Why most mines end up the way they do

Fascinating, isn’t it.

You’ve probably done a lot of flying in your career. There are airlines where you immediately get the feeling that the team is a well-oiled machine; you feel safe, cared for and you just know they have done this many times and this will be an uneventful flight. I, for one, prefer my flights to be boring and uneventful. And I’m not talking about the entertainment system… You sense that the crew is competent and, as they care for your wellbeing, have the right intent, allowing you to trust them.
 
Then there are the other ones (I’m looking at you, most of the US-based airlines…). Where your immediate feeling is the opposite: Is this their first day as a crew? Boarding is chaos, seats are misallocated, and the food is, well, barely fit for humans. There are delays. I have been on a flight from Dallas to Buenos Aires where we were told we were ready to leave, except for the small inconvenience of not having a First Officer, resulting in a two-hour delay. I’m not making this up. Immediately, any trust I may have had is gone.
 
I’ve done a lot of flying and I have been and a lot of mine sites. There are similarities to boarding a plane. I can count the ones where I felt like they had their sh!t together on the fingers of one hand.
 
Have you visited a mine site, even after it’s been operational for some considerable time, and felt like this is their first day? Their daily production meeting (if they hold one) is chaotic and achieves very little. People are not really prepared, or late, or both. They read their numbers from the back of their hands (again, I’m not making this up), even though everyone is looking at the big screen on the wall – and the numbers are not the same. Often they are just numbers, not against a target, so it’s impossible to know if it is a good or bad outcome and if any action should be taken.
 
You may say it’s just a meeting, but we will argue that it’s a very important meeting. Think of it as a node, where well-made plans should feed a planned and purposeful post mortem of where we performed well, where we bombed out and a fruitful discussion resulting in agreed, logged and tracked actions. Otherwise, tomorrow and the next week will look exactly the same (the sh!t show continues).
 
Here’s another example. I kid you not, one of our consultants had an experience he will never forget – nor will I. He went underground to see how a supervisor’s shift unfolded (what is called a DILO or Day in the Life of); halfway down, their little side-by-side vehicle (SSV) ran out of fuel. The shift only got worse from there…
 
Agreed, that is an extreme example, but it does illustrate some of the stuff that goes on. I can guarantee you that no one would ever have heard about that incident, had it not been for it happening to the unfortunate soul being shadowed.
 
Why does this matter? Because if you as a leader cannot guarantee the delivery of your strategy I don’t care how good your strategy was in the first place. And neither do your shareholders or board.

So, why are Chaotic Organisations so much more common than effective organisations?

Mining cops a lot of flak from outsiders, but there is no doubt, it’s a tough gig. Mines have a long and risky runway from inception, resource confirmation, design and construction, operational readiness (if done at all) and eventually the transition from ramp up to steady state. Add to that other aspects such as remoteness, harsh climates, back-to-back rosters, FIFO and long stretches of time away from family and loved ones, and it starts to explain some things.

Adding to this complexity, the changes from one phase to another is usually quite fluid. The ops team takes ownership of some parts but not all, while the construction team is still working towards full completion. There are a number of things that have to come together for it all to work well.

Interestingly, I have also seen sites that were running quite well at some point and then went backwards later on.

As cost pressures have been mounting over the last 10 or 20 years, site teams have become leaner and there is very little time for them to work on the business because they are all too busy working in the business. And so things improve very slowly – if at all.

But I’m going to say it: from a management perspective, this approach is penny-wise and pound-foolish.

How many people does it take to drive a Formula 1 car? How many people does it take to support that one driver? Some folks need to be tasked with just working on the business.

Many sites actually have a Business Improvement / Continual Improvement (BI/CI) person or team in place, which is a great start. I’ve seen this work very well, usually in mature, well-running businesses; but here are my observations of what really goes on at mine sites:
  • The BI/CI team member role is a fantastic career development opportunity; yet, mining companies often treat the role as a ‘departure lounge’ or a sin bin, where under-performers might get a second chance if they’re lucky. Apart from this situation being completely ineffective in every way, it sends a terrible message!
  • They do not receive much relevant training, so they are ill-equipped to see the gaps to Best Practice, let alone to know how to close them
  • Not everything is a Six Sigma project! Six Sigma is a great methodology but it’s only one tool in the toolbox
  • More often than not, BI leaders are positioned too low in the org chart and don’t have a seat at the leadership table, reducing their effectiveness enormously
  • From a Superintendent level, getting people to do things differently is a challenge – they are peers
  • Where should they fit in the business? Who should they report to? It makes sense to have them report to the GM, but then they have zero control, only influence, because everyone reports to a different HOD – that’s a tough gig!
 
Traditional BI/CI has its place and is definitely a must for every business. But it’s important to recognise the limitations of that approach, especially if your operations are a long way down on the Maturity Scale <add link>.

However, if your mine site(s) are underperforming or at risk of doing so in a dropping commodity price environment (which is always just a matter of time), you will need more of a transformational approach, which, in our experience, a BI/CI department is rarely able to deliver.

Anyone who knows anything about implementing change knows that it has to be driven, led and sponsored from the top. Unless your site has a highly unusual culture that I have never seen, any other approach is doomed to fail.
 
But it does not have to be this way. It is possible to set your sites up to run safely, reliably, predictably and profitably for years, even when the commodity prices dip. It’s not rocket science but it does take a level of commitment. There is usually no one single solution, instead, to become an effective organisation you have to ensure that the key business functions are effective and play together well.

Conclusion

  • Many mines fail to properly transition from startup to stable operations, resulting in, at best, underdelivering EBITDA or worse, failing to meet guidance
  • High commodity prices my be hiding the poor performance
  • Recognising that something needs to be done, Business Improvement functions or initiatives are established; these are fail to deliver, due to their positioning in the business and inadequate capability in both recognising the goal, the gap and how to get there
  • Effecting change from the inside is very difficult
  • Leaders lack the requisite knowledge of their role in change leadership
  • Running mine sites well is not simple, but also not rocket science; it starts with a clearly formulated strategy and requires a coordinated balance of leadership, culture, enabling technology and business processes to deliver the strategic intent.
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