Seven ways the resources sector can survive the COVID-19 crisis

A 7-point health check and action plan to guide your COVID-19 response

Seven ways the resources sector can survive the COVID-19 crisis Seven ways the resources sector can survive the COVID-19 crisis Seven ways the resources sector can survive the COVID-19 crisis Seven ways the resources sector can survive the COVID-19 crisis Seven ways the resources sector can survive the COVID-19 crisis

Proudfoot

The resources sector faces new and different challenges due to the current global crisis. From border lockdowns, new health protocols, falling demand and prices, production pressures, project delays, supply chain and logistics issues, staffing, to declining optimism - like most sectors, the industry has been turned upside down.

Many companies have been significantly affected by COVID-19, and global restrictions to encourage social distancing have seen projects either slowing or shutting down, and operations put on care and maintenance. Global mining giants like Rio Tinto and Anglo American have reported production slowdowns due to coronavirus-related restrictions. And, a study by Deutsche Bank shows that from mid-March virus-related base metal disruptions are hitting commodities operations with significant total output cuts; as an example, global offline capacity numbers show copper mine suspensions are 2.7Mty or 14% of global mine supply, and an estimated 85Mty of blast-furnace capacity has been suspended which equates to a demand cut of 50Mty of coking coal.

Whichever way you look at it, the sector has been severely impacted and leaders are now reviewing their operations carefully and looking at things differently in order to survive the current crisis and position themselves for the future. To get through this and come out ahead of the curve, it is crucial to leverage any current downtime to redefine your leadership and operations to determine what to put back into the operations and what to leave behind. But where do you start?

Firstly, you needed to have mobilized quickly and implemented a War Room. This provides a direct line of sight to the key decision makers within the business and should include your Crisis Executive Response Team (CERT) which covers key members at the Executive level, functional department heads and asset leaders. This enables speed. Your CERT can push forward policies, actions and processes with the support of the War Room's key leaders and ensure minimal resistance or push back.

When setting up your CERT, our experience teaches that who is on the team is not as important as clarity around the what or the "must be achieved goals." To rapidly deploy solutions, it is important that you have alignment and clarity on the outcomes. By now you should have picked 2 or 3 primary objectives as the key focus and know what must be avoided.

Once your response team is in place and main goals for it identified, then you can tackle these seven critical areas to ensure you are fully ready to lead the restart we expect but don't know exactly when.

A 7-point health check and action plan to guide your COVID-19 response

1. Design a robust ramp-up program that also includes the new COVID protocols we know will be in place for some time

We have seen from Asia that when staff are able to return to work, immediate ramp-up is critical: restart planning must kick in now and be ready for day-1 start-up launch.  When you restart your operations, two challenges will present themselves: the continued practice of social distancing made practical in the workplace and other new protocols; as well some of your suppliers may not necessarily be ready themselves for ramp up or the practice of new protocols. It is essential to act now to circumvent some of these additional challenges on the horizon.

Firstly, do you have an Integrated Planning Process (IPP) in place that optimizes your ramp-up? If not, it is crucial to start now to build a post-COVID model of IPP. In advance, create detailed plans and work schedules to allocate resources and skills and manage all people, equipment and shared resources of space, time and protocol. Identify and handle potential conflicts at the planning stage versus at the execution stage; when planning work, consider the entire value chain to manage constraints.  Focus on the global optimization versus local site or silo optimization and use best practice standards when planning your ramp up.

Ramp-up programs will use contractors and external partners. Now is the time to start your contractor selection and qualify individual contractors to work on your site rather than relying on the contracting and labor supply companies once things come back online, this will include new health and safety testing. You must look to how to pre-qualify or online train individuals to ensure they have up-to-date health and safety certifications. As you restart operations, this is an opportunity to review your resourcing model and redesign the workflow. For example, you may be able to move non-core functions off-site or move to a remote management model where site management is focused on execution and planning, and support functions are centralized off-site.

2. Secure your supply chain and look to digital sourcing options.

One of the critical outcomes of the current crisis is that global supply and logistics chains are frail when impacted by unpredictable global events like COVID-19. Across the world, companies face supply chain interruptions both inbound and outbound, with delays in equipment, parts and consumables, which invariably impacts productivity and profitability.  Companies are looking at the decision-dilemma of global versus local: do they now source local supplies to mitigate future disruptions and risk.

Securing your supply-chain is critical over the next 4 to 8 weeks. A key opportunity is to look into digital sourcing, something that can also be completed during lockdown. This will allow you to de-risk your strategy and remain competitive, and can address any liquidity or cash constraints by reevaluating suppliers, payment terms and processes. This digital transformation of the procurement process is increasingly popular, even before the crisis, and looks at six key areas: cloud technology, cybersecurity, data and analytics, artificial intelligence, sustainability and a cultural shift within the organization. Your sourcing strategy will need to be developed and deployed with a clear vision and plan to ensure your procurement and supply chain teams will adapt effectively and efficiently to the change.

3. Refresh your maintenance management framework

When was the last time you reviewed your maintenance processes and procedures? Take this opportunity to assess your existing practices pre-COVID and now during and post-COVID, including maintenance planning and scheduling. You know unplanned maintenance work is ten times more costly, 50 percent less productive and 30 percent more likely to result in an accident or incident than planned maintenance. For example, many companies utilize contractors for maintenance, sometimes resulting in more cost and inefficiency. As part of your maintenance review, consider how you can make contractors more productive by adjusting how you plan and manage work and look to implement joint management models with daily reviews. Look to coordinate their daily and weekly planning schedules with your own people to reduce conflicts and improve productivity. Potentially, look at developing a "concierge service" where a hands-on member of your operations team solves maintenance problems, reducing the cost associated with contractor time.

