Mining sector forced to innovate

Autonomous haulage trucks on the move at Rio Tinto's West Angelas iron ore mine in Australia's Pilbara region. Credit: Rio Tinto.Autonomous haulage trucks on the move at Rio Tinto's West Angelas iron ore mine in Australia's Pilbara region. Credit: Rio Tinto.

The mining sector is facing a Darwinian moment, delegates at the first annual Technology and Innovation in Mining conference in Toronto heard in September.

Just as species deal with changes in their climate, food sources or other circumstances, miners dealing with mounting cost, social and technical pressures must innovate if they want to survive, research group AMIRA International managing director Joe Cucuzza said.

“If you look at Darwinian evolution, there are more species that go extinct than actually quickly adapt,” Cucuzza told the conference. “The point is that in our industry, we need to adapt quickly. Those that are slow to adapt, unfortunately, are going to go extinct.”

The conference, organized by Dubai-based Information Exchange Group, heard from experts on automation and IT, and vendors employing and selling new technology, along with   examples of how different companies cope with challenges in an innovative way.

In a panel discussion on robotics and automation, Luke Jalsevac, Kinross Gold’s (TSX: K; NYSE: KGC) director of business optimization, noted that innovation mostly happens when companies are forced to take risks.

Kirkland Lake Gold (TSX: KGI), for example, needed to expand their underground mine in northern Ontario several years ago, but couldn’t afford the ventilation upgrades. The company found a solution by investing in (and helping develop) battery-powered equipment for underground mining.

“It forced them into taking a risk on the innovation … and work through the challenges and the bugs,” Jalsevac said. “But they were in a corner — they had no choice. And to some degree, that’s where you’re seeing the research and development dollars and the organizations that are really pushing for it — often the choice of not doing it is certain failure, versus the choice of making it possibly work.”

But even though the industry faces common challenges, it is clear that one size does not fit all when it comes to adopting new technology.

Dundee Precious Metals (TSX: DPM), Jalsevac noted, is at the forefront of collecting and leveraging real-time information that has been credited with increasing productivity at its Chelopech underground mine in Bulgaria.

“You need to be cautious,” Jalsevac said. “If it was as easy as buying what [Dundee Precious Metals CEO] Rick Howes bought and putting that in place to get the results, everyone in the room would have bought it.”

Jalsevac said decisions should consider the business, technical and IT divisions all together, and that technology investment decisions made in isolation by senior management, for example, would likely result in bad decisions.

“It’s really important to make sure we focus on the value drivers of the business, understand them and relentlessly focus all the way through.”

For those hoping to capitalize on the experiences of industry trailblazers such as Rio Tinto (NYSE: RIO; LSE: RIO) — a leader in automation, among other areas — the company’s head of emerging technology, Daniel Koffler, pointed out that even if a technology is proven at one site, it doesn’t mean adopting it at another will be smooth sailing.

“Implementing the same technology in a different environment can often lead to a whole set of unexpected costs or challenges that need to be addressed,” Koffler said. “Don’t think you’re immune from the hidden costs or real total cost of ownership, just by being the second wave in implementing a technology.”

Neither can technology replace the need for a clear business strategy.

Scott Mcgowan, global mining practice director at Australia-based IT firm Wipro, stressed that technology can solve problems and bring change, rather than provide guidance for a company’s direction.

“It’s a business challenge, not an IT challenge,” Mcgowan told the conference. “So if you expect your IT teams to come in here and change the way you do business and become a ‘digital mining’ enterprise, that’s not going to happen. It’s the business that has to decide on the use of technology … your chief information officer and IT managers actually enable that change.”

He noted that some companies are changing their business models with the help of new technology.

In what Mcgowan calls a “digital mining revolution,” four years ago companies embraced disruptive technologies in order to deal with resource constraints, onerous regulatory regimes, fluctuating commodity prices and increasing stakeholder expectations.

“Now we see it moving from revolution to evolution, so companies are adopting it, and now how they’re adopting it, how they’re evolving and how they’re changing and becoming more agile as a business.”

BHP Billiton (NYSE: BHP; LSE: BLT), for example, has created a remote operations centre in Perth, changing the way it accesses, monitors and controls its operations. The new model takes people off mine sites and centralizes them.

Rio Tinto, which Mcgowan calls the most advanced in the world, in terms of new technology with their Mine of the Future program, has a similar but different concept with the processing excellence centre they’ve set up in Brisbane.

Rio spent a lot of time and money on automation, he says, but now they’re moving beyond operational automation and are centralizing their data scientists, process excellence experts and others, so that they can assess several different operations at once, and help management make better decisions.

Roy Hill, a private iron ore company in Australia is adopting a demand-driven business model at their greenfield mine.

“They’re actually establishing a demand capacity planning section, so again, it’s a totally different way of looking at the business, where they’re just focused on integrated planning and scheduling. How do they meet the demand and drive back through the demand chain? That is another way of a centralized model that they’re focused on.”

One technological challenge the industry is facing is data management.

More data is being collected via the Internet of Things, physical objects that are equipped with sensors and/or WiFi that can generate and exchange data. At mine sites, this includes sensors on equipment and personal safety gear. Data collected from different areas of the mine can be used to optimize operations and increase productivity.

However, this involves dealing with sometimes messy data in several different software systems.

“It’s crucial not just to store data, but to manage it,” technical director of reserve evaluation at Teck Resources (TSX: TCK.B; NYSE: TCK) Rodrigo Marinho said, who spoke about Teck’s efforts to integrate its geological modelling, resource modelling and mine planning software systems.

Teck uses AcQuire’s Geoscientific Information Management Solution to integrate data and create a seamless workflow at its mines.

In another presentation, Wipro’s Mcgowan noted that it’s not viable to replace exist
ing data systems at a mine with one integrated software system.

“Integration of vendor packages to harmonize information is the only option,” Marinho says, “because there’s no silver bullet.”


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