As a mining CEO, you understand that improving overall profitability is crucial for the success of your business. However, it’s not always easy to achieve this goal. That’s why setting a target to lift your mine’s bottom line by 10% in the next 12 months can be a strategic imperative for your company.
Adding 10% more freeboard to your EBITDA will not only create a margin of safety for your investors but also protect your company against threats such as takeovers or downturns in commodity prices.
But how can you achieve this goal, and why is it not just about the bottom line?
The first step to achieving this target is to make it a strategic objective and communicate it as clearly as possible. Ensure that these objectives cascade down to the people who are closest to identifying the low hanging fruit and that they appear in their performance objectives. You also need to ensure there are mechanisms for them to identify the obvious and hidden wastes, so they can bring them to their leaders’ attention.
Caution: As always, we do not advocate undisciplined cost cutting. This almost always leads to bigger headaches in the longer term. However, there are many untapped opportunities such as renegotiating contracts with suppliers, spotting rework or expanding work to fill the time available.
You will be surprised how often front-line operators, supervisors and superintendents shake their heads in despair at questionable practices. This is their opportunity to shine.
Focusing only on financial metrics is not enough to ensure long-term success. To create a resilient business that’s able to scale and grow, your mine sites must also focus on systemic improvements that address the root causes of inefficiencies and waste. This will require a slightly different approach and a bit more effort and resources. So where does the cash come from for that?
By achieving these quick wins you can deliver and leverage immediate financial results.
But it gets better than that: it will demonstrate to your team and other stakeholders that you are serious about improving the bottom line. This will build momentum for further improvements, unlocking more challenging but foundational building blocks of the business. By increasing operational efficiency, redesigning workflows or organisational structures to bust silos and reduce waste, and increasing employee engagement along the way, you can get magical breakthroughs that lead to sustainable bottom-line improvements.
Conclusion
- Lifting your mine’s bottom line by 10% in the next 12 will free up cash
- This cash can be reinvested to transform your operations to become more resilient and able to scale and grow
- By setting clear objectives, looking for untapped opportunities, and focusing on systemic improvements, you can achieve this goal and unlock even greater gains for your business
