is mining a growing industry

BCG was the pioneer in business strategy when it was founded in 1963. See something interesting? Hundreds of billions of dollars went into the mining industry on the expectation of continued increasing demand and high price and, therefore, decent profit levels. Companies can take several actions to enhance their resilience and outperform through the cycle: Although advanced digitization is just getting underway in the mining industry, major players have it on their agenda. Through creative ways of working and learning, Wing wants to continue to be a part of, andbuild, high-performing teams by challenging everything we do from a personal, work, and mindset perspective. When most firms talk about globalization, they talk about really just chasing large pools of potential consumers. And so, whether its at 14,000 feet in the Andes or on a hot day in the Pilbara in Western Australia, theres been an increasing push for automationwhether that is true autonomous vehicles, of which there are a bunch out and operating, or a remote operation where people are in an air-conditioned office in an office park thousands of miles away, operating this equipment as though it were a video game. https://www.lme.com/News/Press-room/Press-releases/Press-releases/2020/12/LME-moves-ahead-with-sustainability-strategy-and-LMEpassport-roll-out. Markets are increasingly fragmented. Data analytics and machine learning, in combination with new and emergent technologies such as augmented reality and the Internet of Things, can help advance modeling and generate insights. A focus on cash flow contributed significantly to other companies results. The devaluation or divestment of anything ungreen. Increasingly, investors, governments, and communities are voting with their feet in response to companies ESG. (See Exhibit 4.). Leaders face an uncertain landscape. On the other hand, we have other technologies like automated blasting and shoveling that are now undergoing testing. Likewise, Norilsk Nickel (number ten on the list) also increased its sales and paid substantial dividends. BCG X disrupts the present and creates the future by building bold new tech products, services, and businesses. Some larger mining companies saw their TSR fall by 25% to 50% by the end of March 2020, as governments imposed the first lockdowns. Despite golds strong price performance since 2010, two gold producers landed in the bottom tena situation due mostly to changes in valuation multiples in companies that were highly valued a decade ago. 5 It might take 10, 20, even longer periods of time, to compete over geological analysis and exploration to unpack what an ore body contains. This is something the industry has got to have a go at, in terms of thinking about the next wave of technologies that would change the way that we do mining. At the same time, end-user sectors will need to factor potential resource constraints into technology development and growth plans. (See Exhibit 7.). David Hunter: And what sort of initiatives is that translating to? Another element driving change in our workforces is the expected decline in the long-term demand for hydrocarbon products and the shift to cleaner energy sources. I think there are a number of things the industry is going to have to address to change this trend. But they also are very talented about managing a very complex web of stakeholders that allow them and give them the right to do that. They needed to think about what investments were needed to rehabilitate that. In this episode of the McKinsey Podcast, McKinsey partner Chris Mulligan and Mukani Moyo, senior expert, discuss the complexities mining companies face in far-flung locations and the impact of technology on productivity. Mining Equipment Market Size, Share & Trends Report, 2030 Notes: But as markets stabilize post the initial COVID-19 shock, organizations are realizing that there is a critical, accelerated need to fundamentally rethink how value is generated and redesign how work gets done. Although the mining industry has endured a rather rough decade and the future isnt guaranteed to be rosy, companies have a lot to be optimistic about. Its hard to discern the shape of the industry cycle. The COVID-19 crisis has exposed the siloed nature of mining companies and highlighted the need for integrated operations. David Hunter: Has the application of technology started to make mining operations more productive? And then came the COVID-19 pandemic, presenting entirely new challenges to a sector already reeling from structural problems. For downstream intermediaries, the incentives for branding may be minimal, but consumer-facing companies have much to gain. So in their case, it was not only about rehabilitating an old, open-pit operation that had existed previously. The Big Picture: 2023 Outlook for Metals and Mining Nearly 200 mines and 6,500 sand, gravel, and stone quarries in Canada produce over 60 different minerals and metals. Mining Industry - an overview | ScienceDirect Topics No matter their starting point, BCG can help. Historically, mining companies have tended to focus either on cost reduction or on throughput improvement, but not necessarily on productivity in the holistic sense. Another success factor involves digital transformation, which has been a priority in the past decade. Uniting these technologies can boost safety, efficiency, and sustainability. Mining industry employment and talent challenges | McKinsey David Hunter: So, we saw this big increase in demand, rising commodity prices, and unprecedented levels of investment, often in remote parts of the world. As a result, although revenue growth at most companies was positive, many saw EBITDA fall and in response had to issue equity and debt. Things like: Where are they going to find the mineral deposits of the future? 