“For resource companies, navigating a future with more uncertainty and fewer sources of growth will require a focus on agility. Harnessing digital and other technologies will be essential for unlocking productivity gains.” – McKinsey Global Institute, February 2017, Beyond the Supercycle: How Technology is Reshaping Resources
Years of boom-and-bust cycles and low margins have taken a steady toll on the fortunes of mining companies. As the deposits that remain to be mined continue to decline in quality and activity moves to increasingly remote locations, the industry is searching for new answers.
In line with the advice from McKinsey Global Institute, many players are turning to technology for relief.
“Digital technologies are starting to have a critical impact in the mining industry today,” said Karin Jirstrand, product manager of Interoperability for Mining Technology at Atlas Copco, a global manufacturer of equipment, consumables and services for drilling and rock excavation for the mining industry headquartered in Sweden. “Knowing exactly what your machines are doing, where they are and if they are working correctly is becoming essential. Embarking on a digital journey can make any company more productive.”
Sabrin Chowdhury is a Singapore-based commodities analyst at BMI Research, which provides macroeconomic, industry and financial market analysis. Digital technologies, she said, will increasingly be a key enabler to success in the mining industry.
“The benefits of applying technology to mining operations are clear: increased efficiency lowers costs, improves safety records, and lessens waste and environmental impact,” she said.
Digital technologies have the potential to improve both mining operational management and safety and environmental governance, Chowdhury said. Technology can enhance how companies look after their workers’ safety and lower risk, while the combination of digital sensors on mining equipment with Internet of Things (IoT) platforms and analytics give mining firms the chance to boost their operational efficiency. “These enable better prediction of when equipment will break down, helping to decrease the downtime of operations and increase productivity,” she said.
Enhanced process control, asset monitoring and safety and security for miners in harsh operating environments are other potential benefits, she said. Communications among site, surface and underground mining operations also can be improved through digitalization, thereby streamlining and improving operational efficiency. Apparatus innovations, which help improve operational efficiency and lower production costs by increasing fleet utilization, also offer benefits, she said.
As in other industries, sensors can be fitted to mining equipment, drones or workers, making it possible to gather data across the entire production process. 3D visualization technologies also can be harnessed; by visualizing unmined ore deposits as 3D models for example, mine operators can improve their extraction plans, making deposits faster and easier to mine.
MAKING THE DIGITAL LEAP
The digitalization of mining presents the biggest value-generating opportunity available to most mine operators, according to Gavin Yeates, principal of Gavin Yeates Consulting, which advises mining companies on digital mining. Yeates also is director of CRC ORE, which explores new technology in industry.
“Part of the reason the value can be so high is we’re coming off a low base,” Yeates said. “Many of the operational improvements we’ve seen in other industries, we haven’t yet applied in mining. The opportunity is to connect the value chain from modeling the ore body in the ground, through the production process, all the way to the product at the end.”
Some mining companies have begun to translate potential into active benefits. Gold Fields Limited, a gold mining company with operations in Australia, Ghana, Peru and South Africa, for example, is already using remote rock-breaking and loading, drones, 3D visualization and big data collected via underground telemetry, CEO Nicholas J. Holland said in an address at a Future Mining conference in March 2017. Partnerships with IT firms and original equipment manufacturers will be critical to future mining success, he said.
Gold Fields Limited is among a growing number of mining companies that are incorporating digital technologies into wider innovation programs, Chowdhury said. These companies are investing heavily with the aim of enhancing their operations.
“In 2016, top copper miner Codelco increased its innovation budget by 25% year-on-year to US$75 million (€63 million), and in December 2016 created the Codelco Tech unit to drive its innovative efforts,” she said. “In September 2016, Barrick Gold partnered with Cisco to develop a flagship digital operation at the Cortez mine in Nevada, which will inform the eventual global rollout. Industry leader Rio Tinto rolled out the Processing Excellence Centre (PEC) in Brisbane, Australia, and autonomous fleet utilization in 2015.”
The PEC is a state-of-the-art facility that enhances monitoring and operational performance by examining real-time processing data from seven Rio Tinto operations around the globe.
BHP Billiton, a multinational mining, metals and petroleum powerhouse, also is leveraging digitalization to improve mining efficiency. Alan Bye, BHP Billiton vice president, Technology, speaking at a recent industry conference in Melbourne, Australia, cited an environment of distributed innovation, plus the democratization of information and data, as two driving forces of change.
“It’s important to remember that innovation requires big and small ideas,” Bye said. “Moon-shot innovation takes longer, but by engaging with our people and finding small gaps in our process, we’ve been able to deliver huge value over a short period of time. We are quickly becoming a more digital, integrated and connected business. And we’re looking at ways of improving the way we mine from every angle.”
UNLOCKING THE VALUE CHAIN
To fully exploit the potential of digitalization, companies also need to train their miners to make best use of new technologies.
Julien Duquennoy, an associate professor in computer science at French engineering school UniLaSalle, is doing just that at the GéoLab, a digital innovation laboratory in the Spanish Southern Central Pyrenees Zone. His students learn to use 3D modeling of geological layers to examine structures such as faults and sedimentary bodies. The aim is to determine the validity of assumptions about conditions underground, before mining begins.
“We have to find out if automated modeling will work well on a geological area with complex geometries,” Duquennoy said. “The technological difficulty we face is to find the right balance between manual and automated work so that we can obtain a scientifically satisfactory result via the simplest method possible.”
Throughout the industry, however, change won’t come easily. A survey of more than 800 global mining leaders, carried out by digital transformation consulting firm VCI, identified several blocks to implementing innovative mining technologies in the next 15 years. These included resistance to change and difficulty finding suitably skilled employees, with another 20% of respondents citing industry culture as a major impediment to innovation.
George Hemingway, Growth Strategy & Innovation executive at strategy and innovation consultancy The Stratalis Group, believes much of this resistance is rooted in the way that financial markets work against the industry’s need for innovation and technology investment.
“Years ago, I used to say that the biggest challenge to innovation in mining was a disconnect between the incentives that mine managers and executives at the middle level in companies had, and the time horizon and risk appetite required by innovation,” Hemingway said. “However, I have found over time that the challenge now sits not with them but at the very top of the pyramid, with the CEOs and COOs. The reason is that they are slaves to the market, which requires them to return results on a quarterly or yearly basis. They’re no longer willing to invest for the long term in innovation because the market is not rewarding them for it.”
TAKING AN OPPORTUNITY
With so many challenges to face, there is no secret recipe for success in this space. Still, Atlas Copco’s Jirstrand believes companies that move toward digitalization ultimatel
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