Trend 8: The intersection of talent and community Proactively planning for the social impact of digital
7 minute read
03 February 2020
As digital sweeps through the mining sector, a host of benefits are being realized across the value chain. These typically range from cost reduction, improved production, and enhanced safety performance to plant optimization, greater inventory control, and even the ability to predict and mitigate crisis events.
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To capitalize on the digital revolution, mining companies should drive change both internally and within the communities in which they operate. Underestimating internal organizational barriers, bureaucracy and the associated impact on local communities can hinder their ability to realize the full benefit and prosper. This potential lack of value realization can be attributed to a limited understanding of the impact that digital transformation can have on work, the workforce and the workplace, and therefore on the communities in which they operate.
Digital, automation and remote work models, including remote operation centers, could potentially displace up to 60 or 70 percent of mine site roles1—an impact that will likely be felt most across entry-level roles, which often includes diverse talent, comprising indigenous talent from local communities in which the mines operate. While many new roles are also created through Industry 4.0, the question is whether these new roles are at the same level and location as the previous roles. As companies drive the use of automation and digital technologies to enhance operations, there will be key choices to make. These will likely include the extent to which they disrupt current roles and require different talent models where people and machines work together, and the enhanced use of remote operation centers, all of which have direct implications for local employment. The nature of locally and regionally deployed talent could be very different going forward.
The potential repercussions on local communities and on corporate diversity targets are not lost to mining companies. “Miners recognize they have a responsibility to the communities in which they operate, and that their social license to operate is critical for their business,” says Julie Harrison, Partner, Consulting, Deloitte Australia. “Most understand that the transition to a digital future must take this into consideration. True strategic workforce planning can help organizations to understand which roles will be affected; what new roles, capabilities, and skills will be required; and therefore what talent and workforce strategies should be deployed.”
Rather than simply driving a number of digital point solutions, mines should inform their decision-making through the workforce strategies that they choose to execute. “A ‘just transition’ can’t happen unless companies accept that they’re not solely driven by bottom-line outcomes,” notes Janine Nel, Partner, Consulting, Deloitte Canada. In this regard, one thing is clear: companies should understand the impact of digital and start thinking differently about the future of the workforce and communities. In the same way as mining companies conduct life-of-asset and life-of-mine planning, longer-term and more strategic talent planning is becoming more critical to the delivery of planned business outcomes and to ensuring that the possible repercussions on local communities are mitigated. This means considering various future scenarios to plan for the social impact of automation in which there can be benefit for all.
Social impact necessitates creating value beyond compliance for the local communities
In 2019, Deloitte South Africa released a paper entitled Value Beyond Compliance: A new paradigm to create shared value for mines, communities and government.2
The tenets of value beyond compliance can play a critical role in thinking through how the social value proposition to a community might change in a world of increasing role disruption. The intention should be that mines deliver to each stakeholder in terms they can understand. Targets can then be set and performance monitored against these metrics.
That’s why it can be important to identify and define outcomes that matter to all stakeholders, and then quantify the value each stakeholder receives in those terms. Governments typically care about economic growth, local content, and job creation. Communities typically care about income earning opportunities and access to basic infrastructure (figure 1).
Creating value amid uncertainty
In an uncertain world, there are forces shaping the landscape going forward:
- The pace and disruptive nature of technology adoption: Today many companies are experimenting with a range of different technologies, and some companies are further down the road than others on this journey. But as digitization gains momentum, the cost of technology is expected to decline, and more companies are expected to enter this space, we may reach a tipping point where competitive pressure forces more rapid and accelerated adoption across the industry. In the next 10 years, will this adoption be slow and incremental or fast and accelerated?
- The pace at which host community expectations rise on the value that they expect from mining companies: Around the world we see the rise of nationalism in different countries, increased focus on climate action, and increased demands on governments and communities. The mining industry could articulate more clearly the value it delivers to communities. In the next 10 years, will we see an acceleration of demands or will they continue at a more measured pace?
Bringing these two uncertainties together frames four divergent yet plausible scenarios for the mining industry (figure 2).