2 Limiting climate change will require a significant reduction in greenhouse-gas emissions between 2010 and 2050: a 41 to 72 percent decrease for a 2.0C scenario and a 78 to 89 percent decrease for a 1. . I think that the mining industry really has pioneered the way in terms of true globalization. Social login not available on Microsoft Edge browser at this time. To support the country's growing gold mining industry, we have opened a new commercial laboratory in Yamoussoukro. Urban mining not only reduces climate change by recycling products, but it also helps to reduce conflict in various zones. The South African construction industry is expected to see a 5.0% growth in 2023. Promoting diversity also means seeking talent with backgrounds in different industries. It was the roads. Smaller companies are also successfully challenging larger incumbents, as exemplified by the meteoric growth of Northern Star Resources and Saracen Mineral Holdings, whose merger (completed in February 2021) has created a new entrant among the ten largest gold companies in the world. This time, however, commodity prices showed greater resilience and rebounded more quickly. The average annual TSR for the S&P 500 over that same period was 14%. A third thing is explorationexploring for new deposits, figuring out what the new sources or what the new ore bodies are going to be that will fuel growth into the future. It was the water and the water reticulation. Although battery metals companies represent a relatively small portion of our survey sample, they had the largest proportion of strong performers, generating a median TSR of 14%. Boston Consulting Group is an Equal Opportunity Employer. At years end 2020 and/or years end 2010; see part 2 of the Appendix for the full list. How technology is reshaping supply and demand for natural resources, Productivity at the mine face: Pointing the way forward, Getting big mining projects right: Lessons from (and for) the industry, variables that a mining management team doesnt have control over. Push digital transformation further. Those boosts are strengthening balance sheets and bolstering resilience going into the next decade. Deloitte Consultings Mining & Metals practice has helped clients transform to integrated operations through the adoption of digital technologies, artificial intelligence, and analytics solutions. Mukani Moyo: When you factor in the lead times to understanding the geology and the resource basin, it just adds to those timelines. You have to, as an imperative, think about growth. Iluka's Jacinth-Ambrosia in SA is the largest zircon mine in the world. Chris Mulligan: Over the course of the past 15 years, the most pronounced trend has been what people call the supercycle, which was a Chinese-demand-driven desire for more commodities as they continue to industrialize their country. Mining for growth | McKinsey They took advantage of the 5% CAGR price increase for lithium over the past ten years, increasing their production to become two of the worlds three largest producers of the metal. If we look at the narrow view of just one versus the other, we dont get the full picture of how were optimizing those trade-offs. Companies in the sector are expressing renewed confidence, fueled by high commodity prices, fewer concerns about overcapacity, and a clear electrification trend worldwide. Most underperformers fell victim to investors loss of confidence in the aftermath of the 20062012 supercycle. Clients, suppliers, and other partners that are themselves striving for diversity are reassured to see a mix of talent from different backgrounds. This appendix consists of two parts: a description of the components of total shareholder return (TSR), and a presentation of data on the 91 mining companies analyzed for this report.1. All qualified applicants will receive consideration for employment without regard to race, color, age, religion, sex, sexual orientation, gender identity / expression, national origin, protected veteran status, or any other characteristic protected under federal, state or local law, where applicable, and those with criminal histories will be considered in a manner consistent with applicable state and local laws.Pursuant to Transparency in Coverage final rules (85 FR 72158) set forth in the United States by The Departments of the Treasury, Labor, and Health and Human Services click here to access required Machine Readable Files or here to access the Federal No Surprises Bill Act Disclosure. Five major areas of focus can help miners capture value over this decade. They underline the extent to which climate change related issues and ESG more broadly are reframing corporate priorities in mining, as in almost every business sector. Dwindling mineral basins are leading mining companies to remote locations with limited infrastructure. Thats pretty stark. Theres the technology opportunity. http://www.windwardcommodities.com/case-studies/global-aluminium/https://www.windwardcommodities.com/case-studies/global-aluminium/. Being in the wrong commodity at a time of heightened ESG awareness has contributed to some companies underperformance. To help mining clients prepare for this new normal induced by both the pandemic and the growing demand to reduce carbon impacts, we have developed personas for roles we deem important in unlocking the value of intelligent mining enabled through Nerve Centers: To better understand the roles of the individuals who will be interacting with exponential technologies in an intelligent mine, we explore the following different facets of these personas profiles: One of the hallmarks of these roles of the future is that theyll likely draw on familiar components of work but put them together in new ways to create a job thats never been done before. TSRs suffered early in 2020, too. Mining in the United States - Wikipedia And compounding that with whats happening in terms of where we have to go to look for ore bodies, a fundamental phenomenon thats occurring is that the mature resource basins of the world, the places that weve historically gone to extract minerals, are depleting. She focuseson the future of the workforce, the change in skills and capabilities, how roles will be deconstructed, and the business casefor reskilling/repurposing people. In the first place, they dont have the luxury of choosing a site of operations: the ore is where it is. Whats really helpful is that over the course of the last generation, all of the equipment thats being used is just bristling with sensors. But better days lie ahead. Learn about Deloittes offerings, people, and culture as a global provider of audit, assurance, consulting, financial advisory, risk advisory, tax, and related services. Sales growth and dividend yield were the two biggest contributors to TSR growth. Her specific specialization includesleading delivery and thought leadership in areas of digital and the impact on work, the workforce, andthe workplace. Substantially fewer have gone beyond those targetsbut one example is Glencore, which has set a Scope 3 net-zero Copper prices have slipped 11% in the last four weeks and 15% from its year-to-date high, analysts at the U.S. bank say in a note. Furthermore, stock prices in the sector have been among the most volatile during the past decade of the 32 industries we track, second only to tech.
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