Today commodities are moving back broadly into the global market balance but the challenges for the mining industry are far from over. In a world of more complex ore bodies, deeper mines, social and geopolitical risks, growing energy costs, resource nationalism and lack of infrastructure, global mining industry remains under exceptional pressure to control costs, boost efficiency and improve safety performance.
Rising cost is a cause of concern for the mining industry as the strategies of mining companies depend heavily on the current state of the market. Also, the rise in cost is resulting in the declining quality of ore and limited accessibility of new deposits. This will squeeze the supply in the years to come, potentially driving a commodity-price rebound as the global demand continues to rise. So, the companies need to analyze the new procurement trends in the mining industry that can offer exceptional opportunities for efficiency gains and can help in controlling costs as well.
At SpendEdge, we understand the impact that rapidly changing procurement trends can have on your mining business. And to help companies in the global mining industry to reposition their portfolios and excel in the competitive landscape, our team of experts has highlighted three procurement trends that have the potential to change the complete dynamics of the mining industry in 2019.
The past one decade has been a rollercoaster ride for companies in the mining industry. The commodity prices have reached both historic highs and lows, as well as operational realities shifted irrevocably in the face of the digital revolution. Mining companies better fasten their seat belts because those rapid changes are likely to continue and even accelerate this year as well. In addition, the industry’s commitment to strengthen balance sheet performance, reduce debt, and simplify portfolios, has resulted in record free cash flow, improved valuation metrics, and stronger shareholder returns. In many respects, the mining industry is once again poised for growth. As the mining industry’s value proposition is constantly called into question, mining companies have started to see that they cannot succeed in the future unless they change the way they operate. This goes beyond just enhancing efficiencies. It’s about re-establishing trust with stakeholders and collaborating to devise better responses. Here are some hindrances in the industry that mining companies can expect in 2018:
Data-driven insights to drive value
Once measured by how efficiently a company extracted resources, the value proposition in the mining industry may be shifting to how well mining companies act on information to optimize production, reduce costs, increase efficiency, and improve safety. It is becoming evident that success for mining companies doesn’t only depend on adopting the latest applications (apps) and technologies. Instead, it is also significantly dependent on embedding digital thinking into the heart of the company’s business strategy and practices to revamp the way corporate decisions are made. To succeed in this effort, mining companies need a clear vision of how the future digital mine might transform core mining processes, the flow of information, and supporting back-office operations. Hence, to deliver on the digital mine nerve center, mining companies need to develop the ability to use available data to resolve a wide range of business problems.
Changing customer, employee, and public perception
Mining companies operate under a legacy of weak environmental practices, fractious community relations, stock price underperformance relative to other sectors, and a historical lack of workforce diversity. Also, the public perception remains that mining companies contribute to environmental damage, cause a negative impact on the community, and engage in dubious practices abroad. Therefore, tarnishing the mining industry’s image. Also, negative perceptions can do more than damage reputations and affect stock prices. This mandates mining companies to take proactive steps to address and change their reputations.
Meeting shareholder expectations
As shareholder expectations grow, mining companies have started focusing on re-establishing their credibility among investors and analysts. Responding to rising shareholder expectations requires mining companies to walk a fine line. Although, it is vital for players in the mining industry to avoid decisions that can result in an erosion of value, shifting corporate direction to meet shareholder demand for short-term returns can result negatively in the long run. Mining companies can only win back investor confidence if they continually demonstrate the ability to deliver on their promises. This requires companies to improve their project management, forecasting, and reporting capabilities. Rather than prioritizing shareholder returns over all other corporate objectives, it may be helpful for mining companies to shift to a model that recognizes the breadth of functions they serve in the society. This includes activities ranging from generating shareholder wealth to providing employment, paying taxes, and contributing to local communities around the world.
Water management is one of the critical challenges that mining companies face. With each passing year, water has become a more crucial issue for the mining industry. The decline in ore grades results in the requirement of more water to extract the same amount of ore. The demand for water is also soaring globally due to population growth, industrial development, expansion of irrigated agriculture, and increases in per capita water consumption. So, it’s time for miners to improve their water management by rethinking their production processes and partnering with technology companies to incorporate and implement real-time water monitoring solutions.
