Tracking the Trends 2021, the 13th annual edition of Deloitte’s Global mining and metal’s report, explores key trends to feature in the operations of mining and metals companies across the globe as they navigate the impacts of the pandemic and the need to rebuild trust among stakeholders in their pursuit of renewed productivity, financial discipline, operational excellence, and future growth.
The report explored the top 10 trends of 2021 by focusing exclusively on how longer term trends in the mining sector were being impacted and what needs to improve, as well as offering best practice examples.
According to Deloitte’s Global Mining & Metal’s sector leader, Andrew Swart, this year marks a very critical moment for the mining industry.
“The industry is charting a path out of a pandemic where the impacts varied greatly depending on what commodity is mined, and where the company is located, therefore resiliency is one of the most important tools.
“At the same time miners need to rebuild trust among stakeholders, including investors, the workforce, and the local communities, as success in the future will be based on factors beyond just financial performance.”
Overcoming the “trust deficit”
A July 2020 World Economic Forum report identified “trust deficit” as being the most important risk facing the mining industry. Based on the WEF report, addressing this challenge is causing mining leaders to redefine their strategic objectives, reconnect and recommit to their stakeholders, and reset their priorities.
Albeit, the new normal environment presented has led many miners to take the opportunities available to recalibrate for the future by shifting towards integrated operations to drive more predictable returns, rebuilding trust across their talent network, companies are redefining leadership, adapting the workplace culture, and recommitting to the goal of zero harm.
Mining companies are also revisiting their commitments to local communities, and to society at large, by enhancing their environmental, social, and governance (ESG) performance. Mining companies are working to link their social investments to sustainable outcomes and playing an active role in the world’s transition to a clean energy future.
Top industry trends
Building resilience amid volatility
COVID-19 has had a range of impacts on mining companies, depending on commodity and geography. To help understand this fluid situation, Deloitte Global highlighted four divergent scenarios of how the industry can play out over the next 3-5 years.
“Planning for a range of outcomes is key as leaders build resilience in their organizations”
“To do this, leaders should reconsider the assumptions of their current strategy, determine how they will respond if an unexpected scenario occurs, and pay attention to local, regional, and global indicators about where things are heading.”
Mergers & Acquisitions in an altered world
M&A activity is increasing as mining companies seek to strengthen their portfolios and develop commodities. Companies lost investor trust during the peak of the last cycle, when numerous M&A transactions lost value rather than created it.
In order to build investor confidence, mining companies need to address some key table stake issues while at the same time look at the strategic opportunity around M&A as the industry undergoes some structural changes.
Getting serious about Decarbonization
Mining companies are under strong pressure from investors, regulators, and local communities to move beyond environmental risk identification and mitigation and instead execute on fully developed decarbonization agendas.
Companies are making net-zero commitments in line with the 2015 Paris Agreement and starting to shift to execution.
Linking social investments to sustainable outcomes
As mining companies are called upon to play a greater role in remote regions, an opportunity exists to build trust with communities by creating value beyond compliance, collaborating more effectively with host governments and linking activities and long-term investments to sustainable outcomes.
Corporate governance adding to competitive advantage
Companies have often relegated governance to a backstage role, opening the door to potential missteps followed by reputation damage and loss of market value.
Miners are strengthening governance processes, especially around issues such as human rights, ethical conduct, cybersecurity, and social impacts.
Creating an agile supply chain.
The pandemic put the supply chain in the foreground of concerns. Companies need to mitigate supply chain risks by illuminating the multiple tiers in their supply chain and reconsidering their inventory strategies.
Geopolitics, the rise of nationalism, and cross-border supply challenges will also reshape global supply chains.
The path towards integrated operations
Mining companies can better respond to external events and internal variables by breaking down silos and driving towards integrated operations by empowering their people to make the best decisions for the company as a whole.
This will help combat the inherent inefficiency embedded in organizations, but requires firms to leverage technology, redesign processes, rethink workplace design and shift culture
Advancing the future of work
The events of the past year have prompted many companies to review labor routines, institute more remote and virtual work, and to experiment with outsourcing key roles.
Some are already taking the next steps, which include redefining the role of and expectations for leadership, and enabling the creation of a new workplace culture. These are central to building trust in a talent starved sector.
On the road to zero harm
While safety has long been a focus in the mining industry, there is a key opportunity for the industry to more actively collaborate around data pooling, addressing the interoperability of wearables and harness the power of predictive analytics.
Meeting demand for critical minerals
As the world converts to renewable energy sources and adopts electric vehicles, demand for some commodities will rise.
Such commodities that will be on high demand include copper, nickel, lithium, and cobalt, but no one is certain which ones will eventually see the most demand, and there is a scramble to lock in supply.
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