Posted: 06 Apr. 2020 4 min. read

COVID-19: Reflections on mining trends

By Andrew Swart, Global Metals and Mining Leader

In January this year, Deloitte released the 12th Edition of Tracking the Trends.  Two major mining conferences followed – Investing in Africa Mining Indaba and Prospectors & Developers Association of Canada (PDAC) Mining Conference. And then the world changed.  Today executives are navigating unchartered waters, putting in place crisis response teams, shuttering mines, getting staff to work remotely, and making tough choices on how to shore up their balance sheets and cash positions.  Executives are thinking through scenarios ranging from a June 2020 bounce back, a crisis that could stretch through to the end of the year, or perhaps one that returns in seasonal cycles. The truth is we don’t know for sure.

It may seem premature to talk about a reflection of Tracking the Trends so early in this cycle, but I thought it would be useful to look at some of the trends we highlighted in the report and how the perspectives we issued in January remain true today—and probably are more important than ever as firms shape their strategies going forward.

One of the trends, entitled “Dynamically Managing Risk,” highlights how current risk registers were not adequate, given the increased volatility that we’re seeing in the market, and that companies need to invest more in risk sensing, building scenarios into their planning cycles, and leveraging big data. For many companies, supply chain disruption might have been some of the key risks which could have been anticipated. Today, many companies are finding themselves in a position where, in the midst of the COVID-19 crisis, they are working to illuminate their supply chains, four-five layers deep, and assess the exposure and impact of COVID-19 in different geographic areas where those supply chain inputs originate. In many cases, some suppliers don’t even have full visibility into their supply chains given how complex these have become.

In the trend entitled “Seize opportunity amid uncertainty,” we outline the need to prepare for the downturn now. In this trend we highlighted many of the signals in the market which indicate a new normal, either as a lower growth environment or recession. In the report we spoke about how companies need to future proof their organizations by leveraging scenario planning more actively and also continue their investments in innovation so that they can prepare for the inevitable rebound and set themselves up for advantage. In this trend we also discussed the need to “redesign, not burn,” creating more sustainable organizations for the long term, if they have, at the same time, redesigned the underlying processes or found different ways to execute that work, perhaps through automation or outsourcing. We also highlighted the opportunity to acquire assets or people if you have the balance sheet strength. For example, as China is emerging from the COVID-19 crisis, our intelligence suggests that several Chinese firms are back on the hunt for strategic acquisitions. 

Digitization was another key trend we highlighted this year as we looked back on what’s worked and what hasn’t “on the road to intelligent mining.”  In a mining webcast that we recently ran on COVID-19 implications for miners, a question was posed on whether mining companies should seize the opportunity to automate during the crisis. Perhaps, but as always understanding how this would fit into a longer term vision becomes key. Some miners have focused their digitization efforts over the last few years on safety and reliability, taking critical high risk roles and automating these, understanding risk exposures and seeing how technology can mitigate these. What this also highlights is the need to not just look at digitization in the operations of the company, but also through times of crisis; how analytics can inform crisis response; how digital platforms can create connectivity between workers; or how these platforms can help continue the engagement with critical external stakeholders.  As we highlighted in the trend, it’s not just about the technology but all about the people.

Speaking of people and communities, our eighth trend highlighted “the intersection of talent and community.” As COVID-19 plays out, mining companies will have a key role to play in their local communities, particularly in regions with poor infrastructure. We have already seen some local communities’ blockade mines amid concerns of COVID-19. Many West African mining companies have had to deal with Ebola outbreaks in the last few years and have experienced firsthand the role that they play to augment healthcare infrastructure. Today is no different. As we highlighted in the trend, communities have expectations that mining companies are creating “Value Beyond Compliance” and this crisis will no doubt bring this to the fore.  This represents an opportunity for mining companies to lean into those communities and demonstrate that the value that they bring goes well beyond the borders of the mine site and demonstrate true partnership with governments and host communities.

Navigating this uncertainty that mining companies find themselves in requires leadership. We spoke in the report about “leadership in a 4.0 world” and how leaders need to prepare for non-traditional teams, creation of exponential roles, data proliferation, and diversity and inclusion.  In some ways, COVID-19 has shone the light on some of these factors. Leaders are now suddenly needing to deal with teams working remotely and find ways to keep them engaged, being cognizant of creating inclusive environments as staff deal with commitments around children and parents while working from home or navigate the data storm of newsfeeds around the crisis. Welcome to a new world, and one that will be more complex and probably more uncertain for some time to come. 

Early on in the crisis, Deloitte  released a report entitled The Heart of Resilient Leadership: Responding to COVID-19. In it, Deloitte Global CEO Punit Renjen provides some key perspectives on the qualities for leaders navigating this new normal:

  • Design from the heart … and the head
  • Put the mission first
  • Aim for speed over elegance
  •  Own the narrative
  • Embrace the long view

Embracing the long view is critical as mining companies navigate this COVID-19 crisis, understanding the long term implications around their supply chain, their talent, financial management, risk systems and emerging tax environments. Against this backdrop, we remain confident in our ten trends which we see shaping the environment going forward.  While I have highlighted five of the trends deserving immediate attention, companies need to plan for the rebound and how they will come out of this crisis ready to thrive. Capital will return to the market and when it does, investors will again seek out companies with strong economic, social, and governance (ESG) compliance and longer term plans for decarbonizing their business. Like all trends some are shorter term and some are longer, but having the long view is critical to remaining competitive into the future.

Key contact

Andrew Swart

Andrew Swart

Global Sector Leader—Mining & Metals

Andrew is both the Global, and Canadian Leader of the Mining & Metals practice as well as the Global Leader for the sector. In his Global roles, Andrew leads a team from around the world and has the responsibility to set the strategic direction and go-to-market strategy for the global practice. With 20 years of industry and consulting experience, Andrew has a passion for client service, having worked across many major Mining & Metals geographies including Canada, Chile, Russia, Ukraine, Kazakhstan, Brazil, Germany, India, South Africa, UK, and the US. Andrew’s areas of expertise include corporate and competitive strategy engagements, digital and innovation systems and large organizational transformation programs.