and data.”

Deloitte noted that stakeholder activism and relations would also remain a significant issue, especially for the coal sector, and industry challenges would mandate changes in the way miners work with the communities in which they operate.

“In the end, from technology investments and portfolio diversification to stakeholder relations, fundraising and safety, miners that are able to collaborate better, innovate more effectively and develop agile organisations will benefit in the longer term,” Saayman said.

Edited by Creamer Media Reporter

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