Why do exploration and mining companies often fail to deliver?
Mining and exploration companies often fail to succeed because of the personnel employed. Find out why, and how, here.
It will come as no great surprise to you that our answer is, of course, to do with people. Specifically, I’m talking about those chosen to run an operation or, indeed, a whole company.
This is not to blame those people appointed into positions of responsibility.
Exploration, mining and mineral processing are incredibly complex things to do well and not solely because the technologies are difficult to master. They can be difficult, but the bigger issue is that the technologies are being applied to the pursuit of counteracting the vagaries of Mother Nature.
The people tasked with delivering should be chosen because they have demonstrated personal attributes and experience that can be applied directly to mitigating the specific challenges that exist. All too often, that does not happen.
Let’s take a look at some examples where failure could have been avoided.
Brownfields versus greenfields exploration experience
Consider the geologist who has only ever drilled holes into a brownfields environment, using money generated from a nearby operating mine. This person would experience entirely different pressure points to using money raised from the public markets in pursuit of a major greenfields discovery, where a completely different suite of technical skills is required.
In addition, the latter challenge requires a keen sense of equity markets and how to sell the story and take your shareholders on a journey of shared risk, but with integrity.
Mining technically challenging ore bodies
A mining engineer who has spent their career managing a team of people (and scheduling tens or even hundreds of millions of tonnes of material movements) is likely to struggle to unlock the riches of smaller scale, but much higher grade orebodies. Orebodies that duck and dive and twist and turn, seemingly determined to keep you guessing, can drive you crazy. Mining them effectively requires a different kind of experience.
A completely different kind of alchemy
A metallurgist who has only ever been tasked with liberating metals from rocks, employing mainly crushing, grinding and floating, will find it an entirely different proposition when faced with the need to apply complex pyrotechnics and chemistry.
Company size makes a huge difference
A blue-chip miner is not the same as a $2.5 million newly listed explorer. One can be akin to a factory, the other an R&D start-up.
The ore body rules
Ore bodies are all different, including — but not limited to — their:
- Depth
- Width
- Length
- Chemistry
It’s also about location, location, location
Two mines with an identical set of simple technical challenges can require an entirely different set of skills, depending on where it is located.
For example, take a shallow open pit mine producing 250,000 ounces per annum of gold from simple CIP processing. How you treat such a mine in the goldfields of Western Australia would be completely different compared to one located on a mountain in a South East Asian rainforest. For starters, they would have entirely different suites of meteorological, logistical and cultural challenges.
Mining company maturity matters
A mature company with stable positive cash flow requires an entirely different champion to one that is drilling out a massive global-scale ore body but has only $2 million left in the bank.
But surely this is obvious?
It is, at least when we’re looking at someone else’s business as an outside observer. We can all see where the wrong people were appointed to key roles. This is particularly so in industries like resources, where the investments required are vast, the number of people involved is relatively low, and the failures are usually very public.
Where it gets harder is in our own businesses
Most of us seem to think we have a broader range of skills than we actually do. We also think we can manage a broader range of challenges than we’re actually capable of handling.
I admit to, at times, having fallen into this trap myself in the business I co-founded, Mining People International.
We often find it hard to admit that we’re out of our depth and we will not ask for help. This is particularly so in the world of resources, where getting your career going and then becoming even moderately successful requires a strong personality with an above-average level of personal drive. Recognising and accepting your own limitations does not always come naturally to people with these attributes.
Obviously at Mining People we have a vested interest in promoting our executive search service. However, time and time again we see the wrong people ending up in the wrong job, in the wrong company, at the wrong time.
Rather than holding on to too much when you’re out of your depth, or appointing someone you know because it is comfortable, in almost all cases searching further afield will do one of two things:
- Achieve a better appointment or,
- See you persist with the status quo, but with a clearer idea of the alternatives if things don’t improve.
In any event, recognising that having people and businesses that fit each other well saves and makes money, reduces stress and vastly increases the chances of success for everyone involved.
While we’re on the topic of money
This column is rarely about money but if you missed last month’s article, Why you shouldn’t compete for mining talent solely on salary, it is worth a read.
We understand all of these considerations, as well as the technical issues. The result is we spend more time assessing all parties for cultural and personal fit. Get this right and executive and board relationships succeed handsomely.
If this approach is of interest to you, please contact us to discuss our targeted executive search service.