The digitisation of mining has accelerated to a pace not previously seen this year as market sentiment has improved.
While the awareness of what can be achieved by developing digital mines and companies has been well known for at least a decade, various obstacles have prevented much of the industry from taking the leap until now.
Initially, the cost of technologies like autonomous equipment, site-wide sensors and company-wide management systems meant only the major miners could afford to make such significant investments.
When Rio Tinto set up its Perth operations centre to control its iron ore assets in the Pilbara in 2010 it was a big deal for this reason.
Then, just as these technologies were rapidly developing and becoming more mainstream, and therefore more affordable, the commodities downturn hit.
With mining and services companies having to retreat and be on the defensive during the market decline, significant investments planned for digital projects were replaced with cost cutting measures, organisational restructures and strategies of productivity improvement.
Having now transitioned through the downturn, and with digital technologies continuing to become even more affordable, the industry has found itself at a point where the digitisation of mines is back on the agenda.
This is exactly what Deloitte is now observing, with a broader spectrum of the industry looking closely at these opportunities, national mining leader Nicki Ivory explained.
“Everyone is now grappling with this,” Ivory told Australian Mining. “They know they have to do it but they also want to know how they do it in a cost effective.
“So, we think the industry is poised on the edge of a massive change driven by digital technology in mining.”
The three layers
In its 2017 Tracking the Trends mining report, Deloitte divides mining’s digital revolution into three layers, which companies will need to navigate to be successful during the implementation.
First, as mines embrace digital technology, their core processes will become fully integrated, autonomous, remote and automated. A network of low cost, highly capable sensors that use the Internet of Things (IoT) is making this possible, according to Deloitte.
The top layer is the stuff at the mine site itself, Ivory explained, while emphasising that junior and mid-tier companies could now afford to invest in these technologies.
“Things like autonomous trucks, drones and sensors on every piece of equipment…smaller companies don’t need to go the whole hog to get the benefit – they could only automate their trucks for instance,” Ivory said.
“They could have sensors on their trucks to tell them when the tyres need replacing or when they need to refuel, to analyse the changeover points, the idle time etc.”
Ivory said mining companies then need to collect data from the technologies introduced on site.
“It’s about having a platform – like a nerve centre almost – a common platform that can take the information in real time from all of those digital assets and enable it to be analysed.”
This leads to the second layer – reinforcing these changes in core operations, with companies needing to rethink the way in which they generate and process information.
“Companies need to bring all of the data together and then analyse it in real time,” Ivory said.
“It will tell them if there is a bottleneck coming because of a breakdown somewhere I the system, which then enables them to change things further ahead in the process.”
Thirdly, the effects of digitisation will extend beyond core operations and the flow of information to the supporting processes and systems of functions like human resources, finance and marketing.
“These solutions are no longer massively expensive and only for the big companies. There are lots of things smaller companies can now do as well, in their back-end functions,” Ivory said.
How digital should the industry go?
With the digital revolution emerging into the mining industry should companies be warned not to take the implementation too far, or is the sky the limit?
Ivory said there were possibly side effects of the digital revolution that the industry needs to be aware of.
“The consequences of it if you take it to the ‘sky’s the limit degree’ is what happens to jobs?” Ivory pondered.
“People are really thinking about this. What does it mean for the people and where do the companies redeploy them?”
Ivory offered the industrial revolution as a historical reference where comparisons could possibly be drawn.
“If you look at the industrial revolution there was massive angst about what it would do to jobs. New jobs were created through that process,” Ivory explained.
“The same will happen here but it’s not clear whether it will be one-for-one job creation or if it will be a one-for-five ratio. What it means for the future of work in mining is very much front of mine for people.”
Ivory said the human resources component of the digital implementation in mining was something the industry would continue to consider.
Leading digital strategies
Deloitte has identified five key strategies for mining companies considering a digital future (source: Deloitte – Tracking The Trends 2017):
Articulate a clear digital strategy. Rather than spawning disconnected functional initiatives, digital strategy has to be driven from the enterprise level and clearly define the value of digital to the organisation as a whole.
Digitise the mining value chain. Companies will need to apply digital capabilities to the core mining process, including solutions that range from digitising engineering and asset information across the asset lifecycle, to connecting and internet-enabling remote devices and sensors.
Deliver the integrated digital mine. To deliver an integrated digital mine, companies must establish a capability to use data to resolve a wide range of business problems. In essence, intelligent business decisions will hinge on access to timely and relevant information.
Implement supporting platforms and enablers. On the road to digital transformation, mining companies will need to strengthen their information technology (IT) and operational technology (OT) backbones.
Enable the diverse connected workforce. Digital transformation requires top to bottom organisational transformation, which is why it is essential to have the right leadership, culture, operating model and people.
This article also appears in the June edition of Australian Mining.