TORONTO, ON--(Marketwired - February 01, 2017) - For the first time in years, there is a mood of cautious optimism in the Canadian mining industry, with commodity prices on the rise, shallow growth returning to different end markets, and most mining companies in better cost positions than in the recent past. However, the industry is still at a pivotal point as it faces challenges from cybersecurity threats to technological disruption and environmental issues, according to Deloitte's 9th annual Mining report, Tracking the Trends.
"Mining companies must now make key decisions about where to invest and how to position themselves in the coming years. It is critical that companies are aware that with technological and digital disruption occurring across all industries, comes accelerated threats to the mining industry," said Phil Hopwood, Deloitte's Canadian and Global Mining Leader. "Companies that are willing to engage in substantive change by rethinking strategy, embracing technological disruption and adopting a long-term view, will be best positioned to succeed and propel the industry forward."
Tracking the Trends is an annual report that explores the top issues expected to impact the mining industry. This year's report includes a range of case studies, which showcase how mining companies are bringing new solutions to life and implementing 'how to win' strategies effectively. A trend quite new to the industry this year is digitization; and while there are a number of benefits to embracing digital capabilities, miners must decipher how to turn potential benefits into reality.
"In order to experience the full range of benefits and efficiencies new technology offers, companies need to fully integrate digital capabilities into their culture," said Andrew Swart, Global Mining Innovation Leader at Deloitte Canada. "To thrive in the future, companies must embed digital thinking, processes and structures into the entire organization. There is no time like the present to consider new strategic approaches to help transform the way mining operates across the board."
Additional issues facing mining companies in 2017 include:
- Mapping the threat landscape: As technology permeates all industries and sectors, mining is not immune to the accelerating threats of cybersecurity. Mining companies are subject to a wide range of risks, and with an evolving threat landscape, leaders must strengthen their cybersecurity programs.
- Unlocking productivity through innovation: In recent years, the mining sector has invested in technological innovations such as driverless trucks, sensors and advanced analytics to reduce cost, streamline equipment maintenance and prevent safety incidents. Today, new technological advancements such as drones, real-time modeling and geo-coding are rapidly driving the next wave of productivity gains and functional improvements.
- Digital revolution: While there are a number of benefits to embracing digital capabilities, miners must figure out how to turn potential benefits into reality. To thrive in the future, companies must embed digital thinking, processes and structures into the entire organization.
- Improving shareholder value: Historically, the mining industry has underperformed in this space, with total shareholder returns in steady decline since 2011. Optimizing portfolios, strengthening M&A processes, sustaining focus on cost and making long term investments are key to improving this performance.
- Creating healthy and inclusive workforces: Productivity improvement has been elevated to a mining industry mantra following the commodity price weakness of recent years. Companies, however, need to recognize that productivity goes beyond reducing costs and streamlining processes: mental health, wellness and diversity should also be considered and addressed.
- Operating in an ecosystem: For the sector to realize major breakthroughs, companies will need to shift from a go-it-alone mentality, to one that recognizes the value of operating within an ecosystem. Adopting new forms of collaboration including turning vendors into partners, collaborating with competitors and building extended partnerships can help companies achieve this goal.
- Creating a shared vision for the sector: To foster a shared vision for the mining sector, companies and governments could benefit from finding a middle ground that aligns interests and enhances cooperation when it comes to regulations.
- Re-earning the social license to operate: Winning a social license to operate is especially difficult for miners in light of a number of recent, catastrophic mining accidents and as communities continue to raise concerns about the industry's impact on the environment. By lessening their environmental footprint, miners can foster the community trust needed to regain their social license to operate.
- Supporting strategic priorities: While commodity prices have begun to recover since they began falling in 2011, following years of record profits industry leaders now understand the importance of adopting operating models that can help them respond to industry challenges and market volatility. Companies that took steps to strengthen their balance sheets in the latest round of cost take-outs are now considering how to align their operating models against these choices so they can position themselves to meet their strategic objectives and sustain their new, lower cost positions.
- Adopting an integrated approach to reporting: With governments demanding greater levels of transparency, the sector is working to strengthen compliance and disclosure practices. By standardizing information, considering the benefits of over-reporting and reviewing IT systems to ensure consistent data measurement and reporting capabilities, companies can adapt to a steep change in the reporting environment.
The full Tracking the Trends report is available here.
Deloitte, one of Canada's leading professional services firms, provides audit, tax, consulting, and financial advisory services. Deloitte LLP, an Ontario limited liability partnership, is the Canadian member firm of Deloitte Touche Tohmatsu Limited.
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