Mining industry set for a more challenging tomorrow

More than half of the country’s coal mines are managed by pro-Russian separatist militia.

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Several large-scale surface mines are nearing the end of their economic life, and with mineralisation often continuing at depth, there is sometimes a business case to transition to a large-scale underground operation. But with the typical transition lead-time of up to 20 years often being underestimated, some open-pit operations are potentially missing value by continuing with more cutbacks.

It takes considerable effort and cost to acquire the significant amount of knowledge required for an orebody at depth. Without this orebody knowledge, the underground expansion may carry unresolved challenges and potentially unacceptable risk.

Potential seismicity issues, high virgin rock temperatures at depth and weaker rock mass conditions are among the challenges faced by miners as an increasing number of projects look to mine by underground methods.

Similarly, existing open pits are marching ever deeper and require a very good understanding of the geotechnical and hydrogeological parameters to ensure long-term slope stability. Slope failure examples demonstrate that not fully understanding these conditions can generate unexpected and significant production interruptions.

It is currently not uncommon to see projects experience multiple materially-challenging areas that require resolution prior to demonstrating a project’s viability.

On a more macro level, profound socio-political change continues to shift the markers as project owners negotiate approval paths.

An increasing number of jurisdictions are now modifying their tax regimes, specifically targeting resource-related projects and selectively curtailing investment and restraining commodity supply.

The industry’s social licence to operate is also under pressure from many angles in parts of the world.

Due to some poor past behaviours and outcomes in the resources sector, social licence support has decreased from those outside the industry. The reality is that even the best operators are judged by the lowest common denominator.

During the recent downturn, the supply-demand balance was negatively impacted. While demand generally continued unabated, the supply chain, particularly exploration, has lagged in some commodities.

The latest downturn has been particularly challenging, and as an industry, we have experienced a loss of personnel across the ranks. This is exacerbated by the significant drop in new students entering resource-related tertiary subjects – which is in part a reflection of the recent challenging market conditions.

While it is commonly recognised that more needs to be done to attract and retain new entrants into the industry, the messaging and execution are often at odds.

Companies often espouse mentoring programs, for example, but these have been seen to unravel on site, where line management is not aligned or does not have the required skills to implement the corporate aspiration. The net result is the loss of aspirant scientists and engineers.

As mining activity increases, we now see major companies looking to higher significant numbers of tertiary graduates, while the number of students graduating has dropped. If major miners are facing this challenge, what does that mean for the rest of the industry?

Looking beyond the project challenges, the industry also needs to foster a greater collaboration between companies and industry bodies to continue the drive towards technology and innovation, as well as doing more to encourage the younger generation to stick with the industry and use the original thinking they will bring.

To work towards resolving some of these challenges, we need to consider the broader setting of the current resources industry landscape. If the supply-demand balance is out of kilter in certain commodities, then commodity prices will eventually catch up and provide an incentive for developing new projects.

But many are yet to be discovered and evaluated, and exploration processes need to continue to innovate for deposits that are under cover, followed by downstream studies that are more robustly evaluated to ensure the viability of those projects can be demonstrated and funding can be secured.

This is particularly relevant to projects outside of the major mining companies where the supply of capital is more constrained.

A key aspect for the industry’s success will be increased collaboration – up and down the value chain – to ensure better resourcing, retention and knowledge transfer.

The international underground caving community is a shining light in how collaboration promotes thinking differently about complex issues.

There is a high degree of connectivity and networking that benefits all caving operations and projects through a willingness to share lessons and experience in what is arguably the most technically challenging mining method on the planet. Nurturing 'knowledge communities' to share ideas, resources and promote innovative thinking should be the way forward.

Contending with growing complexity across all types of mining projects and operations will require a collective commitment to communication, collaboration and empowerment.

This will all be needed to keep pace a changing resources sector and ever-increasing project complexity, as we see a new-norm taking shape.