Mining needs new business models. Issue 2 (April 2020) - Dunbar, W. Scott
Highlights: A growing population and a desire for decarbonisation is driving mineral demand. At the same time, mining is confronted with technical and social challenges. Current business models are not suited to this social and technical complexity. New business models are needed to deliver value to mining and society. Local procurement is a strategy to anchor new business models. Abstract: we argue that the prevailing business model within the mining sector is no longer fit-for-purpose. Despite the myriad of technical challenges facing the sector, the ability to meet social expectations has emerged as the sector's leading risk to future business. This change in operating context will demand a new business model that supports the effective management of both high social and technical complexity through creating, capturing and delivering value to a broad range of stakeholders including local communities, rights-holders, shareholders and host governments. The prevailing business model of the mining sector is described and its deficiencies for this new operating context are identified. An alternative business model is proposed which would reframe the industry's value proposition, using local procurement to illustrate how mining companies can leverage past successful business strategies to drive additional value.