If the global resources industry believed it might scrape through untouched by the current covid-19 pandemic, that is no longer the case. Fully 100% of the industry have taken measures to protect themselves from the pandemic, as its impact begins to be felt, from operators, to suppliers, researchers, investors and government.
What is remarkable is the speed with which sentiment changes and the virus’ ramifications for the rest of the industry. The crisis is real; it is having a tangible and growing impact on the industry with 50% of the industry reporting a strong effect on their business, compared to just 15% the week before. Sadly, the number of respondents reporting being out of business has also increased to 4%, up from 1% last week.
The level of concern is also growing rapidly; 80% report an increase in concern over the last week. The rapid change in expectations raises a couple of questions. How long can this continue before peoples’ expectations adapt to the rate of change? When we get through the worst of this crisis, how does the industry move to quickly pick up excess slack in production or demand? While the answers to these questions are uncertain, many of the policies adopted by the industry may be both valuable and sustainable in the longer term and may herald a shift in the ways businesses operate.
On the State of Play covid-19 research
Given the unprecedented situation, we at State of Play are looking to use our resources in partnership with the Australian Federal Government through METS Ignited and National Energy Resources Australia (NERA) to help the global resources industry understand how different businesses are responding by providing a useful source of data and support collaboration in response to the crisis. We aim to do this by providing headline, geographical, site-based data to help decision-makers take the pulse of the industry response.
We are conducting research on a week-to-week basis to measure the shifts in attitude and ensure currency of recent data. We will also use this data to conduct further research on how to best prepare and respond for future crises of this nature. We are happy to share the data with researchers and analysts; just send us an email request and we will provide a cleansed dataset.
In its simplest form, the data reinforces the anecdotal evidence of how the industry is responding. In every continent, every industry, every place of work, covid-19 is a big driver of disruption and change. Companies are responding with a range of measures, from travel restrictions, screening, remote work, new policies and risk management and closure of sites. The full data pack is available for download at the top of this article. Some of the most interesting insights come not from the headline data but in the breakdown of different demographics in their evaluation of the crisis and response
Business and operating models
Unsurprisingly, the data demonstrates that the impact of covid-19 is mostly felt in an overall loss of revenue (73%). Cashflow is the primary concern for many businesses, especially services businesses and suppliers.
However, the impact to business models is also telling. As tangible restrictions on travel, movement and interactions are enforced, existing business and operating models are under strain. Whether this will encourage longer term shifts in services models even as cashflow concerns abate will be a crucial element of the post-pandemic services landscape.
To a great extent, the increased level of disruption in week 2 of our survey is driven by the increased structural measures taken by the resources industry in response to the crisis. Our data shows that structural long-term shifts have been increasingly adopted, such as travel restrictions (90%), full remote work (63%) and cancelling external meetings (73%). A week ago, may work sites were looking at partial remote work, which has now fallen from 43% to 20%, as businesses increasingly shift to total remote work where possible. The relative reduction of initial response mechanisms such as crisis team mobilisation (36% to 23%) and communication of site policy (63% to 53%) demonstrates the pace with which businesses are responding with more structural rather than procedural actions in response to the crisis.
In following the impact to business models highlighted above, we should not be surprised to note that virtual service models are ranked as the most likely structural shift after the dust settles on the covid-19 pandemic. Already a shift enabled by the increasing sophistication of digital technology, the current crisis is likely to catalyse innovation in this area.
As this pandemic continues to evolve and businesses respond to the dynamic environment, we at State of Play want to provide as much valuable data back to the industry as possible to help guide the response. We are now launching our Week 3 survey, with some different questions and some that remain constant to track change over time. Even if you completed the survey previously, please complete it again here and share. Thank you and stay safe!
The State of Play Team