Deloitte Global mining report explores key trends in 2020

Published Date: 27 May 2020

The 12th annual edition of Deloitte Global’s mining report, Tracking the Trends, explores key trends facing mining companies in their ongoing pursuit of productivity, financial discipline, operational excellence, and sustainable growth.

“Mining has made impressive progress in the past few years, with many firms streamlining their portfolios and establishing more robust balance sheets in order to put themselves in a position of strength regardless of what lies ahead,” says Andrew Swart, Deloitte Global Mining & Metals leader. “At the same time, they are addressing climate change, developing new opportunities, strengthening community relationships, and investigating new ways to create value. All of this is in the service of pursuing sustainable growth and is reflected in the key industry trends identified for the new edition of our report.”

Leading from the front

"The mining industry continues to face multiple complex challenges, from uncertainty across the geopolitical landscape to the disruptions of digital technology. There is also the increasing – and increasingly divergent – demands from investors, ecosystem partners, workers, and impacted communities," says Kevin Xu, Deloitte China Mining & Metals Sector leader. "The companies that succeed will be the ones who lay a proper foundation today by establishing clear strategic goals and aligning operations to achieve those goals through financial discipline and the mitigation of risk."

“Navigating these complex issues will require strong, forward-thinking leadership,” says Swart. “To lead from the front, mining executives will need to go beyond just good managerial skills, to creating differentiated strategies, creating flexibility in their operating models, and inspiring their teams to accept change and commit to a path.”

The ten key trends identified in the report include:

• The social investor. The drive towards social value is no longer limited to environmental activists. Civil society and investors alike are demanding greater transparency around the environmental, sustainability and governance principles. To regain investor trust, miners must embrace a commitment to value beyond just compliance with regulations and embed these processes in their organizations.
• Getting partnerships and joint ventures right. In the next year more companies will be looking to explore joint ventures and partnerships in the execution of their strategies. However, looking back, many of these JVs and partnerships have failed to deliver the kinds of value originally envisaged.  In this trend some of the common pitfalls and ways for companies to maximize the success of a joint venture or partnerships through decision making, governance and transparency is looked at.
• Seize opportunity amid uncertainty. Commodity prices rise and fall in tune with economic trends, which are currently foreshadowing a potential downturn or lower growth environment. To avoid being blindsided, there are five bold plays mining companies can make to prepare: 1. Future-proof tomorrow; 2. Continue to innovate; 3. Redesign rather than abandon; 4. Review business relationships; and 5. Acquire resources.
• Dynamically managing risk. As global volatility rises, mining companies can no longer rely on their risk registers to identify danger areas. Systemic issues such as insufficient risk sensing, a ‘tick the box’ mentality, and complex operating models are forcing companies to predict the impact of emerging events and prioritize key risks. In this trend embracing more strategic risk management practices is looked at.
• The path to decarbonization. Driven both by pressure from stakeholders and the strengthening business case for decarbonization, mining companies are taking steps to reduce their greenhouse gas emissions. While the path won’t be easy, the commitment is necessary if miners are to contribute to the mitigation of risks associated with climate change and at the same time create value for customers, investors, governments, communities, and employees.
• On the road towards intelligent mining. Digital technologies, artificial intelligence, and analytics solutions have the potential to transform the mining industry. While many companies have launched digital programs, companies often are not deriving the value they originally hoped for. A retrospective look at this trend was taken, summarizing key lessons learned and where companies need to focus going forward.
• Modernizing core technologies. Over the years, mining companies have made significant investments in a range of backend technology systems. Many of these legacy systems will need to be modernized. This raises considerations such as moving to the cloud, adopting sound cybersecurity strategies, managing data, and choosing the best approach for revitalizing core systems.
• The intersection of talent and community. To capitalize on the digital revolution, mining companies need to drive radical change both internally and within surrounding communities. This requires a thorough understanding of the impact that digital transformation can have on work, the workforce, and the workplace, and in turn on the communities in which they operate
• Leadership in an Industry 4.0 world. There are four drivers reshaping today’s leadership landscape: the emergence of non-traditional teams; the creation of exponential roles; the proliferation of data; and the imperative to embrace greater diversity and inclusion. Mining companies that want to strengthen their competitive advantage, and create an adaptive and responsive culture, must commit to upskilling their leaders now
• Tax tribulations. Various global tax measures potentially could create serious constraints on mining economics. To mitigate any unexpected tax obligations, mining companies should be aware of these changes, understand how they could impact their tax affairs, and take steps now to mitigate tax risk. This will involve new forms of agreements and government partnerships, and greater transparency regarding taxes paid.