Navigating the Complexity of Mining Supply Chains

Why supply chains matter to Australian mining 

Ask anyone who has run a maintenance department on a remote site what keeps them up at night, and you’ll rarely hear “ore grade”. You’ll hear about the part that didn’t turn up. 

The industry is huge. The Office of the Chief Economist puts resource and energy exports at around $405 billion for 2025–26, with $416 billion forecast for 2026–27 (DISR, REQ June 2026). Almost every dollar of that relies on moving parts, fuel, people and product across enormous distances. A haul truck in the Pilbara or a dragline in the Bowen Basin can easily be a thousand kilometres from the nearest capital-city warehouse. When something critical breaks, the clock starts, and the quickest fix is usually a hotshot that costs a small fortune. 

At the same time, finance teams want working capital back, site storerooms have grown over years of “just in case” buying, and head offices are keen to standardise how everyone buys. These pressures rarely show up as one tidy problem. They show up as four issues pulling against each other: centralisation, inventory reduction, speed to site and cutting back on hotshots. Orchestrate operational performance beyond today’s limits. In this piece I explore how those four issues connect, and at the global pressures sitting behind them. Two supply chains, one operation.

Every mine really runs two supply chains. There’s the outbound one: pit to plant, onto rail or road, through Port Hedland or Dalrymple Bay and away to a customer overseas. For iron ore and coal in particular, that chain has been engineered and re-engineered for decades. 

Then there’s the inbound one, which gets far less attention in annual reports. This is the flow of maintenance, repair and operating (MRO) supplies into site: bearings, hoses, filters, ground-engaging tools, tyres, rebuilt components, explosives and thousands of other lines. Much of it comes from overseas OEMs with long and unpredictable lead times. It typically lands in a hub in Perth or Brisbane, moves to a regional depot in somewhere like Karratha, Kalgoorlie or Mackay, and finally makes its way to the site store. 

Australian conditions make that last part harder than it sounds. Road legs are long. Up north, the cyclone and wet seasons can shut roads, rail lines and ports for days at a time. Mine-spec vehicle rules, inductions and gate procedures add time to every drop. And with FIFO rosters and a tight labour market, there often aren’t enough store persons, planners or drivers to go around. 

Missing parts are a bigger driver of downtime than many people assume. One commonly cited figure is that they account for close to a quarter of unplanned downtime in asset-intensive operations. Put that problem a day’s drive from the nearest warehouse and it gets expensive quickly. 

Centralisation 

Over the last decade most of the larger Australian miners have pulled purchasing away from individual sites and into central procurement and shared-services teams, usually in Perth or Brisbane. The warehousing model has followed the same path: a central distribution centre feeding regional depots, which in turn feed leaner site stores. 

The case for it is easy to make. Pool spend across sites and you can cut the number of suppliers selling you the same item, and negotiate harder with the ones you keep. One catalogue and one set of part descriptions means fewer duplicates. You can see that the spare you’re about to buy for one site is already sitting on a shelf at another. Freight gets cheaper, and safer, when it moves in planned, consolidated loads rather than a stream of one-off trips. 

The catch is that head office and site don’t always see the world the same way.  We see this repeatedly in mining supply chains as the pull between central standards, which give you leverage, and local teams, who need room to deal with what’s actually happening on the ground. Pull too much stock back to Perth and a site 1,200 km away ends up waiting a day for a part it used to keep on the shelf. That’s how plenty of centralisation programmes end up quietly pushing hotshot costs up. 

The operators who get this right tend to centralise the decisions, the data and the slow-moving or expensive stock, while leaving truly critical, fast-needed spares close to the equipment. Just as importantly, they write down which items belong where, so nobody has to argue about it at 2 am. 

Inventory reduction 

Walk through almost any mine storeroom and you’ll find the same contradiction: shelves full of things nobody has touched in years, and a haul truck parked up waiting for one part that isn’t there. 

The numbers back this up. Industry estimates suggest somewhere between 20 and 40 per cent of typical MRO inventory is excess or obsolete and some go further, reckoning 30 to 50 per cent of parts haven’t moved in two years. On Australian sites the usual suspects are familiar: spares for fleets that were retired years ago, the same item stocked under three different part numbers, panic buys from the COVID shortages, and extra stock laid in to ride out the wet season that never got drawn back down. 

