TOKYO -- When female miners drive trucks, they are gentler on the gears, leading to lower maintenance costs and longer machine life. This one example illustrates how, for resources companies trying to lift productivity on volatile profit margins, diversity is emerging as an unexpected watchword.
Multinational BHP, the world's biggest miner, now demands that over 30% of job applicants from its contractors be women. And since May last year, the company has been working with suppliers like Komatsu -- the Japanese equipment maker providing BHP with haul trucks and shovel systems -- to adjust steering wheels, cabin insulation and other features to better accommodate female workers.
After a nearly five-year slump, a rebound in commodity prices is giving global miners room to spend. But protecting their recovering bottom lines requires increasingly wide-ranging methods.
"When you talk to mining companies increasingly these days, it's the small wins," said Jade Little, resource industry analyst at UBS. "They've got the big-ticket items, in terms of productivity improvements. Minutes, seconds, it all adds up."
BHP startled the industry in 2016 when it announced a 50-50 gender parity goal for its workforce by 2025. It has moved quickly, using its $14 billion clout in global supply contracts to lift female hiring.
"Our diversified teams outperform our company average by 15%, our injury rate is about half, we're more likely to meet production forecasts and maintenance schedules," Sundeep Singh, BHP's vice president of supply in Australia, told the Nikkei Asian Review. "And people actually enjoy working there more."
Other major mining houses -- including multinational Rio Tinto, Switzerland-based Glencore and Anglo-American -- are falling into line, driven by expectations of an emerging labor shortage and signs of higher productivity from diverse teams.
The industry has come far over the last five years. As commodity prices plunged in 2014, global miners came under fire for ill-advised trophy asset acquisitions and bloated corporate structures, including rich salaries and overemployment.
BHP and Rio Tinto, the two biggest players, went through more than $20 billion of combined cost-cutting to ride the cycle's recovery to multibillion-dollar profits last year. Glencore, the third-largest miner, was drowning in nearly $30 billion of debt in 2015, but has since slashed that figure by nearly two-thirds.
Equipment suppliers see the demands of their mining customers as a new norm. "Rather than buying new equipment, they want to sweat that asset, get more out of it" for their whole workforce, said David Farrar, Komatsu Mining's global account director. Modifying to accommodate female workers "may have started with BHP -- but if it's a good idea, we'll embed it into the machine. We'll adopt it as standard."
The idea requires investment from suppliers, too, sharing the cost burden. With more spending on consultants on the ground, in addition to redesigns and modifications, Komatsu's "continuous improvement" budget and "its relationship to diversity is the highest it's probably ever been," said Farrar.
Labor, which accounts for 32% of operating costs in global mining, rose by 5% industrywide last year -- well above inflation -- even as employee numbers declined.
Studies have begun to draw comparisons between productivity and gender-equal teams. A recent analysis by consulting firm McKinsey showed that the companies most diverse at the executive level were 20% more likely to financially outperform the average than the least diverse. Elsewhere, a five-year MSCI study to 2016 linked greater female board representation to growth in return on equity of 10% and earnings per share of 37%, versus contractions for boards with no women.
But how to get there is still a difficult question for companies. Quotas remain a controversial measure, while many boardroom-level initiatives fail to reach industry front lines. Intervening at the supply chain is a new way of making up time.
"The industry is its own worst enemy, in that when times are tough, they do underinvest" in their future crop of employees, said Glyn Lawcock, UBS senior resources analyst. "You've got to think counter-cyclically, and sometimes it's hard."
BHP had a 20.5% share of female workers last year, just shy of the annual increase required to reach 50% in seven years' time. As diversified global miners recover, their shareholders are demanding value after years of watching sinking profits and plunging stocks. Returns to shareholders were up 125% last year, and investment in automation has been the main expense in pursuit of future labor cost payoffs. For miners, pulling all levers appears to be a test of their resourcefulness.
