'Current Approach Is Not Enough to Enable Competitive Advantage in Mining'

Digital maturity across the mining and metals sectors has a long way to go and current digital solutions are merely functional or siloed and only address parts of the value chain. These are some of the findings of a new Ernst & Young (EY) report, ‘Digital mining: the next wave of business transformation.’

While mining companies have started to make some headway in using digital effectively to improve productivity, the report highlights that focusing on productivity alone is not enough to gene-rate competitive advantage, and companies need to adopt a more cohesive, end-to-end approach to integrate digital initiatives.

The report also identifies around 60 key digital themes and initiatives across the sector, though it finds few examples of a clear, integrated and business-wide approach among mining and metals organisations.

According to Mr. Anjani Kumar Agrawal, Partner and National Leader – Metals and Mining, EY, the mining and metals sector has so far lagged other sectors in the realm of digital effectiveness. “The value from digital will only be realized when companies change how they work, rather than succumbing to the lure of individual technology programs and pursuing local optimization, which is not necessarily transformational. While a revolutionary approach to digital would be too disruptive, we believe companies with mining activities should adopt a progressive, multi-year strategy that also accounts for business risk and the primary drivers of value,” he stated in a press release.

Digital transformation in waves – most optimal

The report finds that introducing a series of digital transformation ‘waves’ is the optimal way to transition a business from current to future state, steadily introducing more digital hotspots and inter-connections as part of a coherent overarching strategy. This approach is structured around four key components:

Digital pre-start: Building out connectivity to prepare for digital transformation, which typically involves investment in infrastructure, communications and data.

Wave 1: Activities that focus on the productivity or performance improvement agenda, and are typically operated within a single function. At this stage, digital can enable a mining operation to manage inherent variability and move toward manufacturing levels of productivity.

Wave 2: These activities are broader and span the whole value chain and include initiatives to better manage margin through interactions with customers and suppliers.

Wave 3: This stage refers to the rise of disruptive factors that may create significant changes in how the sector operates and may require a step change in business strategy.

“We see the end-state vision for the mining sector as constantly changing and businesses will need to be ready to adapt and change course as required. And while we don’t believe the sector will see radical disruption, the opportunity for new entrants to disrupt existing players poses a real threat. Market leadership can be lost quickly if dominant players respond slowly or ineffectively to industry disruption and external changes. However, the pathway through the waves of digital transformation should not be viewed as inflexibly sequential or static,” Mr. Paul Mitchell, Global Mining & Metals Advisory Leader, EY said.

The report also highlights that, as the level of automation increases through Waves 1-3, mining companies will need to adopt new ways of working. “The introduction of greater levels of automation will likely lead to a shift in workforce demographics and the skillsets required across the sector. This presents an opportunity for mining businesses to retrain employees and restructure their organisations to pivot the focus of work away from manual tasks and toward improved decision-making and efficiency of execution,” Mr. Agrawal added.