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Mine Sites: Factories of the Future

Three manufacturing practices can help mining companies beat the competition: Integrate functions, optimize the value chain, and collaborate within the industry’s larger ecosystem.

Boom or Bust

Mining has come to epitomize boom and bust. The growing gap between minerals production capacity built over the past decade and slowing Chinese demand has driven the latest commodity price crisis, particularly in coal and iron ore, where prices have fallen below 50 percent of their peak. Moreover, many analysts predict a long period of slow global growth, meaning current profitability pressures could be the status quo for the foreseeable future. The modus operandi of the past-tons at any cost during boom times puttygen ssh , slashing and burning during bust times-will be less effective in a depressed market and will leave companies exposed if they are unwilling to evolve their operating practices. Miners now need to ensure operating flexibility and resilience to cope with the increasing volatility of commodity prices.

Mining companies have much to learn from leaner industries that have thrived amid similar market reforms with concepts such as muda (reduced waste) and kanban (value chain optimi­zation). Firms that take these lessons to heart will be poised to create sustainable operations in the current environment and be best prepared for market fluctuations.

In other industries, leading companies under sustained periods of stress have hung on to productivity levels better than their mining counterparts (see figure 1). Without question, minerals production is a challenging business, and mine operators understandably cite several barriers to taking a more integrated, collaborative approach, including variability and limited knowledge of resources, constantly changing mine ownership, frequent turnover of staff and management, time to market and volume growth pressures, and demanding customers.