Making up for lost productivity in mining
Labour productivity in the mining industry fell by around 50% in the decade since 2001, although high commodity prices concealed the true extent of the problem. When prices fell in 2013, improving efficiency became a top priority for the industry but the question was how best to regain lost ground.
In research on behalf of UQ’s Sustainable Minerals Institute, Associate Professor John Steen from UQ Business School set out to identify the key productivity challenges facing the sector and how best to address these in the post-supercycle environment.
Working with consultants from advisory firm EY and Imperial College London, John Steen interviewed over 60 senior mining executives from around the world. His report - ‘Productivity in mining: now comes the hard part’ – found that the main problem was that, in an era of high commodity prices, companies had been focusing on output at any cost rather than efficiency.
As mines had become larger, they had also become more complex, leading to the creation of silos within the business with poor communication between different departments. Managers did not have the right tools or experience to run such large-scale operations, resulting in what one executive described as ‘diseconomies of scale’.
Skills shortages and high staff turnover added to the problems, as did lack of innovation. The report recommends that companies take an end-to-end approach, breaking down silos and improving communication, engaging the workforce in addressing productivity issues, making better use of data to inform decision making and using innovation to transform their business. Achieving that will require a cultural change driven by the CEO.
The latest work follows an earlier report on productivity in oil and gas which was conducted in conjunction with EY and which received worldwide acclaim.
The new report has helped to clarify the challenges facing the global mining industry and provided a blueprint for best practice in improving productivity.
Are you an organisation in need to solve a business issue? Contact John Steen to know more about his work and benefit from his expertise.