Further, establish a robust maintenance management framework, which includes any contractor or specialty supplier, as well as a standard meeting model that helps increase productivity and information flow. Then arm your supervisors with walk-the-floor checklists and a RACI matrix; share these with the planning team to improve planning and reporting. These results provide the right information to make better decisions and address maintenance issues promptly.

Contractors must, now more than ever, be true partners. Your ability to enable a partner to become inconspicuous as such, and simply be part of your life blood, working with you side-by-side is imperative for success.

4. Prioritize operational excellence

While operational excellence isn't a new phenomenon, it has moved beyond the simple goal to improve the bottom line. Operational excellence has become a core part of a mining company's culture, engagement strategy and business model and it plays a key role in business survival during this time. It also leads the way to safe and healthy work. The core of this concept is consistency, predictability and reduction of variation by intimately understanding the entire end-to-end process. For example, mine operations planning requires significant real-time knowledge of every moving part to ensure the right tools and skills are in place. When planning your ramp-up and while beginning to move into day to day operations, you will want to increase detailed planning to outline the activity, resources and support needed for each location on an hourly basis up to 72 hours in advance and include the evolving COVID protocols. Having that level of in-depth knowledge allows agility, especially in a time of crisis.

As you strive for organizational excellence, look at your revenue generation and sales efforts. This could be the opportunity to transform your current sales, business development and customer management teams into a virtual sales and business development unit. Your team right now will need to maintain contact, build trust and re-assure your customers and suppliers as to what is or is not going to happen.

5. Don't forget about people as you focus on productivity and profitability.

The future of business is still people. When dealing with the new reality of remote workforces, furloughed people, terminations and changing shift schedules and hours, leaders must work harder to address fears, keep morale up, engage employees and lead to inspire. Proudfoot's #HeadsUP program develops leaders at every level, improving their capabilities through two concepts: The #HeadsUp High Five and Active Management. The High Five focuses leaders on five core principles: developing presence, sharing a clear vision, adopting technology, promoting coaching and enabling people to have true influence over outcomes. Active Management focuses leaders on how to influence people's behaviors and results, at the point of execution. Together, they help people stay connected, productively and as humans.

Specifically, with virtual teams, leaders should check-in regularly with their teams. As a simple way to do this, we encourage managers at all levels to practice 1-5-30's. Check-in once a day (1) preferably one-on-one, but worse case as a team. Have online huddles to assess the day ahead and what needs to be done. In addition to checking-in from a performance standpoint, check-in with them on a personal front to help people cope during this unprecedented time. These more personal chats should happen each week (5) and last about 30 minutes. They should be a combination of work and home as they work remotely. Once a month (30), leaders should host a real conversation about how they feel the team member is performing and developing. This is a slightly longer conversation, perhaps an hour. Now more than ever, leaders must innovate how they lead not just to achieve todays results but also to remind their people of the core vision and that we're in it together, no matter how virtual our team is.

6. Promote a safety operations culture

Safety is essential and a core value for the industry.  Knowing that safe operations are more productive and cost less, it is essential that in a post-COVID world planning is detailed with a focus on the people and work along with the outcomes required.  It is clear, that any safety incident will have an even greater impact amid the current situation. New safe operations protocols will need to be incorporated, for example how do you manage and prevent potential reinfection at sites which are in operation? How do you check and monitor individual safety? How do you ensure that with a potentially smaller sized workforce on-site, your operations are still conducted with the upmost safety standards?

To sustain a safety-first culture, you will need to continue to review and map all safe operations and environment processes and standard operating procedures and guides, and identify material risk to assess the critical controls in place to manage these risks in an ongoing manner. As part of this, develop a management system to prevent, detect, and assess all risks, such as unplanned work. For example, track the percentage of work which is unplanned within the shift and develop a detailed change plan to manage shared time, space and resource conflicts. Provide tools, training and communication and role model expected behaviors to create alignment, understanding and higher awareness among all stakeholders. A safety-first culture across the mine operation improves productivity and performance and reduces costs.

7. Continually review your financial performance

Now is the time to develop a program to maximize your cash runway, understand how best to apply for the various government financial support mechanisms, review how to engage local suppliers and communities and discuss management of social payments, taxes and royalties to reduce risks and amplify financial health, ensuring the company is well-positioned to restart.

No business is immune from the flow-on economic and financial effects of COVID-19. The slump in demand and prices, as well as significant capital project delays, top-line and bottom-line performance, will inevitably be impacted. This affects profitability of projects, suppliers, contractors, communities and mine operations. Everything must be on the table during this time - cash management and working capital, cost reduction programs and pricing reviews. These reviews should get into the details of fly-in fly-out versus local staffing models, rotation schedules, localization of workforces, supplier partnerships, simplified decision models, streamlined work processes, review meetings and communication schedules.

Final thoughts

In summary, while this global crisis is first and foremost a human tragedy that has created a Great Pause it has clearly been the catalyst for an unprecedented industry rethink. This means, there is an opportunity for the forward-thinking leader to develop their organization's agility and not only manage the crisis but lead successfully through it and come out of this period with a different organization.  By looking at innovative ways of doing business, by redefining leadership, by implementing transformative processes and ensuring continuous improvement and operational excellence, there is an opportunity to reposition and redesign your organization so you can ensure a healthier future on the other side of this pandemic.

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We design, implement and accelerate operational and digital transformation through people. Realizing tomorrow's results, today.

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We design, implement and accelerate operational and digital transformation through people. Realizing tomorrow's results, today.

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