South Africa mining at a digital crossroadThe digital transformation of the mining industry promises a paradigm shift in performance, and for South Africa, the successful modernisation of the mining industry might mean the difference between prospering and slow decline. While the benefits of digital are not in question, the mining industry in general, and South Africa mining in particular, lags behind other industries in realising the benefits that digital will bring. This article outlines the sources of value, explores the roadblocks that stand in the way of digital transformation, and provides approaches to overcome those roadblocks. It concludes with a call for action – what regulators and companies need to put in place to seize the opportunity. Looking back a decade, the mining industry at large was sceptical as to whether digital can bring sizeable value to their operations. As of today, the nature of the digital discussion has fundamentally changed – it is no longer about whether there is value, but rather about how to capitalise on the value promise, and overcome the many roadblocks mining companies face during their digital journey. As Boston Consulting Group's (BCG's)s Digital Acceleration Index (DAI) reveals, the bottomline gains of those companies that ‘get it right’ are pronounced – and not limited to ‘just’ operational or financial gains, but also offering benefits for employees such as improved safety and environmental advantages such as lower emissions. As shown in figure 1, BCG’s DAI research highlights that “digital” companies achieve mining throughput improvements of 10% to 20% and emission reductions of 15% to 30%. At the same time, the DAI results also reveal an overall digital maturity lag - the metals and mining industry has fallen behind other sectors such as automotive and chemicals. As shown in figure 2, what is even more alarming is the substantial gap between the digital strategy and the digital execution score of mining companies – in simple terms, miners have reasonable digital ambitions, but fall short executing on those ambitions. So, while a select few mining players are ahead of the wave, the broader base of mining companies is struggling to turn digital ambition into action. Comparing those who thrive with those who struggle, we found five distinguishing qualities that sets the champions apart from the contenders. Those insights provide an opportunity for companies to quickly learn from experiences of their peers and drive adoption more quickly – provided there is a will, and a supportive and enabling environment. Let’s have a look at the five overarching recommendations to achieve successful digital transformation. 1. Focus on operators’ needs to close the digital strategy-execution gapMost metals and mining companies have ambitious digital strategies in place, but the gap between strategy and execution is significant. Our research found three reasons to explain (and, address) this gap. i. Lack of customised solutions
ii. Use of traditional waterfall models instead of agile methods to deploy digital products
iii. An inadequate focus on a solution’s sustainability
2. Value data assets as much as physical assetsThe value of data in digitally advanced industries such as banking and retail is obvious. But for many metals and mining companies, investments in data capture technologies are still viewed as little more than an additional cost. According to the DAI survey, only about 10% of the industry views data as a corporate asset. As a result, mining companies need to shift their perception of data, and realise it as an intangible, but highly important source of business value. 3. Develop an ecosystem mindset to leverage internal and external partnershipsDigital leaders understand the power of leveraging both internal and external ecosystems, and the benefits of building interconnected solutions on the same digital foundation:
About the authorPeter Clearkin and Tycho Moncks are managing directors and partners at Boston Consulting Group, Johannesburg. |