Arnoud Balhuizen knows the mining industry inside out. He has been with BHP for almost 25 years in various key commercial roles based out of The Hague, Houston and Singapore. In his last role as Chief Commercial Officer he oversaw BHP’s procurement, logistics, supply-chain, sales, marketing, trading and economic & commodity analysis activities. Having spent 15 years working overseas he returned to the Netherlands in 2019. Since then, Arnoud continues to be involved with the mining industry through multiple advisor roles at Foundamental, BCG, Ackcio, and EarthAI.
When I started my first job at Billiton, the vast majority of business was transacted in North America and Europe – mostly using phones and faxes…
Since then, we have seen fundamental shifts in the market: most notably the rise of Asia-Pacific and a boom of commodities. A few numbers highlight this change: In 1995 China’s GDP was at roughly $730bn and the annual global steel production added up to 750mn tons. Today, China’s GDP is at $14tn and we produce approximately 1900mn tons of steel per year.
These macroeconomic changes came along with an enormous increase of professionalization, technological improvements, and digitization in the industry. Mining has become a much more modern industry compared to when I started my career.
There are plenty of challenges left to be solved – the risk of boredom is not a concern from my perspective.
It’s an undeniable fact that mining has a large impact on our planet. Today’s generation needs to make sure that we live up to this responsibility and operate mines in a way that doesn‘t harm the planet and the environment in an unsustainable way. At the same time, we cannot deny the importance of mining. It‘s part of everyone’s life, all day every day. Mined materials are in buildings, infrastructure, smartphones, clothes, cars and much more.
It certainly does not make our jobs easier but I remain optimistic that customers will eventually be able to objectively evaluate and appreciate global supply chains. Comparative cost advantages exist – even if we do not want them to.
We need to create a level playing field. There has to be a much higher level of transparency of the actual costs of doing business. Looking at the monetary side of costs this may sound like a no-brainer. When thinking about the environmental costs of doing business it’s becoming slightly more nuanced. Not only do we have to include the direct impact of mining on the local environment and community. We also have to take greenhouse gas emissions into consideration – scope one, two, and three.
Achieving this level of transparency poses an enormous challenge – not only within the mining industry but across industries. For entrepreneurs it’s a tremendous opportunity!
Now coming back to your original question: When holistically analyzing the costs of doing business, we may reconsider a few global supply chains. The point is: This decision would then be the result of rational thinking and not an emotional reaction.
Many big corporations are great in running their business smoothly and efficiently. The organizational setup and incentive schemes required to achieve that are, however, not well suited to breed innovation. I’ve seen firsthand – and continue to see – how difficult it is to run and innovate a business at the same time.
This dilemma is fertile ground for startups wanting to build new businesses and disrupt incumbents. However, for startups seizing this opportunity they will need to interact with said incumbents – be it for early testing in real-world environments, fundraising etc.
The main challenge is that the collaboration between startups and incumbents offers a variety of pitfalls and both worlds find it extremely hard to work with each other. Assisting to bring together these new entrepreneurs and the incumbent mining companies excites me.