![]() Value-driver tree: Representation that links business value to a comprehensive set of detailed value drivers, allowing for a better understanding of the business. Further complicating matters, the wide range of related activities requires a series of interdependent steps before products reach customers, many of whom live in other countries or on other continents (see sidebar “From extraction to the customer: The mine-to-market value chain”).Įleven core levers factor into mine-to-market performance enhancement. Mining value chains are highly complicated and must account for all assets, including equipment (for example, trucks and shovels), processing plants, and railway and port operations (Exhibit 1). For product types that come in various grades of quality, such as iron ore, an additional step known as product blending takes place before the product is loaded onto the ship and transported to the customer. For bulk material (eg, iron ore) once reconditioned, the product is stacked in stockyards and then it is transported to the port. These steps vary with the respective raw material-for example, ore processing consists of crushing and grinding. The material is then transported (typically on conveyors or trucks) to a processing plant, where it undergoes multiple steps to create a shippable product. Raw material is extracted from both open-pit and underground mines with the help of specialized equipment. Securing end-to-end efficiency of complex mining value chains This is a particularly relevant topic for the mining industry, as recent research shows there is still room for improvement in mining supply chains. Those that assess their priorities can strengthen their position in the current down cycle and expand their market position in the long term. In this article, we illustrate how creating transparency to improve decision making and keeping the right tools at hand can help mining companies prepare for an increasingly volatile future. Thus, taking a closer look at the value chain from mine to market is the first step in addressing these challenges. ![]() ![]() While preparing to address these tighter regulations, mining companies must significantly reduce their environmental footprint to satisfy the increasing push for disclosure by governments, investors, and stakeholders. Companies face unprecedented pressure to increase resilience, flexibility, and productivity to remain competitive. At the same time, environmental concerns continue to evolve, and new regulatory policies continue to be enacted. Mining value chains also face pressure from recent shifts in commodity markets (strong price fluctuations, shrinking value pools, changing market structures with new entrants, and tightened regulations) as well as from the ongoing uncertainty of the COVID-19 pandemic. This oversight has resulted in siloed operations (logistics and commercial services) and organizational setups in which responsibilities are distributed to optimize individual steps (mining, processing, rail, or shipping), rather than a comprehensive whole. Historically, comprehensive management of the latter has not been a priority for mining companies. ![]() To begin, it is critical to distinguish between supply chains, which manage inbound and outbound logistics and warehousing, and value chains, which are made up of integrated end-to-end processes. This article was a collaborative effort by Stephan Görner, Gregory Kudar, Lapo Mori, Sebastian Reiter, and Robert Samek, representing views from McKinsey’s Global Energy & Materials Practice.
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