Each of these four scenarios is plausible and each has very different implications for a mining company’s talent strategy and how that talent strategy interfaces with the local community.
“Depending on what scenario plays out, mining companies face very different implications,” explains Karla Velasquez, Mining & Metals Leader, Deloitte Peru. “Ideally, leadership will pay attention to how things are shifting, what they’re mining, and what value they’re delivering, and then assess not just the work outcomes they’re responsible for but also the most effective, safe, and optimum ways to achieve them. If a large percentage of local workforces may be displaced, for instance, leaders will ideally reevaluate to what extent they will automate and perhaps use people, rather than technology, to achieve the same outcome.”
Strategies for supporting a just transition
- Strategic Workforce Planning–enabled retraining, reskilling and redeployment. The mine of the future will likely require workers with a different set of skills than people possess today. This means workers across the board would need to be retrained and upskilled—including those from local communities. To enable continued workforce diversity, companies can upskill and cross-skill people beyond entry-level roles. Some ways to achieve these aims are by offering local co-op programs with work terms, hiring local apprentices, and using micro-credentialing to independently certify workers in specific skills (this can be recognition of soft skills, such as problem solving and communication, or technical skills, such as data analytics and coding). In addition to providing people with transferable skills training, retraining would keep them rooted in local communities. This would allow companies to build the capabilities they need rather than buying them. Right now, for instance, businesses and government in Australia spend AU$4.6 billion (approximately US$3.18 billion) per year to train their workforces, compared to the AU$7 billion (approximately US$4.84 billion) they spend on recruitment.3
- Open eyes. Many of the skills and qualifications possessed by local community workers can be transferred successfully to other industries, but many local workers don’t understand how. In remote regions, mining companies have often acted as multigenerational employers—giving people the impression that their skills are confined to the mining industry. To change that perception, mining companies should aim to educate communities about the wider range of career options available to them, and help upskill them to close any gaps so they’re better placed to thrive in the future.
- Empower local businesses. Historically many companies focused on developing local suppliers in low-complexity/low-value spend categories—such as cleaning, catering, and security services—to comply with local procurement requirements. To empower local businesses to meet their future labor requirements, mining companies should help them develop more strategic and specialized skills, such as heavy mining equipment manufacturing and maintenance, mining services, explosives and ballistics services, and engineering consultancy. In addition to empowering them to scale economically, this can enable local businesses to gain greater technological capacity and employ a higher number of upskilled community members (see case study).
Case study: Retraining regional workforces4
BHP, BHP Billiton Mitsubishi Alliance (BMA), and BHP Billiton Mitsui Coal (BMC) developed a strategic partnership in 2012 to strengthen local procurement from small businesses near their operations in Queensland. Since then, the program has extended to cover all of BHP Minerals Australia core assets, including Queensland Coal (BMA and BMC), NSW Energy Coal, Western Australia Iron Ore, and Olympic Dam in South Australia.
The companies established a backbone organization called C-Res (Community Resourcing for the Future) and a local buying foundation. The program provides a platform for small businesses with up to 20 employees to competitively tender for jobs through a streamlined process. Shorter payment times (average 14 days) are a feature of the program.
For every contract awarded through C-Res, BHP, BMA, or BMC makes a financial contribution to the foundation. These funds are intended for regional workforce development programs, economic development projects and awareness-raising, and building individual business capability. Since inception, the partnership has awarded more than AU$317 million (approximately US$219 million) in contracts to 1,320 approved suppliers for more than 25,000 approved work instructions.
Energy, Resources & Industrials
Deloitte’s Global Energy, Resources & Industrials specialists provide comprehensive, integrated solutions to all segments of the Oil, Gas & Chemicals, Power & Utilities, Mining & Metals and Industrial Products & Construction sectors. Offering clients deep industry knowledge and a global network.
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Get in touch
- Andrew Swart
- Global Mining & Metals Leader
- Deloitte Canada
- aswart@deloitte.ca
- +1 416-813-2335
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