Mining for Value

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The supercycle that gripped the mining industry during the early years of the twenty-first century was unparalleled in its speed, length and intensity. When boom finally turned to bust, many companies were psychologically unprepared and financially overexposed.

Mining for Value examines what went wrong. It offers key insights from senior figures who experienced the cycle at first hand, and supports the next generation of leaders as they seek to build a more robust, diverse and sustainable industry for the future.

The twelve leadership lessons provide valuable and constructive insights into a difficult time for the industry and what needs to be avoided, changed and strengthened when managing a mining company into the future.

Mining Mining for Value is a joint initiative of Spencer Stuart and Cesco.

Lessons learned from the mining supercycle

Twelve Leadership Lessons

LESSON ONE

Don't forget: cycles don't last forever

Booms always turn to bust

“The industry forgot it was a cyclical business. It forgot that productivity and costs are important and the main factors behind competitiveness.”
- Iván Arriagada, Chief Executive, Antofagasta

LESSON TWO

Ensure rigorous, long-term decision-making

Short-term gains can cause long-term pains

“The key is to think strategically over the long-term and to focus on high-quality assets in commodities with sound long-term fundamentals.”
- Arnaud Soirat, CEO Copper & Diamonds, Rio Tinto

LESSON THREE

Never lose sight of core balance sheet discipline

And ensure competitive shareholder returns

“In the base metals business you don’t have a great benefit by being diverse in commodities because the forces that drive the demand picture for them are so highly correlated.”
- Richard Adkerson, Chief Executive, Freeport-McMoRan

LESSON FOUR

Boards must be balanced, experienced and focused

Know a thing or two

“People like to do these grandiose things. It comes down not to the discipline of your technical people but the egos of your CEOs, the egos of your board.”
- Kenneth Pickering, independent mining consultant and company director

LESSON FIVE

Don’t get distracted: focus on operational excellence

Treat mining as a continuous production rather than batch process

“You can’t avoid the price volatility: the fundamental principle of mining is to have a low-cost mine life.”
- Jerry Jiao, MMG

LESSON SIX

Don’t delay innovation and technical change

Keep ahead of the game

“There needs to be a step-change in the use of technology to improve performance.”
- Daniel Malchuk, president Minerals Americas, BHP

LESSON SEVEN

Beware of growth at any cost

Bigger is not always better

“Culturally, we like to build, do things, and invest. There’s a culture of the bigger the better to capture economies of scale.”
- Diego Hernández, President, Sonami

LESSON EIGHT

Less haste, more speed

Know your orebody

"The greatest probability of error – an almost irreparable error – is the difficulty of adequately representing all the geological alterations contained in an orebody.”
- Nelson Pizarro, Chief Executive, Codelco

LESSON NINE

Build in-house expertise

Don’t lose control of projects

“Companies should be the way they used to be and spend a bit of money on R&D and have a few engineers that know and follow developments.”
- Douglas Upton, investment analyst, Capital Group

LESSON TEN

Hire fewer but better people

Use contractors to provide flexibility

“Diversity means drawing from the widest available talent pool of both men and women, across nationalities and cultures, and fully leveraging their complementary skills and attributes once they are in the organisation.”
- Mark Cutifani, Chief Executive, Anglo American

LESSON ELEVEN

Make company worth working for in good times and bad

Build pride in your company

“The common purpose of improving safety made sense to everyone and on this basis we created a more holistic, more altruistic purpose that finally united the capacities, effort and interest of all.”
- Jorge Gómez, Chief Executive, Collahuasi

LESSON TWELVE

Embed sustainability values in the business model

And engage openly and effectively with stakeholders

“We cannot survive without sustainability front of mind; it’s a key focus in all our thinking and a major part of Anglo American’s DNA.”
- Hennie Faul, CEO Copper, Anglo American

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