During this phase, all mining companies were solely focused on increasing their production, without worrying much about their productivity and costs. Click the button to read the digitizing underground mining whitepaper. We’ve assembled a collection of sample Key Performance Indicators for you to use as a starting point when building scorecards. These worsen and deepen as a mine is exploited, leading to rising extraction costs and falling output. Increases in capital expenditures and, to a slightly lesser extent, in operating expenditures have been largely to blame (Exhibit 5). Productivity and the Structure of Employment, Productivity in Australia's Wholesale and Retail Trade, Productivity in Electricity, Gas and Water: Measurement and Interpretation, Productivity in Financial and Insurance Services, Productivity in Manufacturing: Measurement and Interpretation, Productivity in the Mining Industry: Measurement and Interpretation, Public Infrastructure Financing: An International Perspective, Quality of Care in Australian Public and Private Hospitals, Quantitative Modelling at the Productivity Commission, Quantitative Tools for Microeconomic Policy Analysis. Mining next to a see technology-driven productivity uplift Source: BCG experience, Technology Advantage Practice Multi-channel, 24x7, single view of customer Branch, office hours, account based Consumer banking 2000's Manual assembly lines Just-in time, automation, global platforms Auto industry Multiple-brands with common supply chain Workforce Participation Rates - How Does Australia Compare? The path to a step change in mining productivity will come through reducing and, where possible, eliminating the variability that has made mining unique. For individual mines, productivity performance as shown by the MPI data can also provide useful insights. 3. The surge in demand for metals and minerals in the early 2000s quickly translated into much higher prices and, with it, much increased miners’ profitability. Somewhat more encouraging signs start to emerge, however, when the MPI trend is separated into the two distinct phases of the mining industry’s recent history—before and after 2009—as is also shown in Exhibit 2. The data set looks back ten years; for each mine, detailed data have been gathered from publicly available sources for each of MPI’s four components: production volume, net assets, number of employees, and non-labor-related costs. * The mining, except oil and gas industry had a productivity decline of 3.8 percent, as hours worked increased while output declined. shows that, in the period from 2008 to 2010, mining productivity declined 2.5 percent a year (exhibit). The company, which has been partnering with mining companies for more than four decades, has the MMM division, a digital technology platform aimed at impacting productivity in the sector. To that end, we have developed a metric—the MineLens Productivity Index (MPI)—that enables mining managers to measure the aspects of productivity that are within their control. If you would like information about this content we will be happy to work with you. It's only relatively recently that we're starting to see that approach come in with mining. Over the longer-term, MFP impacts of resource depletion have been offset by technological advances and improved management practices. Examining productivity performance within specific countries can shed light on the drivers of the industry trends we see, as the example of Australia makes clear. To do this requires a determined focus on eliminating all forms of waste, reducing variability, and improving productivity of assets through advanced reliability and maintenance approaches, together with increased flexibility about changing conditions. Our productivity measure is composed of four elements: physical mining output, employment at the mine site, the value of assets at the site, and nonlabor costs. Here’s how to retain valuable staff in the mining industry. Mining companies have spent several years ruthlessly reducing costs. We have deliberately excluded ore grade from the calculation. Practical resources to help leaders navigate to the next normal: guides, tools, checklists, interviews and more. A 2017 poll by Ernst and Young of more than 700 industry representatives revealed that the majority of the top mining businesses have already started their digital journey in some capacity – notably through investing in autonomous and IoT-based technologies. enables mine managers to measure the aspects of productivity that are within their control, namely capital, labour and non-labour operating expenditure. Rules of Origin: can the noodle bowl of trade agreements be untangled? This publication is only available online. We’ve assembled a collection of sample Key Performance Indicators for you to use as a starting point when building scorecards. It is also in evidence across most mining players and all the major mining geographies (Exhibit 4). Productivity at Rio Tinto 24 4.1 Pilbara iron ore challenges 24 4.2 Rio Tinto innovation and productivity programs 25 4.2.1 Autonomous and remote equipment 25 4.2.2 Systems automation 31 4.2.3 Excellence centres 33 Our flagship business publication has been defining and informing the senior-management agenda since 1964. Increasing productivity and cutting wasteful costs could help the mining industry when market conditions are tough. Mining productivity growth reflects: Solid growth in GVA (4.9%), supported by continued strength in oil and gas extraction and increased demand in iron ore. While some of the investments take time to affect production due to build cycle, this nevertheless shows that capital spending grew at a disproportionate rate relative to the increases in production that materialized. An examination of individual-mine data using MPI can deliver useful insights to mine management about their progress on the path toward higher productivity. Mining-company management should encourage openness to trying new approaches and to adopting new technologies. Ongoing depletion of Australia's natural resource base is estimated to have had a significant adverse effect on long-term mining MFP. 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