COMPASS MAGAZINE #11
COMPASS MAGAZINE #11

NATURAL RESOURCES TAKING THE LID OFF : Technology enables transformation in the mining industry

The mining industry has some catching up to do, according to Rick Howes, CEO of Dundee Precious Metals. He says that compared to other industries, mining is decades behind in technology adoption. But he thinks mining companies can take control of their operations with a better set of tools and processes.

The days of simply increasing mine production to raise revenues are quickly drawing to a close, said Rick Howes, CEO of Canada-based Dundee Precious Metals. Howes believes mining’s credibility in delivering the business results stakeholders expect is suffering, and technology may be integral to the industry achieving future success.

With costs climbing and the industry hit by a downturn in cyclical metal prices, Howes said mining companies must focus on operational performance and project delivery through attention to detail. “We have to deliver the kind of value our stakeholders – from stockholders to employees to the communities in which we operate – expect,” he said. “Mining has an image and credibility problem that requires new and innovative thinking on how we manage the entire mining asset lifecycle.”

When the 33-year industry veteran became COO and Executive VP at Dundee, one of his first challenges was to revitalize the company’s Chelopech mine in Bulgaria. Under Howes’ direction, Dundee undertook a transformation, called “Taking the Lid Off” to operational performance excellence.

“We coined the phrase ‘Taking the Lid Off’ because an underground mine is a dark hole,” Howes explained. “No one really knows what’s happening in real time because you can’t see it. We need to be able to ‘visualize’ the mine all the time.”

OPERATIONAL EXCELLENCE WITH TECHNOLOGY

“My vision is for Dundee Precious Metals to be a leading company – an innovator,” Howes said. “The challenge, of course, is to be good at what we do.”

Howes recalled that he became interested in what technology could do to improve the industry’s performance when he was just a young engineer. “The industry hasn’t evolved as well as it could have, but I’m very optimistic that with the right companies working with mining in the future, we can significantly change the way this industry works,” he said.

Operational performance excellence relies on the innovative use of technology, Howes stressed. “’Taking the Lid Off’ involves trying to get real-time production management in an underground mine using the latest technologies available, including low-cost off-the-shelf Wi-Fi networks, inexpensive wireless RFID tagging for vehicle and personnel location tracking, and software systems for mapping, modeling, estimation, design, scheduling, simulation and mine production management reporting tools,” he explained. “That’s how to fundamentally change the way our operations are managed.”

Howes explained that small mistakes or miscalculations can have a big impact on project results. “A 20% overestimation of grades might result in a more than 20% drop in net return on investment,” he said. “These kinds of miscalculations are widespread in the industry. It has a lot to do with the level of experience and the tools being used to evaluate and put together our mining projects. We need a much better set of tools and processes.”

However, the necessary technology pieces are not all completely developed, Howes said. “It takes strong partnerships with technology providers to develop software and get the pieces integrated to deliver results,” he explained.

CALCULATED RISKS

At Dundee’s Chelopech mine, the company set out to double production and reduce costs by 44%. With the technology the company has adopted, Howes said, it is able to continually visualize the mine in 3D.

“’Taking the Lid Off’ is all about planning and executing that plan, and being able to track our progress in real time,” he explained. “By monitoring and intervening where we need to in order to course-correct from a production point of view, we can eliminate a lot of waste seen in today’s underground mine projects.

“When you have a vision and you bring the right technology partners in, you can change the way the business functions.”

Rick Howes CEO of Dundee Precious Metals

“We’ve achieved the performance targets we set when we took ownership of the mine back in 2003,” Howes said. “We’ve quadrupled production from about 500,000 tons a year to nearly 2 million. We’re still working on the final stages of our implementation, but the key measure of success is that we didn’t add any new mobile mining equipment to go from 1 million to 2 million – it was purely a result of operational improvements.”

COLLABORATIVE SPIRIT

Chelopech is one example of a very aggressive mining project that has been successful. “When you have a vision and you bring the right technology partners in, you can change the way the business functions,” Howes said. “It’s not easy, but the potential is here now with the technological advances such as those used in other industries.”

Technology tools will not only educate stakeholders on how mining projects are responsibly developed and operated, Howes said. They also provide management with a high degree of confidence that mine designs will successfully achieve the results desired before huge investments are made.

Howes said he believes the mining industry must innovate, become creative and transform its approach. He advised companies to be willing to partner with technology vendors and take some risks on ideas that haven’t been tested or implemented before. No company has all the pieces,” he stressed. “A collaborative spirit was the key to our success at Chelopech.”

by Lisa Rivard Back to top