If the wheels come off the supercycle

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A focus on cost management

Whether we go into a supercycle mark II or exit the current supercycle altogether, the transitional period will increase the industry’s focus on effective cost management.

It’s instructive to see that the Ernst & Young report on the business risks facing mining in 2011 and 2012 saw ‘Capital project execution’ appear at number five in the top 10 list where it had not appeared at all in the previous list. This was three places above the perennial ‘Cost management’.

The Ernst & Young report stated, “Upstream metals and mining projects comprise a significant percentage of company spend and require particular focus on budgets, schedules and execution.”

Given the current climate, it is attractive to focus on short-term cost cutting but this should be complemented by taking steps to generate longer-term value for the mining company.

The effective use of remote communications can help in both respects. Of course, a mining company is not going to alter its mine plans solely based on the quality of the communications infrastructure available but remote communications has a disproportionately high effect on business efficiency for the amount of capital expenditure.

High-performance network architectures

For a mine operation to be as efficient and profitable as possible there has to be a reliable, high performance and easily adaptable network infrastructure.

The need for data hungry applications and real-time information sharing has grown rapidly. The inability to meet these demands can be costly. One industry estimate suggested that the oil and gas industries alone lose US$15bn each year through poor decision making from lack of access to relevant information where and when it is needed.

In addition, in uncertain economic times, all companies will look to control head count. The mining industry is no different. However, the mining industry is slightly different as it is faced with a growing crisis in terms of available skills.

One way to address this area is to look for business processes that can be handled through remote operations.

For most organisations, the success of increased remote operations will be determined by the robustness and availability of the network that lets them monitor and manage from wherever the business requires – whether on-site, off-site or the other side of the world.

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