Where programmes go wrong is treating age as the only test. A spare gearbox, slew ring or set of mill liners is supposed to sit there untouched. It’s insurance. Sell it off to hit a working-capital target and you’ve just swapped a nice number on the balance sheet for weeks of lost production down the track. 

The better approach starts by sorting stock by how critical it is and how long it takes to replace, not just by how often it moves. A cheap part with a 20-week lead time from overseas, fitted to a bottleneck asset, is a very different animal from a fast-moving consumable. The easy money is usually in duplicates and parts for equipment that’s gone, and clearing those carries little risk. From there, it often makes sense to hold one shared critical spare at a regional hub instead of one per site, and to push some stock back onto suppliers through vendor-managed inventory or consignment arrangements. 

None of it sticks without fixing the data. If the item master stays messy and people keep stocking to recent demand, the excess creeps straight back. It’s also worth remembering that inventory and hotshots are linked. Cut the wrong stock and your expediting bill goes up. Get the right stock in the right place and both come down together. 

Speed to site 

If you’re going to centralise stock and hold less of it, the path from shelf to site has to be quick and, above all, reliable. Otherwise you’ve just moved the problem. 

It’s worth remembering that the truck is only one part of the journey. A part’s trip to site usually starts with a requisition that sits waiting for approval, or a work order that was raised too late. Then comes sourcing, where an offshore OEM backorder can add weeks. The hub has to receipt, check, pick and pack it. There’s the line haul, often on fixed departure days, from Perth up to the Pilbara or Brisbane out to the Bowen Basin. Finally there’s the last mile: inductions, the gate, the laydown yard and getting it booked into the site store. In the north, the wet season can throw all of that out for days at a time. 

The quickest networks chip away at every one of those steps. They link the maintenance schedule to the supply plan, so parts for shutdowns and planned component change-outs are ordered and kitted weeks out. Parts arrive as a kit for each job rather than as a pile of loose items for someone to sort through. Scheduled, consolidated runs from hub to depot to site, with firm cut-off times, give planners something they can actually plan around. Before the wet season, stock is deliberately built up at northern sites. That’s a short-term departure from lean principles, and a sensible one. And both maintenance and supply can see where a part is at any point, from the supplier’s dock to the site store, so nobody is ringing around trying to find it. 

Predictability matters more than raw speed. A part that turns up in 48 hours every time lets you run a much leaner network than one that arrives in 24 hours on a good day and takes a week on a bad one. 

Cutting back on hotshots 

Anyone who has worked in WA or Queensland mining knows the hotshot: a dedicated vehicle, often driving through the night, getting one urgent part to site. A whole industry of 24/7, mine-spec operators across the Pilbara, Goldfields and Bowen Basin exists to do exactly that. When a critical machine is down, they’re worth every cent. 

The problem is how often they’re used when the machine isn’t down. Urgent hotshot freight can cost up to three times the standard rate, according to one Australian freight marketplace (Best Rated Transport), and buying a part in an emergency typically costs three to five times what a planned purchase would, before you’ve paid to expedite it. There’s a safety cost too. Long, urgent drives on remote highways carry real risk. 

When operators actually dig into their hotshot data, the causes are rarely surprising. A critical spare was never flagged as critical, or got cut in the last inventory clean-out. A requisition for planned work was raised too late. The part was in the network, but bad master data meant nobody could find it. A supplier shipped late, short or wrong. Someone missed the cut-off for the scheduled run. And sometimes, if we’re honest, a hotshot gets booked simply because it’s the quickest way to close the request. 

That’s good news, because most of those causes can be fixed. Start by tagging every expedited movement with a reason, a cost, who asked for it and which asset it was for, and look at the list every week. Make booking one a deliberate decision that needs a genuine operational reason, such as equipment down or about to be. When the same part keeps getting hotshotted, treat it as a sign it should be stocked closer to site. Hold planned work to proper lead times so it rides the scheduled freight. And put on-time, in-full performance and the cost of expediting into supplier scorecards and contracts. 

Hotshot spend ends up being one of the most honest indicators of how the whole system is working. If it’s falling while equipment availability holds steady, you’ve probably got the balance about right. 

Putting it together 

The mistake I see most often is treating these four issues as separate projects, each with its own owner and its own targets. Procurement centralises, finance drives inventory down, logistics is told to cut freight costs, and the sites end up paying for it in hotshots. They really need to be managed as one system. 

If I had to boil it down to a few measures worth watching together, it would look something like this: