3 ways to reverse declining profitability

Even before the 2020 COVID-19 lockdown, the mining industry was facing significant challenges that affect profitability. According to research by McKinsey, mining profitability had already been in decline for at least three years. More than ever, firms need to understand and overcome these problems if they are to grow profits. And the aftermath of the global slow-down increases the urgency with which they much act.

Here are three ways they can.

1. Embrace a digital transformation strategy

Following the lead set by other industries, like manufacturing, that are similarly affected by poor
productivity, miners will need to adopt a digital transformation strategy. This means unlocking and
unifying the data held across the organization so that it can be used.

Technology alone will not magically resolve productivity problems – but it will create a platform on which to begin making incremental improvements. The correct solution will make data available at every level of the business, allowing stakeholders to make informed decisions that result in short- and long-term gains.

An effective management system capable of tracking operations at mines will increase operational
transparency and allow managers to accurately assess performance. Replacing disparate data collection and reporting mechanisms, particularly those that are still paper based, will ensure that information is always available centrally, and no details are lost.

Once centralized, data can then be analyzed both manually and automatically. Decision makers are able
to access the information they need to make informed operational and strategic decisions with minimal risk. More importantly, they will also be able to identify productivity bottlenecks and weak points.

By giving employees information they need to improve their own performance you are also equipping them to improve productivity at the individual and team level.

2. Focus on operational excellence

Quantum gains in productivity are rare – the largest returns will come from incremental improvements to operations. A series of small changes, often as part of an operational excellence program, will generate significant returns over time.

Data also sits at the heart of operational excellence – and it is not just for the attention of senior management. By making relevant, contextual information available to all workers, they too can make smarter working choices.

Take the humble shift hand-over log for instance. This document is not only a regulatory requirement, it is also a vital tool for ensuring that the incoming shift is fully briefed on work that needs to be done. Digitizing this asset allows you to share information further, faster, ensuring that everyone is fully briefed on the issues that may affect productivity and safety.

By giving employees information they need to improve their own performance, you are also equipping them to improve productivity at the individual and team level. Operational excellence gains can be realized across the entire operation with access to the right information at the right time.

Mine operators can help to better manage capital spend by building a digital twin of their operations.

3. Improve capital spend

Declining production and increased demand are forcingmining companies to boost their capital spend. But whenfaced with lower yield ores and investor expectations,this spend needs to be smarter than ever before.

Borrowing a concept from the chemical industry, mine operators can help to better manage capital spend by building a digital twin of their operations. Using 3D modeling they can build out a plant before construction begins, solving many of the issues that add to project cost. The same digital twin can be used throughout the life of the operation, allowing designers to model potential upgrades and enhancements, calculate the potential return on investment and to map out installations without affecting operations.

Improved access to data allows mine operators to better target their spend, reduce waste and invest where they can make the greatest productivity gains. Enhanced visibility will also allow your team to monitor equipment performance and identify the signs of imminent failure.

Using this insight, it is much easier to plan and execute proactive maintenance to optimize performance, rather than trying to deal with an unexpected failure that further reduces productivity.


Clearly, poor productivity is unsustainable in the long term, and the COVID-19 crisis has helped to highlight these issues. Firms must correct the problems – including spending and culture – to remain competitive. Fail to do so and they risk the very future of their business.

Hexagon empowers mine operators to transform unstructured information into a smart digital asset. Our tools allow you to visualize, build, and manage structures and facilities of all complexities, ensuring safe and efficient operation throughout the entire lifecycle.

Hexagon’s PPM division offers solutions to:

  • Combine portfolio, project and contract management processes and data into a single system
  • Create structural, piping and instrumentation models for sharing and review across the organization
  • Build a reliable, accurate digital twin of processes and make sense of your unstructured data using
    asset lifecycle information management
  • Reduce human error and workplace accidents by improving shift handover processes and data
  • Collect and analyze data in the field to provide real-time insights and address productivity issues immediately

Applied correctly, the information stored in Hexagon systems will help you improve productivity and overcome the profitability challenges facing the mining industry.

For more information, download Hexagon PPM’s free report “Reversing the decline: A strategy for growth in the mining industry”.

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