Now we have better information and data than we’ve ever had before so organisations are really able to evaluate, and evaluate on a regular basis, not just annually, their portfolio of choices.For example, the Royal Commission into banking in Australia brought attention to the role of large corporations in the financial sector. In mining, however, Sanders says there has been a major shift in what companies need to do to satisfy a vast range of stakeholders. He refers to communities, customers, suppliers and governments as the key stakeholders that now sit alongside company shareholders as groups companies must aim to appease. “How mining companies join up all of those stakeholder expectations is becoming increasingly difficult because sometimes those expectations don’t align with everything they have planned in their strategic objectives,” Sanders says. “Getting that balance right, reporting transparently around what you are doing in terms of social licence or social outcomes is really important in terms of that communication.” Deloitte’s opening trend in 2019, ‘Rethinking mining strategies’, outlines its first set of recommendations that help companies prepare for the accelerating rate of change. Despite the problematic no-so-distant approach of the past to base strategic planning around producing the highest volumes of ore at the lowest possible costs, Deloitte believes companies are still grappling with their transition from this legacy. Deloitte states that companies have not yet sufficiently broadened their strategic outlook to take a range of critical industry shifts into account. But as Sanders indicates, this outlook can be transformed through a mindset switch that will allow companies to better use the opportunities now available to them. “Now we have better information and data than we’ve ever had before so organisations are really able to evaluate, and evaluate on a regular basis, not just annually, their portfolio of choices,” he says. “So it’s really critical that we have got that ability to do that on a regular basis. In that portfolio of choices we need to consider all stakeholders.” Sanders points to Rio Tinto’s exit from the coal industry and increasing focus on building its copper portfolio over the past two years as an example of how this approach has been put into practice. Rio Tinto completed the $2.69 billion sale of its Hunter Valley-focused thermal coal business Coal & Allied to Yancoal in September 2017. In 2018, the mining company divested several coal assets in Queensland to multiple buyers, including Glencore and EMR Capital. At the same time, Rio Tinto has increased its exposure to future supply of copper, a crucial ingredient found in electric vehicles, with exploration activity in Western Australia and a joint venture in Peru. “That translates to taking out potential future earnings to appeal to environmentally friendly stakeholders, including investors,” Sanders says. “That was good messaging put out by Rio in that regard – a really strategic portfolio choice by them.” Sanders is convinced mining companies can start to rethink their strategies on a regular basis to support changing stakeholder demands instead of taking the common periodical approach that has become archaic. “It is no longer good enough to look at your portfolio over a tenure of the chief executive officer or the current executive leadership team. It needs to be done on a regular basis with much richer information and intelligence than we’ve had before,” Sanders concludes. Find out how mine rehabilitation legislation in Australia is changing in our FREE guide.
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