MINING INDUSTRY: CHARTING THE ROAD TO RECOVERY AND REBOUND POST COVID19

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Energy & Resources Industry

Recover

Rebound

AbstractThe sudden outbreak of the COVID-19 pandemic has sent shockwaves across the economic order and industries, including mining. Encouragingly, major miners have shown resilience during the pandemic through appropriate risk management to reduce infection risks that could have potentially jeopardised operations. This has resulted in uninterrupted production operations in major mining economies. However, the impact of the pandemic on commodity prices due to demand variability will require miners to continue focusing on safety, optimize operations, and remain financially sound.

Additionally, employee health & safety is at the centre of mining businesses and the post-COVID-19 reality will require innovative ways of collaboration and

coordination to ensure safety and productivity of the workforce.

Now, more than ever, mining companies are required to play a crucial role in protecting the health of employees and partners, support local economies, as well as become purpose driven, adaptable, and resilient organizations.

This paper is discusses the ways miners can rapidly address the changing workforce and supply chain needs, while navigating the financial and operational challenges towards recovery and rebound.

It draws upon an assimilation of industry best practices, non-linear learnings from COVID-19 as well as our experiences working with global miners to help them respond to the pandemic-induced disruptions.

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The substantial decline in base metal prices since the beginning of the year, driven by the global economic implications from the pandemic, have severely impacted the metals and mining sector. This was mainly due to the reduction in consumption as a result of the economic slowdown. However, while metal prices have witnessed an improvement since May due to the rebound in demand from China and easing of lockdown restrictions in Europe and the US, improved gold prices still spell gloom for the global economy at large.

The International Monetary Fund expects global 2021 GDP to shrink by 6½ percentage points , in turn significantly impacting the commodity demand. A part of the impact will also be due to supply interruptions from some mine closures due to the pandemic. As a result, commodity prices will stay suppressed in 2020. However, on a positive note, commodity markets are expected to rebound in 2021.

Mining: An industry reeling under pandemic impact

In addition to the need-based response on war footing, miners must increase their use of automation and other digital technologies such as AI and ML to navigate the new reality. Nimble and pragmatic AI-enabled interventions such as remote setpoint support, predictive & risk-based asset management system, and robotic & cognitive process automation will enable miners to optimize operating costs and improve throughput. Further, an intelligent integrated remote operation centre, autonomous fleet, wearable technologies and digital workplace solutions can help miners ensure workforce safety while driving adaptability and warranting resilience. Plug and play technology solutions can ease the pain of managing some of the foundational yet critical activities during these stressful times.

Uncertainties around worker safety, economic growth, commodity prices, demand, mine closures, and supply-chain issues, require the leadership to respond swiftly by acting on two key dimensions:

Recover: This phase requires miners to revisit and revise their business continuity plans, and secure supply chain operations through digital transformation of procurement systems.

Rebound: This phase will require miners to prioritize operational excellence, implement digital technologies to improve productivity and reduce operating costs.

Here’s a look at the best practices for adoption in both these phases to help miners reimagine their work and workforce strategies for the altered business environment.

Embracing new strategies for recovery, rebound

Worker safety being the topmost priority, most mining firms have removed non-essential workers from the sites by enabling work from home (WFH) and this trend will likely continue in the near-term. This will require implementing robust cybersecurity practices and migration of critical applications to Cloud. In order to manage infection risks, mining companies are regularly measuring and reporting employee health data manually. This is time consuming and risk-prone. To avert the risks, mining clients can leverage a remotely deployable COVID-19-ready PWSS module integrated with AR/VR and mobility technologies that can conduct thermal scanning of employees at various entrances and exits at offices and provide live alerts and dashboards for real-time monitoring. A RPA solution can help by collating important COVID-19-related data through various sources and displaying it in an easy-to-interpret, actionable format.

Miners also need to undertake critical process control measures and other technology upgrades to increase the rate of automation in operations and eliminate the need for any future shutdowns.

RecoverThere is also need to implement remote decision support systems for operator assistance offering scenarios and outcomes using Data Analytics, Machine Learning and Artificial Intelligence to improve productivity.

Large scale disruptions induced by the pandemic have rendered most BCPs obsolete. Mining companies need to revisit and revise their BCPs to improve resilience to future pandemics. Reassess maintenance planning and execution in line with pandemic protocols. There is also need to implement a risk and AI-based Integrated Asset Management (IAM) Solution to drive efficiency. Additionally, remote maintenance planning, and equipment health monitoring services can help optimize maintenance costs.

Prioritize operational excellence through improved operational planning, transforming physical teams into virtual teams. This calls for maximizing the use of digital technologies such as AR/VR, mobility, Big Data, AI, and RPA.

Implement an offshore Intelligent Integrated Remote Operations Centre that will support integrated operations and maintenance planning backed by AI and Big Data analytics. A remote operations center not only removes workers from mines but also delivers huge benefits in terms of cost and productivity.

Implement Digital Twins to improve the overall utilization of mining assets through scenario planning.

Improve collaboration within local and remote teams to reduce variability through data sharing, analytics and cloud.

Relocate non-critical roles to offshore sites to reduce costs.

Focus on diversification and remodeling of business.

Rebound

Pandemic as a catalyst for future growthThe COVID-19 crisis has proved one thing beyond doubt – that digital technologies can deliver tangible benefits for the mining industry – and this realization is set to shape the future of the sector. Before the pandemic, the mining industry had struggled to realize the promised value of Digital Transformation. Digital & Data Optimization ranked third in the list of risks and opportunities facing mining and metals industry in EY’s top 10 business risks and opportunities 2020 report. However, as the pandemic exposed multi-layered supply chain vulnerabilities and rendered on-site operations unsafe, in turn crystalizing the value of digital for miners. The time is ripe for the mining firms to capitalize on the realization at scale and embrace digital mining. The ways miners choose to fast-track technology adoption to accelerate business outcomes, and build resilience, agility, and adaptability will be the key differentiators in the post-COVID-19 mining world.

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1 https://www.imf.org/en/Publications/WEO/Issues/2020/06/24/WEOUpdateJune20202 https://www.ey.com/en_gl/mining-metals/10-business-risks-facing-mining-and-metals

Pandurang Dalvi

About the Author

Pandurang Dalvi is a domain expert supporting ANZ, and MEA geographies in the Energy & Resources business unit. He has over 26 years of experience in mining, metals, and utilities verticals. Currently, he leads the mining practice based in Perth, Australia. Pandurang holds an MBA in Strategic Management from Australian Graduate School of Management (UNSW). He is an Electrical & Control Systems engineer with deep interest in value chain technologies for the mining industry.

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