Heed The Words of Nick Giorgetta

Last year I sent a note out expressing some frustration that all I seemed to be reading in the media was negative articles about the resources industry and that this negativity had permeated to the general community who believed that the resources industry was effectively no longer significant. I made the case that our industry was in fact in great condition and was achieving significant performance goals and operationally the industry was in fact strong. The 2016 Diggers and Dealers event was a robust endorsement of how effective the industry was with 45 presentations demonstrating what was being achieved and three days of great networking and significant business being negotiated.

This year, the situation seems a little worse. This year our industry is largely being ignored as the media moguls continue to reduce general reporting and in particular business focused reporting. We know from discussions that the journalists are keen to report what is happening and we know from the quarterly reports that the resources industry continues to deliver impressive operational performance.

I have had a look at our main gold producers profile compared to five years ago when the perception of the resources industry was still the focus of many headlines as Australia’s leading economic indicator. In 2012, 2407 people attended Diggers and Dealers. Below are a couple of tables that clearly indicate that our main gold producers have not only substantially improved the production profiles but have also maintained or significantly enhanced their resource bank profiles. Some of this has been through asset acquisitions and an encouraging contribution has been achieved through internal exploration success.

In 2012, Sandfire was just commissioning De Grussa and now is one of Australia’s respected copper producers and the company has also experienced strong exploration success securing the future of production.

In 2012, Fortescue was shipping 58 million tonne of iron ore. Many in the investment and general community were mocking the outlandish production estimates that the company was suggesting of 140-160 million tonnes per annum. General perception was that the company was debt laden to the extreme and the risk profile suggested that the company had a short-term future. The company is now delivering 165 million tonnes per annum, has one of the most conservative balance sheets and is one of the most respected companies in not only the resources industry but within the general Australian business community.

Seriously, the rumours of the death of the Australian resources industry is again greatly exaggerated! Our industry remains one for us to be rightly proud of.

Numbers for Diggers and Dealers to be held in Kalgoorlie in August are significantly ahead of the same time last year. We will meet again and our industry will again proudly present achievements for the year and strategies for the future. Let’s hope this does not become the annual industry reporting and that out media moguls again allow our talented journalists to regularly profile our industry achievements as they occur.

See you in Kalgoorlie in August.

MM’ But, you’re not a miner!!

George Hemingway

Growth Strategy & Innovation Executive | CxO Advisor | Columnist

Spend enough time in any industry and you’ll hear some version of the following: “You’re clearly not a (fill in the blank). You see, we’ve always done it this way.” Ring any bells yet…..

The implication is clear; you don’t know what you’re talking about and here’s why it won’t work. After all, you’re not a MINER

The voices of experience and authority are difficult to challenge, especially in mature industries fraught with risk. The price of taking that risk and being ‘wrong’ is generally considered too great. The result? Comfort with the status quo overrides fear of change and leads to roadblocks and, eventually, failure.

This ‘industrial xenophobia’ sends a message to many; “Your skills aren’t valued the same way that mine are.” Try moving up in a chemicals company without a chemistry degree. Put another way, how many mining CEOs came from the marketing department?

There’s a reason why this is relevant today. Like so many others, the mining industry is going through a massive transformation driven by digital. Our research has shown that the greatest hurdle to this is not technology but implementation, and that the greatest impediment to implementation is unclear leadership, resistant cultures and a lack of the needed skills.

In mining, new skills will be required around data analytics, software programming, advanced manufacturing and scenario planning, to name a few. Companies that fail to develop these will not make the shift. Success requires a recognition that “we are all miners”; technologists as much as geologists, data miners no less than hard-rock.

Culturally, digital transformation requires a willingness to collaborate to take risks, embrace failure and learn quickly from past mistakes. This will be a challenge, but it has been done before.

When Lou Gerstner took over IBM in 1993 it was fading into history; an individualistic dinosaur focused on hardware manufacturing and sales. Today, the business is primarily a team-driven software, IT and consulting company. Gerstner said “culture was everything” in achieving the transformation.

Microsoft might be the next IBM; a company trying to pivot its business through new leadership focused on changing the cultural dynamic.

Steve Ballmer, in his last interview as CEO, stated that he focused on “how do you make money?” – lots of it, preferably yesterday. Compare that with Satya Nadella, Microsoft’s current CEO: “Something that’s worth $1 million can feel irrelevant. But that $1 million business might be the most relevant thing we are doing.”

What makes such a huge pivot possible isn’t just a clear vision or good technology. To bring it to life, Nadella echoes Gerstner, with “culture is everything”.

Part of what will make the transformation of mining possible are cultures that recognise and elevate the new skills needed to transform the industry. We must recognise that the leadership of the future may not be composed solely of engineers, but also of computer scientists. Their backgrounds may not be in resources, but in retail. When you say ‘mining’ they may think ‘bitcoin’.

Many would nod their heads in agreement, but caution on an over-emphasis of the shiny and new over the industry core. After all, mining is breaking rock and extracting minerals; it’s always been that way. But change is coming. Just this week, Vale chose a new CEO who comes from the world of pulp and paper. One has to wonder what his response will be when someone finally breaks the news to him: “Psst…you’re no miner.”

One can only hope that he responds: “Yes. That’s exactly the point.”