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Lack of digital leaders a key 2019 risk for miners

Until recently, the mining and metals industry lagged in adopting and implementing technology tools. In the past few years the industry has expanded its use of automated and digital technology, but now it faces a shortage of digital executives who can effectively manage these tools. Even when mining and metal companies employ executives with these capabilities, they frequently do not place them in positions with the authority to truly transform the business.
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Image: SAP

Heloise Nel and Sameera Sandhu*

During September 2018, the Egon Zehnder Mining and Metals team analysed the top 40 mining and metals companies worldwide and found that only 28% of them have created or expanded senior leadership roles that focus on digitalisation (for example, augmented reality, Internet of Things, artificial intelligence and blockchain).

Of the executives in these senior leadership roles, only 18% have a digital background, with 46% having a traditional mining background. 

So far, most of the efforts to digitise the mining and metals industry have been disjointed and piecemeal, occurring in isolated parts of the company or in niche areas.

Some companies have significantly changed the scale and pace of operations for mining and metal refining companies. For example, blockchain technology has transformed the way De Beers, a diamond exploration and mining company, is able to track a diamond across the value chain, using a system called Tracr. Gold producer Iamgold has also focused on blockchain, investing in fintech firm Emergent Technology Holdings, a gold supply chain and digital token platform. Back on the ground, Rio Tinto and BHP are employing fully automated mines operated via remote control centres located offsite as part of their innovation efforts.

Yet simply adopting new technology isn't enough. You need leaders who can drive a digital transformation.

Without strong digital leaders to execute these large-scale changes, companies will not succeed—and, in fact, may be setting themselves up for possible extinction.

Sourcing digital talent: Expertise and experience needed

Mining companies face two principal issues as they try to scale digital innovation: Finding executives with needed digital and leadership skills, and placing those executives in the right level within the company.

Unfortunately, executives who can lead fundamental digital transformations are rare. The role of a "digital transformational leader" is new and the pool of talent is not firmly established.

In addition, Egon Zehnder's study found that executives with relevant skills, such as automation or telematics, are typically appointed below the C-suite, which may not give them the seniority or perspective needed to drive an organisation-wide digital strategy.

While these skilled executives can translate the application of digital initiatives within a technical mining environment, they may not be capable of driving a holistic digital transformation, which requires fully examining the strategy, culture, commitment, and capability of their organisation to deliver.

How can metals and mining companies get the talent they need into the right positions? One way is to consider talent from outside of the industry. The type and level of appointment of these executives largely depends on the nature or scale of the innovation strategy; however, given the fundamental changes in other industries, a C-suite appointment will emphasise the transformational focus.

Global resources company BHP is a good example of how to appoint digital leadership to drive transformation at a global level.

Diane Jurgens joined BHP from General Motors and became chief technology officer in 2016, a newly created role reporting to the CEO. Jurgens' role, in her own words, is to "balance the incredible speed of progress with the long-term nature of mines to capture the dividends that technology can deliver."

Since her appointment, BHP has made significant strides in globalising its technology function, in part by combining research and development, program delivery, and operational technology. BHP's new technology-enabled operating model allows for the application of a "systems engineering approach" to all operations, exploration, and development activities.

This makes it possible to analyse mine lifecycles, identify constraints, and prioritise investments across BHP's global asset portfolio, which is composed of 12 core assets, two seaports and more than 1,000km of rail network. Perhaps most importantly, it facilitates rapid replication of best practices across their operations.

Another way to find talent is to look for transformational leaders who have a critical blend of experiences, competencies, and future potential to be successful, given the unique complexities that mining and metals companies face.

Egon Zehnder has found that irrespective of the digital leader organisations require, there are four qualities great leaders share.

They are curious, insightful, engaged, and determined.

This is collectively referred to as "potential". High-potential executives have the ability to adapt to ever-changing business environments and grow into challenging new roles—an essential component of digital leadership.

Companies that take advantage of technology may not only find cost-savings as an incentive, but also make risky jobs much safer by utilising technology and machinery instead of people.

Leaders who drive digital transformation will have a significant impact on establishing their companies as trusted corporate leaders who are committed to making the world a better place.

And this combination will be key for the future of the mining and metals industry.

*Heloise Nel is global mining and metals practice leader at Egon Zehnder, based in Johannesburg. Sameera Sandhu is a global mining and metals segment specialist with the firm in New Delhi.