To know more about the roadblocks that mining companies need to overcome
The mining industry plays a significant role in building the world’s economy. Several key markets such as utilities, the primary metals industry, non-metallic minerals industry (glass, cement, lime), and the construction industry are highly dependent on the mining sector companies. However, mining companies are the victim of some major challenges like diminishing productivity, harsh climates, remote sites, rising energy costs, and water scarcity to name a few. Despite these challenges, the fact that the industry ended on a strong note in 2017 is raising hopes for mining companies to showcase increasing health in 2018. So, who are the top players spearheading the mining industry’s journey to growth? Here is our pick of the top five mining companies in the world:
Rio Tinto PLC
Rio Tinto PLC is an Australian-British multinational company and is one of the world’s largest metals and mining companies. They have widely adopted the latest technologies in the mining industry and are investing heavily in new mining methods that will allow them to mine deeper, longer and at a lower cost than any other large mining firm. The London-based company operates through five product groups – diamonds, minerals aluminium, copper, energy and iron ore.
Glencore is one of the most diversified natural resources and mining companies in the world. The company is based in Switzerland. Their operations consist of about 150 mining and metallurgical, oil production and agricultural assets. Glencore’s industrial and marketing activities operate in a global network of more than 90 offices located in over 50 countries. Top players in the automotive, steel, power generation, oil and food processing sectors are some of Glencore’s top customers.
Anglo Amercian is one of the leading global mining companies that is based in Johannesburg and London. It is engaged in the exploration and mining of precious base metals and ferrous metals. Their portfolio of mining businesses includes bulk commodities, including iron ore and manganese, metallurgical coal and thermal coal copper, nickel, niobium and phosphates, base metals and minerals and precious metals and minerals The company is a significant player in the mining tech revolution. They have predicted that in the next decade, some mines will be run entirely without a human presence.
Vale is a Brazilian multinational metal and mining firm. The company owns the title of the largest producer of iron ore and nickel in the world. They also produce manganese ore, ferroalloys, metallurgical and thermal coal, platinum group metals, gold, silver, copper and cobalt. Vale operates across 30 countries and employs over 76,000 people.
Barrick Gold is one of the largest gold mining companies in the world. The company also mines and explores silver, copper and nickel. American regions including Argentina, Canada, Dominican Republic, Peru and the US are some of the major contributors of the company’s gold production. Their operations are also spread across regions such as Australia, Chile, Papua New Guinea, Saudi Arabia and Zambia.
To know more about the top mining companies in the global mining industry
Over the years, players across the mining industry have started witnessing daunting challenges in terms of water scarcity, harsh climates, and rising energy costs which has consequently affected the growth prospects of the mining equipment manufacturers. As a result of these challenges, firms operating in the mining equipment manufacturing space have started advocating the need for robust procurement best practices solutions to gain a comprehensive understanding of their sourcing and procurement activities and increase their overall profitability across office locations.
With years of expertise in providing a wide array of similar solutions, SpendEdge’s procurement best practices experts assists firms operating in the mining equipment manufacturing space to gain a competitive edge over the peers operating in the industry space by implement best-in-class sourcing and procurement strategies.
The Procurement Pain Point and Insights Offered
A renowned mining equipment manufacturing client was facing predicaments in gaining a stronger foothold in the industry space against their peers. As a result, the client wanted to identify the sourcing and procurement best practices adopted by their peers. They also wanted to identify the key suppliers operating in the mining equipment manufacturing space.
To cater to the specific predicaments faced by the mining equipment manufacturing client, the procurement best practices experts at SpendEdge personalized an integrated research methodology, which included primary and secondary research coupled with quantitative and qualitative data collection methodologies.
During the course of the procurement best practices engagement, the mining equipment manufacturing client gained actionable insights into the functional and commercial drivers and decisions that impacted the profitability of the firm. Additionally, the client was able to categorize the peer group companies and key suppliers operating in the industry space. This helped them understand the accordingly implement sourcing and procurement best practices and formulate superior sourcing strategies.
Fundamental questions answered in this procurement best practices study include
The procurement best practices engagement helped the mining equipment manufacturing client instrument best-in-class sourcing and procurement strategies across the supply chain. This helped them identify and cut down the inefficient and unproductive processes and consequently helping them improve profits.