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McKinsey: embrace the value chain and boost EBITDA by 10-15%

Companies that manage their value chain well can establish a significant source of competitive advantage and value creation

|Oct 12|magazine4 min read

Understanding the mining value chain as a single integrated process and embracing mine-to-market optimisation can generate a 10 to 15 percent increase in EBITDA, according to a McKinsey report entitled The mine to market value chain: a hidden gem

While fragmented responsibilities often cause companies to lose sight of the big picture, the report notes companies that manage their value chain well can establish a significant source of competitive advantage and value creation.

It acknowledges the industry faces pressure on all sides, be it shifts in commodity markets, the COVID-19 pandemic, environmental concerns or regulatory policies. But those that "dissolve silos" and focus on organisational enablement and data/tech architecture will see commercial benefits. 

Companies should boost transparency along the value chain by building a 'value-driver tree' encompassing operations, logistics and sales. Simulation and optimisation are most effective when applied together, which can ensure individually optimized operations with KPIs. Amid uncertain times, an integrated mine-to-market perspective can help create further resilience and maximise shipped throughput in the face of disruption. 

"As digital technologies help remove the barriers to entry and tip the scales of competitive advantage, mining executives will need to ensure their organizations rely on a sustainable business model by proactively envisioning and shaping that model’s role in an integrated end-to-end ecosystem," the report concludes.

"The journey toward an integrated end-to-end mining value chain is complex, but it is also an essential shift to unlocking an untapped source of value. Mining companies must develop a comprehensive mine-to-market perspective to survive down cycles in the short term and strengthen and expand market position in the longer term."

McKinsey report
Mining Global magazine