Dig into the future: Building resilience in mining & metals
August 14, 2020
August 14, 2020
Faced with extraordinary events, mining and metals companies have risen to the challenge by moving quickly to respond to the COVID-19 pandemic. In many areas, the industry has been designated an essential business—reflecting its key role in the global and local economies—and companies have had to find innovative ways to continue operations while keeping their people safe. As the pandemic continues, it will undoubtedly have long-term ramifications, and the industry must continue to adjust to this evolving reality. With that in mind, Accenture teamed up with the World Economic Forum to create Industry Action Groups (IAGs) with about thirty metals and mining companies to help answer the daunting question: How might mining and metals companies collaborate with one another and their surrounding ecosystem to build resilience for disruptions to come?
COVID-19’s impact on the industry has been rapid and widespread. By peak lockdown in April, market capitalization of the top 30 mining and metals companies had fallen 28% since January,1 and 275 mining operations2 and more than 56 steel plants3 had been disrupted as can be seen in Figure 1.
Three months later, market capitalization is still down 27% from January, and more than 40 mines are still shut down across the world.4 Projections indicate a 12% decline in 2020 production5 across key customer industries, including high tech, motor vehicles, industrial production, and construction—and declines of 6%6 and 4%7 in commodity and steel production, respectively.
The situation has stabilized somewhat since the peak of the crisis, but that stability is fragile. COVID-19 case numbers have declined in some areas and surged in others. The long-term economic impact of the crisis is still unclear. And in general, there are still many unknowns about the virus.
One thing seems certain, however: the pandemic is driving and accelerating further disruption. In addition, the urgency of tackling climate change remains very real. In fact, COVID-19 has highlighted the need to fundamentally change the way companies operate. As suggested by the World Economic Forum, the world is entering a unique window of opportunity to shape the recovery through a “Great Reset” to address political, economic and social disruptions caused by the pandemic, and in which industries and societies need to assess, re-think and transform the way they work.
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The world is entering a unique window of opportunity to shape the recovery through a “Great Reset”, according to the World Economic Forum.
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Each company should build greater resilience through initiatives such as to boost cybersecurity, deploying digital technologies that increase flexibility and efficiency, and creating mechanisms for dynamically adjusting production capacity to meet changing demand, among other initiatives.
Such efforts are critical, but they won’t be enough. As they drive internal improvements, companies also need to look beyond their four walls. The impact of COVID-19 continues to be both deep and widespread. That means that effective responses will need to include industry-wide, collective initiatives that tackle evolving pandemic-related challenges from a broad, holistic perspective.
Over the last few months, Accenture and the World Economic Forum’s Mining and Metals Industry Action Group identified three areas where the industry is likely to find valuable opportunities to collaborate.
As dramatic as the impact of COVID-19 has been, the industry is still in the early stages of gauging its long-term impact and understanding what mining and metals companies will need to do—individually and collectively. In the coming weeks and months, Accenture and the World Economic Forum will continue to explore these issues and share their insights into how the industry can navigate the Great Reset.
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Managing Director, Lead – Natural Resources, Accenture
Head of Mining and Metals Industry – World Economic Forum
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We would also like to thank Sylvain Marpeau-Roussel, Marina Colombo and Renée Van Heusden from the World Economic Forum for all their support and contributions.
Sources:
1 S&P Global Intelligence
2 https://www.spglobal.com/marketintelligence/en/news-insights/blog/covid19-mining-impacts-mining-projects-with-at-risk-production
3 Metstrat as of 4/23/20
4 S&PGlobal_Covid_capex
5 Oxford Economics updated with most recent data 20Jul2020
6 S&PGlobal Market Intelligence updated with most recent data 20Jul2020
7 Metstrat updated with most recent data 20Jul2020