A complete step-change in the current mining business model in South Africa is required for the industry to survive in future, says global consulting firm Deloitte Africa energy and resources leader Andrew Lane, adding that the only way to ensure sustainable growth and deliver a return to stakeholders is through innovation.
This emerged at a Deloitte in Conversation discussion, entitled The Future of Mining in South Africa, held in Johannesburg last week.
Also speaking at the Deloitte-sponsored discussion, Deloitte Canada energy and resources leader Jürgen Beier said that South Africa’s mining industry was plagued by unfavourable commodity prices, tougher mining conditions, rising input costs and balancing society’s and government’s demands and expectations, which was compounded by the recent labour unrest and legislative uncertainty that impacted on investor confidence.
Beier, too, is rallying behind the innovation imperative, saying that incremental change in the way South African mining companies continue mining is not enough to overcome the challenges facing the industry, and that instead, it hinges on taking radical leaps.
He highlights the need for mining companies to reimagine the future of mining by changing their current mindset of extracting higher grades and achieving faster throughput by optimising only the pit, the schedule, the product mix and logistics.
A truly innovative mindset will instead see mining companies adopt an entirely new design paradigm that leverages new information, mining and energy technologies to help them increase their value.
Beier says that by integrating mining, energy and information technologies, such as simulation modelling, robotics and energy storage into mine and process design in an innovative way, it is possible to achieve radical performance improvement breakthroughs that are not possible on an incremental basis.
“This approach can help mining companies reduce [the number of employees], energy and capital intensity, while increasing mining intensity,” he says.
Part of the innovation approach includes maximising value for the socioeconomic system, says Beier, adding that by focusing on value creation for the environment and society as part of the mine and process design, new levels of improvement in value to shareholders are created in a substantial and sustainable way.
To ensure that mining companies reap the benefits that come with innovation, Lane highlights the need for mining companies to prepare for the new operations realities that stem from innovation, such as striking a balance between the likelihood that fewer mineworkers will be required owing to increasingly mechanised operations and government’s job creation imperative in a country where mining is seen as one of the biggest creators of employment.