Mining companies need to uncover new sources of productivity to drive value creation.
In characteristic cyclical fashion, the mining industry’s performance has taken a sharp downward turn since peaking in 2010. In response, many mining companies have implemented productivity programs. However, as the supply of low-hanging fruit is exhausted, it has become increasingly necessary to go beyond traditional approaches to productivity improvement.
To achieve breakthrough productivity—the kind that leads to sustainable improvements in margin—executives and operators need to think differently about how their assets are organized and managed, where costs and value accrue, and which activities deliver the most (and least) value to the organization.
Contractor management is one area of expenditure that traditional productivity and lean programs often struggle with, but it’s also one that holds great potential.
Successful companies recognize the role that a long-term, integrated productivity program plays in value creation. Yet such programs alone are not enough. Other levers are needed; chief among them is profitable growth, both organic and through acquisitions. Companies can seize new opportunities in value creation by pursuing three important strategies.