Issues and Trends in the Metals and Mining Industry

Issues and Trends in the Metals and Mining Industry

Is it over yet? I ask this question often to my coworkers within the industry who are waiting hastily for the down cycle to finish. It's like we still have how to travel. During the supercycle, people imagined product prices will go up forever, people thought that the market will never recover. Neither hypothesis is correct, However, the very fact is that the cycle is lengthening, which suggests it could take years for the industry to regulate to plug forces. In my opinion, below are the highest 4 trends we'll see within the Metals and Mining industry in 2016 and beyond.

A. Operational Excellence Tops Corporate Priorities

Mining and Metal companies have spent many years cutting costs, upgrading operational efficiency, and stopping discretionary spending. Depressed commodity prices continued to threaten profits, generate a lower return on capital invested and undermine capital budget. These factors are challenging companies to revisit their core competencies, specialize in only things they're good at, partner with experts on other aspects of the business and drive ongoing operational improvements. 

Rethinking supply chain: Massive supply chain challenges stem from the absence of confidence in suppliers’ performance and supplier capacity. Improved visibility on end to the top supply chain is important for better alignment with customer needs during this ultra-competitive environment. Reassessing existing supply chain structure, organizations can drive production gain and efficiency through co-opting suppliers into setting shared productivity targets, cost equation, and reforming industrial/labor/supplier relations.

Refocusing Capital Allocation: it's typical for traditional organizations to possess fragmented capital allocation. It’s hence difficult to attach capital spend to financial and operational returns. Centralized buying, better asset tracking, computerized preservation management help improve corporate detectability into spare parts, replacement and repair evaluation, cost and equipment performance and improve budgeting and forecasting.

Gathering Collaboration: Talent pooling, allocating infrastructure, partnering on capital projects, managing attainment as shared service within the industry are ways to think about to not only expand buying power and to extract economy of scale and scope but also reform relations with suppliers/competitors.

Advancing Working Capital: While the cliché “cash is king” is old, it never gets tired. Anticipating analytics and ERP consolidation help strengthen the main target on the capital lever to raised match inventory with market demand.

"Starting from process automation to advanced machinery to big data analytics to cloud technologies, companies are increasing operational efficiencies while reducing expenditure"

The ultimate goal is to release capital for more productive use.

B. Game-Changing Technologies Inject Innovation and Efficiency

Despite the actuality of several game-changing technologies that will increase competitive supremacy, lower cost of operations, improve safety, metals, and mining companies have continued to be reluctant adapters. Below are key technology trends the industry will experience within the coming years:

1. Internet of Everything: We are truly in an unmatched age of technology disruption. Phone, PC, car, server, sensor, and even security systems now hook up with the web and hook up with one another. Companies tend to combine their operational systems like PLC, DPC, and SCADA with their Enterprise Resource Planning platforms. Better connected and better-networked enterprises aim to enable superior deciding by adopting a standard platform for information sharing across the enterprise.

2. Machine Learning: As machines become more intelligent, complex tasks are going to be performed by the machine, reducing labor costs. Integrating the physical world with the digital world results in improved cost efficiency, productivity, and revenue. Hardware technologies, like sensors, provide wisdom for intelligent operations planning, while robotics helps overcome hazardous working conditions. Integrated diagnostics technology besides big data analytics generates useful insights from devices that will be examined for effective deciding on production planning, capacity utilization, energy usage, and continuous improvements.

3. Wearables: Wearables, which still storm consumer market, are often extended to profit business by attaching those to employee clothing and accessories to detect employee fatigue, hamper on accidents, and enable rapid response just in case of injuries.

4. 3D Printing: 3 D printing enables companies to manufacture parts in remote locations reducing delays related to unplanned maintenance and therefore the got to hold inventories.

5. Smarter Enterprise: Increased use of electronics and data analytics, remote operations centers and other intelligent software applications, multiplied by cloud computing power and data storage facilities, are allowing organizations to unravel critical business issues more quickly and intelligently. Drone technology (UAV) is making headway into the industry allowing accurate inventory tracking and reconciliation.

C. Finance Scarcity Continues Disturbing the Industry

Commodity price drop, leading to weaker earnings, continues to affect industry valuation. Many traditional lenders have disappeared; institutional funding continues to bypass this sector and personal equity wave is yet to form a big investment within the sector. Existing major players are going to be forced to consolidate and little businesses may disappear. Companies will find government funding, explore crowd-funding, deduce debt levels, and leverage intra-industry and inter-industry alliance to source funds.

D. Health, Environment, Safety, and Security Remain to the Fore

While industry safety record has been improving, companies will still invest in evaluating and refining their safety programs. Technologies like sensors, wearables, driverless vehicles, and large data analytics will help minimize the incidence of great injury. Fostering a culture of “safety first”, providing safety training, enhancing physical and knowledge security are a number of the steps companies will take. because the Internet of Things (IoT) evolves and network extends beyond the nuclear enterprise, organizations are faced with unprecedented risks from cybercriminals.

The industry hopes to emerge from the present downturn soon and position for growth. this may require the willingness to draw lessons from unrelated industries like airline, car, and banking and apply those to metals and mining. it's about time that the industry takes a tough check out current strategies on technology investment, diversification, and M&A and makes strategic changes!

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