Keeping Things Moving: Supply Chain Risks in the Mining Sector

mining equipment maintenance shop

A resilient supply chain is of paramount importance to ensure the reliability of operations and the continuous delivery of business objectives.

Catastrophes such as the Thailand floods back in 2011 threw into the spotlight the issue of supply chain risk after computer makers declared that the floods had set back the supply of components and car plants were forced to suspend the production of some models due to supply shortages.

A year later, global supply chains were hugely disrupted by Hurricane Sandy in the U.S. Yet the fact remains that very few sectors have taken on board the lessons learned from these disasters.

“Logistical Pinch Points”

One such flaw in addressing supply chain risk in the mining sector amongst others is that global sourcing remains key to the procurement strategy meaning that local supply chains are often overlooked.

This gives rise to logistical pinch points such as ports and rail routes which, if hit by natural catastrophes, geo-political turmoil or industrial disputes, can cause the flow of supplies to come to an abrupt halt.

Supply Chain Risks Relevant to Mining

Supply chain management is critical for the provision of services, parts and chemicals involved in a mining operation.

Willis’ latest Mining Risk Review, published today, identified some common causes of supply chain risks in the mining sector, which include:

  • The remoteness of the mine can lead to a long supply chain which in turn increases the likelihood of parts and supplies being lost or delayed in transit. As deposits become harder to find and operations move to more remote areas, it is likely that this risk will become commonplace.
  • The loss of a supplier for critical items upon which the mining venture heavily depends on, for example, leaders in technology who are exposed to the failure of bespoke systems.
  • The failure to hold high value, rarely used spares affects availability when the parts are needed.
  • Socio-political pressure to ‘buy local’.
  • The breakdown of economic, community, sovereign and natural infrastructures such as greater volatility in emerging markets, climate change and political instability will, in many cases, affect mining ventures.

About Andrew Wheeler

Andrew Wheeler is Willis' Mining Practice Leader, based in our London office. He has been with Willis since 2001.…
Categories: Mining

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