Deloitte says mining companies need to change mindset, find new ways of doing business to gain from digital transformation
Published: 10 September 2018
With the cost of digital technology dropping sharply and digital solutions being trialed and tested, there is no better time than now to explore Intelligent Mining. However, at its core, digital transformation is not just about technology, but about changing the way companies do business. This means miners need to understand what it takes to transform and where to start with digital to reap the full benefits of adopting new technologies, according to the latest report from Deloitte.
The report, Intelligent Mining – Delivering Real Value, says that globally, mining operators across all commodities are facing the combined challenges of declining ore grades and operating efficiency. Responding to these challenges is difficult due to the large variance inherent in ore bodies. Mining companies are also beleaguered by costly infrastructure requirements, lengthy implementation timelines, dangerous operating environments and subsequent critical safety considerations.
"The digital future brings great promise. It enables quicker and better decisions that can reduce performance variability and improve equipment utilization and safety. Instead of being reactively managed, mining companies can adopt a management and operations approach that looks forward with insight and confidence," says Kevin Xu, Mining Sector Managing Partner, Deloitte China.
According to Deloitte, there are several benefits to mining companies embarking on a digital transformation. First, evidenced-based insights allow organizations to do the same work better, eliminating execution waste with a potential improvement of 10%-20%. Second, technology can help automate processes and make better system-wide decisions. Potential improvement in this space is anticipated to reach 20%-30%. Third, it can facilitate the overall transformation of mining companies with expected improvement potential of more than 50% by integrating and optimizing all technologies across the value chain.
From working with mining companies, Deloitte has identified the following key challenges that slow the rate of digital transformation:
- Opting for "out-the-box" solutions which are not fit for purpose
- The inability of technology providers to implement their solutions
- Limited comprehension of the impact on the workforce and changes required to work processes
- Underestimating agile methodologies for transformation which are rooted in adaptive planning, early delivery and continuous improvement
- Inability to adapt governance models to support agile principles
- Fragmented ownership of the digital transformation agenda
- A general tendency to focus on project outputs instead of business outcomes
"To succeed, intelligent mining requires a comprehensive organizational transformation, in which mining companies need to change the way they run their business rather than just adopt new technologies. In a rapidly evolving technology environment, where solutions are often unique and target step-changes in performance, a 'think big, test small and scale fast' method is highly recommended, so transformation will create concrete business value and make Intelligent Mining sustainable," Xu says.