Mining is entering a new financial dark age.
Slowing Chinese demand coupled with an enormous oversupply in the market has reversed the surge of the boom, sending mining into downward spiral it is yet to stop.
All of the world’s largest miners have declared massive losses and cut costs, many have had to shutter operations or sell underperforming assets, and others have cut hundreds of workers.
BHP, Rio Tinto, Anglo American, Vale, and Glencore have all suffered, and many pundits in the market are forecasting the industry to continue to be pressured until late this year.
Data from Bloomberg Intelligence showed capex by the top 10 miners fell dramatically year on year, from US$82.5 billion in 2014 down to US$65.5 billion the following year, with forecasts that it will decline by 25 per cent this year to US$49.23 billion, and another 12 per cent next year to US$44.1 billion.
So what can miners do to keep their operations afloat and in shape, preparing themselves for the eventual revival of mining?
Innovative, smarter technology, automated processes, and an eye to increase efficiencies are what miners are turning to in these turbulent times to weather the storm.
This new technology is helping shift focus from the old, siloed way of doing business and disconnected pit to port chains into one where the entire business is working in concert; asset performance management is key.
As Schneider Electric's head of mining and metals, Diego Areces, has previously told Australian Mining, "it used to be about being the biggest, pushing out the most tonnes", but the position has evolved along with technology.
"The focus is no longer on being the biggest; it's on being the best, the most efficient."
According to the McKinsey report How Digital Innovation Can Improve Mining Productivity, and its author Ryan Geragthy, a number of digital technologies that have been developed over the last few years are now available and affordable enough to operate across the mining industry.
“The industry has shifted its focus to improving productivity by “sweating” existing assets, but this strategy will only go so far. Despite the industry’s booms and busts, the nature of mining has stayed the same for decades,” Geragthy said.
Mining is undergoing a productivity revolution, and using innovation to address cost issues.
According to new BMI Research, “miners will increasingly focus capital expenditure on innovation through the use of technology and automation to improve efficiency and increase output at existing mining operations.”
“Firms’ competitiveness will increase as technology is utilised to improve mining operational management and processes,” it said.
“This shift will follow miners’ strategy of retrenchment and divestment of high costs assets.”
So what are the areas of focus?
The four key areas
Man & Machine
BMI Research, in its paper IoT (Internet of Things): The Future of Mining, has outlined the four key innovation areas.
It labelled machine interfaces, IIoT (Industrial Internet of Everything) platforms and processors, communication and controllers, and equipment utilisation.
Regarding human and external interfaces, it stated that fatigue and fatigue management programs and technology can aid in lifting efficiency.
“Technology can be utilised to improve both mining operational management and safety and environmental governance,” BMI said.
“For example, according to a study by Caterpillar, mining companies face significant losses in operational efficiency through employees being fatigued and distracted.”
According to McKinsey, one example of this technology is “smart glasses or goggles that feed instructions to workers carrying out repairs”.
“Another is work clothing that incorporates sensors transmitting data to managers about hazardous conditions and the physical condition of the workers themselves, improving safety outcomes.”
BHP has installed systems like these on its trucks in the Pilbara.
According to the company 110 trucks have implemented the technology, which uses eye tracking and facial recognition technology to measure truck drivers’ fatigue.
BMI linked employee management, scheduling, and tracking systems to lowering issues related to battling productivity loss through absenteeism and a deeper understanding of workers operate, implementing more efficient standards.
Internet of Everything (IIoT) platforms and processors, essentially Big Data, is being integrated at every level.
“Mining firms’ operational efficiency will increase through the use of data analytics and processing.
Nearly every aspect of the mining industry, from minute processes through to massive haul truck payloads and warehousing and maintenance activities are now measured, tracked, and stored, and now these machines and data sets can now compare and create a predictive picture for future production in a way the industry never could before.
“We see a significant number of mines that have data locked away in individual systems but now want to federate that data together, instigate new processes, involving their people in new ways to achieve better outcomes. Mining generates big data because the number of sensors are growing rapidly and systems involved are becoming more intelligent, so the challenge ahead is to federate that data,” Cisco Systems engineer Michael Boland said.
Rio Tinto has embraced this innovation path, and opened its ‘Big Data’, Analytics Excellence Centre early last year.
