SUPPLY SIDE

A paradigm shift

THIS time even five years ago one of the hottest professions to be in was the mining consulting space. <i><b>Supply Side</i> by Noel Dyson</b>

Noel Dyson
A paradigm shift

The correction to the mining boom was in the rear view mirror and mining hopefuls were still trying to get their projects away. Mining consultants were in demand. Here a competent person's report. There a feasibility study. The work was piling up.

Then things changed.

These days the mining consulting space is starting to look a little threadbare. Sure, Snowden, AMC, CSA Global and RungePincockMinarco are still going but many others are struggling.

Nowhere has that been more obvious than in the trials and tribulations of Coffey - the Icarus of the mining space if ever there was one. It flew too high and is now quietly being gobbled up by Californian engineering services company Tetra Tech. And it is Coffey's geotechnical business rather than its mining that Tetra Tech is interested in.

There is still a call for consulting in the mining space -just not from mining consultants.

It is the management consultants that look best placed to win some work.

And they are gearing up for it too.

PricewaterhouseCoopers grabbed Ground Breaking Innovation's Graham Lumley two years ago. More recently Deloitte snapped up former Snowden CEO David Cormack as its national mining leader.

Cormack said a lot of the work mining consultants did was early stage in the mining process: resource estimation, JORC compliance,competent persons reports and feasibility studies.

"That work has all but dried up," he said.

These days miners are more concerned about running their operations more efficiently.

Cormack said this was where the management consultants were starting to come in.

"The big driver of productivity improvement will be innovation," he said.

"As deposits are lower grade, harder to find, deeper and more complex, we have to find innovative ways to mine and process it cost effectively.

"This will mean technology changes. That's not just IT but mining technology too.

"Then there is looking at some of the softer sides such as bringing in an innovation culture in a mining company. How do we incentivise that?"

That is where the management consultants come in. Finding ways for miners to do just that.

After all, the mining industry is not one well known for the softer side of anything, nor for its ability to rapidly adopt change.

Professor Graeme Jameson recently won the Prime Minister's Prize for Innovation for creating the Jameson Cell.

That technology revolutionised the processing of finely disseminated ores and has been used by hundreds of mines around the world.

The cell might never have come to fruition though had the then Mount Isa Mines not taken on the technology and helped him develop it.

It is hard to imagine any miner taking on such a "risk" these days but given the challenges coming, it is imperative they do.

"Mining has a lot of similarities with oil and gas but the differences in culture are huge," Cormack said.

He said the oil and gas sector was much quicker to adopt emerging technologies and change its approaches to make the most of them.

"Mining, meanwhile, is not that different to how it was done decades ago," Cormack said.

"Leaders need to be aware of that."

Cormack said embracing off-the-shelf technology was another thing miners would need to do to deliver productivity.

The challenge will be to get them to do it holistically.

"When you are fighting for survival it is quite hard to focus on innovation," Cormack said.

He said the gold sector was one for other miners to emulate because it had made the tough decisions and changed its operating practices much earlier.

Indeed, the performance of Australia's emerging mid-tier miners is proof of that.

Cormack said the gold sector had been quick to get out ofthe volume mindset and back to focusing on grade, while getting all-in sustaining costs under control and disposing of poor performing assets.

He argues iron ore players are still trying to play the volume game and that they will soon start to reassess their operations andstart closing poor performing players.

"To me it's all about how you measure productivity," Cormack said.

"I think we've seen big companies getting on top of their costs as a matter of necessity.

"To me that's only one element of productivity.

"Productivity is most simply defined as outputs over inputs."

Inputs in this case are costs so reducing those is important. However, outputs are the minerals being shipped and in such a case volume alone is not necessarily going to give the best result.

"In iron ore they keep seeing it as a volume game," Cormack said.

"Phases two, three and four of the productivity push in that industry will be shutting down poorer performing assets."

A growing series of reports, each focused on a key discussion point for the mining sector, brought to you by the Mining News Intelligence team.

A growing series of reports, each focused on a key discussion point for the mining sector, brought to you by the Mining News Intelligence team.

editions

MiningNews.net Research Report 2024

Access a multi-pronged tool to identify critical risks and opportunities in Australia’s mining industry.

editions

Mining Journal Intelligence Investor Sentiment Report 2024

Survey revealing the plans, priorities, and preferences of 120+ mining investors and their expectations for the sector in 2024.

editions

Mining Journal Intelligence Mining Equities Report 2023

Access an exclusive, inside look on the quarterly mining IPOs and secondary raisings data and mining equities performance tables with an annual Stock Exchange Comparisons supplement.

editions

Mining Journal Intelligence World Risk Report 2023 (feat. MineHutte ratings)

A detailed analysis of mining investment risks across 121 jurisdictions globally, built on 11 ‘hard risk’ metrics and an industrywide survey.