______________________________________________________________________________________________________ Investment
ore mix , service , or stability of supply . Again , this might only add one or two percent to their prices , but this is a benefit against competition regardless of the actual price , and also locks in value-adding supply agreements when demand is scarce .
Managing expectations
It is worth adding that all of this highlights another problem mining companies must navigate – investors ! All investors want the management of businesses they invest in to deliver above-average performance , causing many mining companies to have financial forecasts for investors that are often unrealistic and in contrast to their internal mining forecasts !
Investors are happy when the commodity price is high , with the profits masking any inefficiencies within the business and problems in the mines . When the price falls , the veil is lifted , bringing a conflict between decisions to deliver profits or focus on longterm operational reliability .
This is not just a performance risk but can translate to a very real impact on safety and effective mine planning – especially as overproduction demands are driven all the way to the proverbial coalface , the place you most want stable and safe operations .
The key as always is patience and confidence . Good miners understand the life of their mine and manage this for continuous and consistent benefit , while investing in improvements as technology and application deliver new and improved methods of mining . They protect these plans through the cycle , both in terms of money and culture .
Key takeaways to achieve continuous value
This sounds altruistic , but in our experience , there are some practical steps miners can take to deliver continuous value , through the boom and the bust of the commodity cycle . These include :
1 . Separating the incremental benefit of critical projects from the overall performance of the business . This is best done by measuring competitive advantage as a driver of ROI , compared to overall profitability being linked to commodity pricing .
2 . Creating a culture of consistent , reliable delivery from their operations . Analysts and investors can translate predictable mine output into value through the cycle – but overpromising output to compensate for poor margins leads to trouble .
3 . Look for value-adding incremental margin opportunities in price and service , even if the percentages are small or the realization model appears complex . The reality is that small changes translate to big gains .
4 . Move from annual planning to rolling planning and use a process like Integrated Business Planning to provide leadership with a continuous transparent reality , as well as visibility of the impact of critical initiatives to support performance . ■
Monte Maritz oliverwight-eame . com
Monte Maritz is a partner at business transformation specialists , Oliver Wight . Based in South Africa , Monte works with senior leadership teams at local , regional , and global companies to implement change programs . Oliver Wight is a world leader in IBP consulting ( Integrated Business Planning ). With a focus on transferring knowledge to clients through coaching , mentoring , and workshops , the organization ’ s approach differs from other consultancy firms .
m-mtoday . com 19