October 23, 2017

Mining’s future lies in productivity turnaround

As the latest statistics from Productivity SA show that labour productivity in the mining sector fell almost 7% last year, mine management urgently needs a long-term vision for an operating environment that will improve output per worker, according to SRK Consulting chairman Roger Dixon. [Source: SA News (SA Government News Agency) release 30 September 2014 – first article:  2013 productivity stats released]

Other recently released figures – from Statistics South Africa – showed that mining production dropped almost six percent in the June quarter compared with last year, and the industry shed over 4% of its jobs.

Deeper mines, more challenging ore bodies and recent labour unrest have all been factors in steadily declining productivity, said Dixon, but the sector has been slow in finding sustainable solutions to these challenges.

“The sad fact is that we have been conducting our mining operations in essentially the same way for decades, and somehow expecting our efforts to have a different and better result,” he said. “The future of mining will have to be based on more innovative technology, for instance, but our research and development initiatives remain uncoordinated and under-funded.”

SA this year slipped again in the World Economic Forum’s global competitiveness index, falling three places to 56th out of 144 countries.

“In a productive economy, we would expect to see certain trends – such as rising levels of labour utilised alongside wage level increases in line with inflation,” said Dixon. “Mining shows the opposite trends, with employment falling and wage increases regularly outstripping the overall consumer price index.”

Recent labour disputes on mines have led to more frequent discussions about mechanisation, with Productivity SA highlighting the long-term benefits of mechanised production in the economy: with the higher profits that mechanisation and automation can produce, savings are generated that will be ploughed into new job-creating enterprises.

However, Dixon said mechanising and automating in conditions of high unemployment creates a dilemma, and he emphasised the importance of steady and long-term implementation of innovation in working practices and technology.

“The logistics systems on our mines are a good example of where we could improve productivity substantially,” he said. “The distances from surface to the working faces of our deep-level mines have increased drastically since the 1950s and 1960s, but we have not adapted our supply chain technology sufficiently to address this. We simply lose more and more productive time as workers spend a greater portion of their day travelling to and from the stopes.”

While machines and systems are vital to better productivity, so is the health of the workers themselves, he said. To operate at their peak, staff need to be healthy, well nourished and well rested; however, it is increasingly clear that the living environment around many mines – with large number of workers in informal housing – is not conducive to this level of well-being.

“Ill health, fatigue and stress also contribute to accidents, which in turn erode the productive hours that staff spend at work – not to mention the resulting work interruptions and regulated stoppages that follow an incident,” said Dixon.

He said it was vital for the survival of SA mines that management grasp the productivity nettle with a strategic commitment to develop and implement new ways of working, underpinned by research and active consultation with labour and other stakeholders.

About Roger Dixon: Roger has spent almost 40 years in the South African mining sector, and today specialises in reserve and resource reporting to stock exchanges. With his principal qualification in mining engineering, his career has included over 30 years in senior management roles at both operations and head offices of large gold miners. As a consulting engineer since 2002, he has worked extensively in mine valuation, due diligence studies and engineering studies. He has also played a leading role in developing reporting standards through the South African Mineral Resource Committee (SAMREC) and the global Committee for Mineral Reserves International Reporting Standards (CRIRSCO).

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