What is the impact of COVID-19 on Digital Transformation in Mining?
It is fair to state that 2020 is an exceptional year, with our society facing a once-a-lifetime kind of crisis: a health pandemic which has caused a shockwave across society.
While there is much debate around the response our governments have provided to tackle public health protection, economic resilience and the safeguard of social order, we can all agree on the fact there is pre and post COVID-19. Which triggers the question: what will the ‘new normal’ look like?
In this article, we are reviewing the impact of this crisis on the mining value-chain, and more particularly, the effect it has on mining organizations’ digital transformation agenda.
Did the mining industry get affected by the COVID-19 crisis?
The last few months have provided an unexpected stress test of the global economic order and a real-life challenge of long-held business truths with the mining industry, a cornerstone of our society since ancient times, proving resilient. While several mining organizations around the world had to reduce or temporally stop operations in order to accommodate for COVID-19 best practices, production has largely continued; however with a few caveats as outlined below.
• Demand: although mining organizations have managed to keep their business running, we cannot necessarily say the same of their clients, hence a miner that focuses on a single commodity and/or geography was more likely to get affected than a diversified one.
• Supply-chain: the mining industry has been increasingly relying on global supply-chains in order to connect & optimize operations, so the worldwide lockdown has impacted those organizations which rely on a mobile workforce and ‘just-in-time’ inventories.
• Community: mining’ social license to operate has come to the spotlight over recent years as organizations have looked at boosting local content, and the worldwide lockdown has accelerated that efforts with miners being forced to look locally for resources & supplies.
How did mining organization react to the ‘stress test’?
Mining organizations have faced a number of bottlenecks, some of which were outlined above, forcing them to adapt their operating model. With staff stranded abroad, limited access to site and the implementation of COVID-19 best practices, the last few months have mostly been about business resilience: ensuring that core business functions kept on running in order to meet production plans and shareholder targets. While most mining organizations would have a business continuity plan in place, providing a framework to react to external threats and take the necessary measures in order to restore & maintain business operations, the COVID-19 crisis is one-of-its-kind and has triggered new learnings. Most notably, mining organizations have accelerated the implementation of digital technologies in order to drive efficiency in the context of the lockdown.
Does digital transformation remain a priority for mining organizations?
While digitalization targets operational silos in order to deliver localized optimization (reduce costs, cut cycle times, etc.), digital transformation is cross-functional: it targets the end-to-end value chain in order to sustainably transform the business process resulting in order to deliver significant & long-term value. With this in mind, one can only wonder about the impact of the COVID-19 crisis on the mining innovation roadmap.
Innovation certainly remains on the agenda of mining executives, however it seems like the immediate priority is on digitalizing rather transforming. Indeed, while mining organizations remain focused on business continuity, they would rather invest in innovative technologies which would deliver immediate returns and ensure business resilience, rather than disrupt legacy business processes in such uncertain times.
The picture is nuanced of course – for example top-tier mining organizations, which are naturally more resilient, tend to keep their focus on long-term strategic business objectives and previously stated digital transformation vision. Some are even capitalizing on the current crisis to accelerate their efforts; kick-starting relevant digital projects ahead of time or introduce new initiatives into the roadmap.
Whether acting short or long term, it is critical for a mining organization to keep thinking about its value chain holistically in order to avoid falling into the trap of implementing innovative solutions in silos. For a mining organization to realize sustainable value in ‘digital transformation’, it must ensure that the innovative solutions are connected across the end-to-end workflow and aligned with a consistent vision.
Author: Wael JABER
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