Mining companies need to make fundamental changes to their business models to reverse the negative trend of a steadily declining productivity in the industry that has been going on for a decade. This is the main conclusion of the latest EY study entitled ‘Productivity in Mining: A Case for Broad Transformation’ that was released recently. The EY analysis emphasizes that the mining companies has made the mistake of chasing production growth at the expense of productivity on a volume and cost basis. In his statement, Bruce Sprague, EY’s Canadian National Mining Leader, has commented that “Companies caught in the race to capitalize on high commodity prices are now facing a number of business model challenges. […] Operation expansion and inefficient use of labor and equipment are all compromising productivity.”
However, the study also warns that there are no easy solutions to these challenges. Cost-cutting exercises and nominal process and technology enhancements aren’t sufficient to avoid the damage that has been done. In this situation, the report argues that “Behavioral change is critical given that many mine managers, frontline engineers and operations supervisors appointed to these positions during the super cycle have never operated under a marginal environment.” If the mining industry is serious about implementing sustainable changes to increase productivity, this would require an industry-wide broad business model transformation chiefly by way of revising mine plans, reassessing mining methods, considering opportunities for automation and making changes to equipment.