A new report released by global advisory services firm Ernst & Young (EY) has called for increased efforts from mining companies to make effective use of digital technologies.
Commenting that only few mining companies are adopting a holistic digital strategy, the report, titled ‘Digital mining: the next wave of business transformation’, noted that existing digital solutions are disconnected and only address parts of the value chain.
The report stated that the implementation of digital strategies is more focused on productivity and that companies need to adopt a more end-to-end approach to integrate digital initiatives and gain a competitive edge over peers.
It identified around 60 significant digital themes and initiatives across the sector.
EY Global Mining & Metals advisory leader Paul Mitchell said: “Mining and metals continues to lag other sectors in the realm of digital effectiveness.
“The value from digital will only be realised when companies change how they work, rather than succumbing to the lure of individual technology programmes and pursuing local optimisation, which is not necessarily transformational.
“While a revolutionary approach to digital would be too disruptive, we believe mining companies should adopt a progressive, multiyear strategy that also accounts for business risk and the primary drivers of value.”
In the report, the advisory firm highlighted that the introduction of a series of digital transformation ‘waves’ will play a significant role in transitioning a business from its current to a future state.
The approach recommended in the report comprises four key components.
In preparation for the digital transformation, mining companies need to initially build out connectivity by investing in infrastructure, communications and data.
In the next step, known as Wave 1, companies are required to undertake activities that are aimed at improving productivity or performance, and are typically operated within a single function.
This stage allows a mining operation to manage inherent variability and move towards manufacturing levels of productivity.
The following stage, named Wave 2, widens the scope of activities, covering the whole value chain and including measures to achieve improved management of margins through interactions with customers and suppliers.
Wave 3 represents the rise of disruptive factors that may result in significant changes in how the sector operates and may also require companies to incorporate a step change in business strategy.