The pronounced decline in productivity is evident across different commodities, including copper, iron ore, coal, and platinum group metals Exhibit 3. It is also in evidence across most mining players and all the major mining geographies Exhibit 4. This decline stands after adjusting for external factors such as deteriorating ore grades and mine cost inflation, including escalations in the prices of mine inputs such as fuel and explosives.
It is important to note that the productivity decline would be even more pronounced if no adjustment had been made for ore-grade deterioration.
The MPI data suggest that over the —13 period, the industry has more or less stabilized the downward trend in productivity, with MPI running on average at only —0. The productivity data also registered a rebound in some commodities in the —13 period. Which factors that make up the MPI have had the greatest impact on productivity trends? Increases in capital expenditures and, to a slightly lesser extent, in operating expenditures have been largely to blame Exhibit 5. Capital expenditures increased at a compound annual growth rate CAGR of The number of workers also has risen, at a CAGR of 6.
For individual mines, productivity performance as shown by the MPI data can also provide useful insights. Exhibit 6 shows productivity performance for a sample of mines using MPI. The four quadrants represent the evolution of performance from a base in in terms of unit costs and output, with the green quadrant representing the most desirable outcome—lower unit costs and higher output per employee.
A bigger light-blue bubble than the dark-blue base bubble indicates an increase in asset value corresponding to increased capital spend. A smaller bubble indicates lower capital spend. A mine that has improved in all four elements of productivity that underpin MPI—labor, capital expenditure, nonlabor operating costs, and production volumes—will move from its starting position as shown by the dark-blue bubble into the green quadrant, and the bubble size will be the same size or smaller than in Such a mine will have reduced unit costs and raised output per employee without increasing its capital expenditures.
This has represented a difficult challenge for mines since An examination of individual-mine data using MPI can deliver useful insights to mine management about their progress on the path toward higher productivity. A South American copper mine made significant capital expenditures to boost its production and saw output rise 3. However, while productivity has started to increase in the past four years, helped by the higher output, the increased outlays on labor and, in particular, on operating costs across the full — period resulted in productivity declining almost 2 percent per year on average over the period.
What is the way forward? To address the challenge of productivity improvement, miners will need to make moves on two levels: On the first level, the way forward is clear.
Productivity in mining operations: Reversing the downward trend. Ajay Lala | Mukani Moyo | Stefan Rehbach | Richard Sellschop. This is a contrast between the Kingdom of God and our Lord Jesus Christ and the kingdom of Satan, the Prince of the Power of the Air. For every kingdom or.
Our research identifies that capital expenditures and nonlabor operating expenditures have been the main drivers of the productivity decline. Clearly, the industry has already started to work on this, with many companies already reining in capital expenditures and making moves to obtain more value-adding output from their asset base. Work also needs to continue on lowering nonlabor operating expenditures, notably by improving procurement performance.
Indeed, the improvements that are already starting to be seen in the MPI data point the way, with an upturn in productivity performance in some regions where capital expenditures have been reduced dramatically and where a number of large assets have come online and boosted output, while major efforts have been undertaken to drive costs out in operations. Moving to the second level of actions, we see three important areas of focus to address the root causes of productivity decline. Embed effective management operating systems at mines. Doing this will create greater transparency on operations performance.
The operating systems should also free up people and resources to prioritize productivity and operational excellence, and support effective performance management. This approach will help resolve an important challenge that the industry has struggled with: There has typically been a focus on improving one or two of the variables, such as reducing cost, lowering capital intensity, or increasing throughput. But a holistic focus on the drivers of productivity that is shared at multiple levels is rare in mining organizations. Prioritize operational excellence and capabilities development.
Operational excellence implies a continuous focus on improvement and enables ongoing cost reduction and throughput improvement.
To do this requires a determined focus on eliminating all forms of waste, reducing variability, and improving productivity of assets through advanced reliability and maintenance approaches, together with increased flexibility about changing conditions. Many mining companies struggle with capabilities constraints and need to address them: Talent is needed not only, for example, to achieve world-class levels of waste elimination and flexibility in operations, but also to be able to make progress on productivity.
For example, the potential to implement advanced dispatching processes in underground mining operations is clear, but it has still not been adopted at scale. And, in many cases, new capital projects are executed without integrating new technologies into the mine design.
Mining-company management should encourage openness to trying new approaches and to adopting new technologies. At the same time, mining companies should use advanced analytics to harness the potential of the vast amounts of data generated in typical modern mining operations in order to boost productivity-improvement initiatives. To make this happen will require a broadening of the expectations of what operations leaders are responsible for, and tighter integration with other corporate functions.
Partnering between mining companies and equipment and technology providers should also increase, so innovation in mining can succeed more broadly. Nevertheless, we think the long-term supply-demand fundamentals of many important mining commodities suggest that companies that can cost-effectively raise their output will be rewarded. This means that the companies able to succeed in the race to achieve higher productivity will be among the biggest winners. The initiatives described here are important enablers of those productivity improvements.
A downtrend, which is a series of lower highs and lower lows, reverses into an uptrend by changing to a series of higher highs and higher lows. We have developed the MineLens Productivity Index MPI —that enables mining managers to measure the aspects of productivity that are within their control, namely capital, labor, and non-labor operating expenditure. Technical analysts often use charting channels to detect potential reversals at resistance and support levels. There has typically been a focus on improving one or two of the variables, such as reducing cost, lowering capital intensity, or increasing throughput. Technical analysts watch for reversal patterns throughout the day, because they can indicate the need for a different trading strategy on the same security or can provide an opportunity to profit.
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Search Toggle search field. Toggle search field Toggle search field. Productivity in mining operations: Reversing the downward trend. A decade after the global financial crisis: Why data culture matters Interview - McKinsey Quarterly. As a fisherman, scuba diver and kayaker, I have seen the evidence at first hand: Not only do these effects hurt biodiversity, they also threaten humans, especially people who live in small island nations that depend on a healthy ocean for food, jobs, tourism, traditions and community cohesion.
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Over the past decade I have been privileged to work with coastal communities — including some very remote ones that are home to indigenous people with traditions deeply rooted to the ocean — on the creation of reserves. For some cultures, including many in the Pacific, protecting the environment honours long-held practices and beliefs. And in every case, the local people led the charge to preserve a healthy ocean environment that would continue to support their communities. Creating this sanctuary is … essential to our survival. The evidence is clear: It helps regulate global chemistry and climate and is home to more than two million species, many of which still await discovery.
This rich biodiversity enhances the fisheries that provide food for more than four billion people around the world. Increasing the area of ocean protected by reserves is a critical element of a broad conservation strategy. More of the planet was protected in than ever.
Edgar GJ et al. Global conservation outcomes depend on marine protected areas with five key features. Helping to reverse a downward trend index. Features Helping to reverse a downward trend. Large, fully protected marine reserves help the ocean and coastal cultures by: