Mining companies must be more efficient, says MD of consulting firm Hatch – by Charlotte Mathews (Business Day Live – September 2015)

HELSINKI — Financial cost cutting by mining companies is achieving short-term savings but in the long term it is hurting performance, MD of Hatch mining and mineral processing consulting firm Jan Kwak said on Tuesday.

In an interview on the sidelines of the Global Cleantech Summit in Finland on Tuesday, Mr Kwak, whose global company (which operates in Africa as Hatch Goba) specialises in strategic consulting and research, project management and operational support for mining, energy and infrastructure companies, said mining companies should rather be making savings through solutions that deliver sustained output using fewer resources.

The three-day Global Cleantech Summit, which is organised by the Finnish government, brings together about 800 delegates from around the world to discuss issues relevant to “green” technology development, financing and marketing.

Mining companies, squeezed by falling commodities prices, have intensified cost-saving programmes in the past two years, including retrenchments and cutting back on new capital investments. Anglo American has said it will cut about one-third of its global workforce, including through disposals of assets.

Mr Kwak said Hatch has seen less project work but greater demand for its research and strategic consulting services.

During the decade-long boom in commodities prices mining companies focused only on increasing volumes and economies of scale. The focus should not be on size but on operating in the most efficient way, looking at the intensity of capital, labour, energy and mining, he said.

The way that mining companies have always operated has not encouraged innovation, Mr Kwak said. This was changing. For example, Anglo American CEO Mark Cutifani has made research and innovation a strategic priority and has taken personal management of it. AngloGold Ashanti has also invested significant resources in developing new technologies for deep-level mining.

In South Africa, the biggest opportunity for mining companies to improve their performance lay in reducing variability in the processes, including labour, Mr Kwak said. Workers should not be used in heavy manual labour that can be done by machines, but in jobs where their wisdom and initiative were more valuable.

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