Deloitte’s "Trend Tracking 2021" is now in its 13th year, and it focuses on the factors of growth and improvement in the mining industry. Global mining professionals once again shared actual case studies, and mining companies can use these cases and studies to build a way forward.
"Trend Tracking 2021" not only focuses on current fashion trends, but also focuses on how the long-term trends of the industry are affected, as well as the new trends that are about to emerge. A core issue that emerged in this year's report is the issue of trust between the mining industry and its wider stakeholders.
The following are the top ten industry trends identified in 2021.
TOP 10 meets the demand for green and important minerals
Conversion to renewable energy and electrification are the core of the world's clean energy future. As people seek a new series of commodities, the demand dynamics of mining are changing, and miners need to make strategic planning.
In addition, environmental activists no longer act in isolation. Investors, governments and large companies have all begun to reduce carbon emissions. Increasing the production of renewable energy is bound to increase the demand for nickel, cobalt, lithium, heavy rare earths and copper.
When it comes to key green minerals required by clean energy technologies, a common challenge is the potential supply shortage.
TOP 09 The Road to Zero Damage
Security has always been the central issue of mining. New technologies and data can enhance security. Wearable devices can provide protection and data, but an integrated approach is needed to use them. Safety analysis can predict potential hazards and provide preventive measures.
The spread of the new crown epidemic may pave the way for wearable devices and make people more accustomed to tracking mechanisms. However, wearable devices may only be the first step.
To take this technology to a new level, mining companies need to develop plans to prevent accidents before they happen. Now, by integrating data to promote increasingly complex analysis, it is possible for us to shift from previous security analysis to combining artificial intelligence and other new technology predictions to propose solutions.
TOP 08 Promote future work
Digital transformation makes possible a new type of leadership. Leaders need to provide vision and goals, empower people to rethink, and collaborate across borders. It is essential to establish an inclusive culture of mutual trust and mutual respect.
In order to transition to a more comprehensive way of working, leaders should promote the development of the organization's value system, from the initial development based on compliance and performance to including collaboration and system-driven capabilities.
The mining industry is a talent-scarce industry; leadership and cultural changes are the key to maintaining and building the trust of existing and future talent that mining companies will rely on.
TOP 07 The road to integrated operation
Advances in technology have made organizational integration possible. Many miners need to clean up their data and integrate it into the entire value chain. Processes and workplaces should be reconfigured, and proper leadership and team culture should be established.
Digital initiatives and automation investments have not produced comprehensive and consistent results. While some companies have made extensive progress, others have only experienced incremental changes.
Integrated action provides a single source of truth based on real-time information tracking. This position requires the company to gradually improve decision-making through advanced analysis, implement remote resource management where feasible, and simplify labor distribution and utilization.
TOP 06 Create agile supply system
Supply chain and mining companies affected by the new crown epidemic are currently looking for ways to better understand their supply risks. In contrast, local resources are more attractive, but costs must be weighed, and inventory management must also be reviewed.
As some mining organizations cannot accurately track their supply chains other than their primary suppliers, as the new crown virus spreads around the world, the risk of supply shortages and interruptions has increased.
Companies should establish alternate (sometimes local) supply lines and re-evaluate inventory strategies.
TOP 05 ESG: Corporate governance increases competitive advantage
Governance has been neglected in ESG (Environmental, Social and Governance), but investors, customers, communities and governments are now focusing on corporate behavior, human rights, ethics, diversity, and changing social norms. Miners should step up their efforts.
Good governance is often seen as a way to prevent downside risks, but it can also be seen as increasing competitive advantage. Companies with strong governance systems make them more attractive to investors under the pressure of ESG, enhance their attractiveness to host governments and communities, and help attract some talents.
TOP 04 ESG: Efforts to overcome the lack of social trust
The high-profile disaster has damaged the image of the mining industry, and regaining social trust requires collective efforts. Miners should find ways to create long-term social and economic benefits in the community, and sustainability is the new goal.
According to a recent report from the World Economic Forum, mining companies have admitted for the second year in a row that their biggest single risk is a trust deficit with the local community.
The report pointed out that although the trend of efforts to link investment and community impact has changed in recent years, under the influence of the new crown epidemic, there is still a lot of way to go.
TOP 03 ESG: Take decarbonization seriously
Mining companies need to solve the problem of decarbonization and fulfill their ESG commitments. Most people need tools to improve their emissions data throughout the supply chain and should strive to benefit their communities.
"Mining companies should recognize that there is a correlation between stakeholder sentiment and company valuation," said Henry Stoch, Deloitte Canada risk consulting partner and national head of sustainable development and climate change. "Companies that fail to commit to a decarbonization agenda may find that their stock prices are affected, which strengthens the rationale for decarbonization."
TOP 02 M&A
In the last mining cycle, many mining companies lost the trust of investors, partly because high-priced M&A deals failed to be delivered. The report suggests that miners should consider ESG, create shareholder value, and use mergers and acquisitions strategically.
In order to truly win the confidence of investors, mining companies should strengthen their capital and operations. In addition, mining companies should conduct M&A transactions at a price with no or low premium, instead of the usual 30-50% premium range in the past.
ESG investment is still the main trend. According to a study published in January 2020 by the Ecole Business School of Paris, Toulouse School of Economics, and MIT Sloan, investors are willing to pay an extra $0.70 per share of companies that donate at least one dollar to charity.
This trend was strengthened after the outbreak of the new crown virus, as sustainable funds began to attract a record level of investment, and in the first quarter of 2020 alone, global capital inflows rose to US$45.7 billion.
TOP 01 Strengthen resilience in the turmoil
Although the new crown epidemic has had a series of impacts on mining companies, the impacts vary by commodity and geographic location, but one thing that leaders have realized in the past year is to build a resilient organization to deal with an uncertain future the value of. Deloitte proposed four hypotheses for future strategy.
(1) After the slow start, the epidemic of the new crown epidemic has resulted in an increasingly strengthened health system and a strong political response.
(2) The duration of the new crown epidemic has exceeded the initial forecast, and it has placed an increasing burden on governments around the world that are struggling to deal with the crisis.
(3) The spread of the new crown epidemic in different parts of the world is not consistent. China and other East Asian countries are more effective in responding to the disease, while Western countries are struggling to cope with its lasting impact.
(4) With wave after wave of diseases afflicting the world for longer than expected, the epidemic of the new crown epidemic will become a protracted crisis, leading to rising deaths, social unrest, and a plummeting economic decline.
Trust is very important when assessing how these situations might develop. In many ways, effective recovery depends not only on citizens’ ability to trust the government, communities’ ability to trust companies, employees’ ability to trust employers’ leadership, but also investors’ trust in capital allocation.
