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Looking ahead to mining's new normal

Pandemic highlights need for miners to be far more agile thinkers

Roger Dixon*
Looking ahead to mining's new normal

This is the latest in a long list of organisations proposing ways for the global mining industry to recover from COVID-19. It addresses how mining should adjust to the "new normal" and comply with the plethora of suggested standards for mining companies to become sustainable or maintain a social licence to operate.

It is clear that a narrow focus on shareholder value is not going to be good enough in the future.

So, what is the "new normal" going to look like? In the short term, it is going to mean prioritising the preservation of cash while production returns to previous levels - if it ever will. At the same time, mines need to maintain strict social distancing standards and wait for supply chains and export facilities to return to pre-COVID levels.

The redesign of a 1,300m vertical shaft configuration - hoisting up to 200,000 tonnes of rock per month, 2,000 employees per day and supplying stores and equipment to support the operation - is difficult to conceive

Productivity, particularly in underground mines where vertical shafts are the only means of access, will be severely tested. Hoisting cages were previously packed to capacity with up to 50 employees per deck and three decks per cage. Social distancing will likely reduce hoisting capacity to a maximum of 10 employees per deck or 30 per cage - just a fifth of previous levels. This will reduce the available productive hours, with obvious repercussions on total production. Fewer people per hoist cycle will also increase the number of cycles and the overall power cost.

The IGF suggested that "office and mine-face workplaces must be redesigned to be more spacious and flexible to limit the risk of disease spread".

The redesign of a 1,300m vertical shaft configuration - hoisting up to 200,000 tonnes of rock per month, 2,000 employees per day and supplying stores and equipment to support the operation - is difficult to conceive. In underground gold and platinum mines in South Africa, the mining height or width in the stope face where reef is extracted is between 110cm and 200cm; the width determines the economics of the operation, so redesign is not really possible or viable.

In the long term, the new normal will revolve around three principal issues.

First, the management of mining operations will be the responsibility of statesmen rather than managers; they will need to focus on the needs or interests of all stakeholders, not just shareholders. Secondly, mining operations will have to be flexible and efficient - operating at productivity levels in many cases four to five times higher than they were pre-COVID-19 - if they are to meet the requirements of social distancing, health standards and other responsibilities to stakeholders. Thirdly, there has to be a change to the corporate structure, right down to the relationship between supervisor and employee. The previous command-and-tell structure, where the message from the top is relayed through a hierarchy of supervision, will not be required with the modern technology now available.

Considering this scenario, the long-term goal looks very far away for many underground mining operations, even those that have achieved their social licence to operate in the pre-COVID-19 world.

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*Roger Dixon is a corporate consultant to SRK Consulting, the world's largest mining consulting firm. He has spent more than 48 years in the South African mining sector, and today specialises in reserve and resource reporting to stock exchanges. With his principal qualification in mining engineering, his career has included over 30 years in senior management roles at both operations and head offices of large gold mining companies. As a consulting engineer from 2002 mainly with SRK Consulting South Africa, he has worked extensively in mine valuation, due diligence studies and engineering studies. He also played a leading role in developing reporting standards through the South African Mineral Resource Committee (SAMREC) and the global Committee for Mineral Reserves International Reporting Standards (CRIRSCO) two committees on which he still serves.

 

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