According to Rio the new centre “will assess massive volumes of data captured by the array of sensors attached to Rio Tinto’s fixed and mobile equipment and enable experts to predict and prevent engine breakdowns and other downtime events, significantly boosting productivity and safety”.
“Using predictive mathematics, machine learning and advanced modelling, data scientists in the Analytics Excellence Centre in Pune, India will be working to identify a range of problems before they occur.
“This analysis will reduce maintenance costs and production losses from unplanned breakdowns,” the miner said.
“The Analytics Excellence Centre will allow us to extract maximum value from the data we are capturing around the performance of our equipment, making our operations more predictable, efficient and safer,” Rio Tinto group executive technology and innovation Greg Lilleyman said at the time.
“The Centre will help us predict the future through the use of advanced data analytic techniques to pinpoint with incredible accuracy the operating performance of our equipment. Our aim is to run more efficient, smarter and safer mining operations and provide greater shareholder returns.”
Communications & Control
BMI states that innovation through improving communication and controls will increase the availability for process control, asset monitoring, and overall safety and security for workers in difficult and harsh operating environments.
There will be a growing focus on the capabilities for connectivity, real-time data delivery, collaboration and machine-to-machine (M2M) communications, and the role they will play as critical technological pillars for the industry.
These solutions bridge the gap between remote sites, improving management efficiency and reducing the time it takes to make important business decisions, according to Kevin Griffen, Orange Business Services country manager – Australasia.
“Mining site communications is a varied mesh of different technologies including GSM, MPLS, VSAT, undersea and surface fibre optic cables. It’s critical to create a reliable and real-time environment for collaboration in today’s increasingly digital mining operations.
“In order to get the most benefit from digitisation, mining infrastructure must have hybrid networking capability to provide cost effective access to the cloud; support advanced collaboration services such as video conferencing, unified communications and remote monitoring; and deploy M2M communications for devices within mines to communicate.
“A robust, high availability communications network makes operations more cost-effective because mining companies can stay up-to-speed with changes in supply and demand,” he said.
BMI added this intercommunication capability will improve blasting and drilling processes and safety, while also boost signals, helping to link communications between site, surface, and underground mining equipment, aiding remote control operations and lifting safety levels by removing the operator from the vehicle itself.
Smarter use of equipment will lead to streamlining and efficiencies.
BMI Research’s latest paper states “apparatus innovation will improve operational efficiency and lower production costs by increasing fleet utilisation”.
According to professor of mining engineering at the University of British Columbia, John Meech, autonomous vehicle operations can help increase productivity by between 15 to 20 per cent, and truck uptimes by up to a fifth, with Rio Tinto automated fleets recording a 12 per cent production increase compared to manned vehicles.
“At our Hope Downs 4 site our automated trucks have load utilisation rates 14 per cent higher than manned trucks and their operating costs are 13 per cent better,” Rio Tinto’s Greg Lilleyman said.
“And what of our maintenance of our fleet of trucks? Well using asset analytics and the power of Big Data we can better predict and extend component life, improve maintenance schedules and, most importantly, reduce production down time.”
BMI explained that by more efficient utilisation, battling absenteeism, and hot seating during shift changes productivity was lifted.
Pushing mining forwards
A combination of these trends, better regulation and safety guidelines in operating with and around automated processes and vehicles, and a focus on efficiency is changing the face of mining in what is an economically inhospitable environment.
By driving geological modelling, daily operations scheduling, increased mechanisation, managing hazardous conditions and predictive maintenance, mining companies could make better decisions that would help improve their understanding of the resource base and optimise materials and equipment.
The Industrial Internet of Things is taking the world by storm and opening new and exciting possibilities to businesses, government and industries. The mining sector also has much to gain from the benefits that IIoT can provide, particularly in light of the current challenges.
Through IIoT, mining operations can save energy, downtime and costs associated with production and transportation of resources. Remote operations remove people from potentially hazardous situations. The IIoT provides the platform for the integration and optimisation of the entire supply chain.
Boland explained: “On a national scale, for Australia, the benefits that the IIoT can deliver are most important because as a country we are not going to win on efficiency gains based on cheaper labour to drive down costs.”
“We are going to use our expertise and knowledge of mining and automation systems to continually improve the most efficient and cost effective mining capability in the world.”