The mining industry is engaged in a multifaceted debate about innovation, and the potential impacts new technologies and systems can have on operating practices, workforce demographics, social responsibility and sustainability.
On Oct. 23, The Northern Miner invited industry leaders to discuss innovation and mining operations during its inaugural Progressive Mine Forum in Toronto.
Participants in the roundtable discussion about mining operations were: Michelle Ash, chief innovation officer at Barrick Gold; Joe Lombard, global managing director at Hatch; Larry Radford, senior vice-president operations at Hecla Mining; Nathan Stubina, managing director at McEwen Mining; Eira Thomas, director at Lucara Diamond; and Carl Weatherell, CEO at Canada Mining Innovation Council (CMIC).
The roundtable kicked off with a discussion of the mining industry’s reputation as being slow to adapt to new technologies and innovation. For example, the World Economic Forum (WEF) found mining was “most resistant to disruption” among 21 industries it studied in a 2017 report.
Accounting firm Deloitte characterized that miners as a “notable laggard on the technology front,” while SAP Software & Solutions calculated that miners use “1% of all the data they produce.”
“We have been very slow to move,” Barrick’s Ash responded. “There’s a resistance in our industry to constantly questioning and trying to pull apart what we’re doing. We need to be a lot more collaborative as an industry, and look at how we optimize the system versus point solutions we’re used to.”
Hecla’s Radford agreed and added that he recently travelled to South Africa to assess narrow-vein mining technology, and flew to Sweden to explore cutting-edge technologies Boliden (US-OTC BDNNF) is implementing in Europe. He reiterated the importance of sharing information across borders and embracing global technological initiatives.
Hatch’s Lombard cautioned that the mining industry cannot rush into disruptive changes due to the often “dangerous environments” in operations. He expressed optimism, however, that mining companies are becoming more open to new technology.
Stubina of McEwen Mining and Weatherell of the CMIC were less bullish on mining’s innovative prospects.
“I wasn’t very optimistic after many of today’s discussions because we’re still talking a lot about the status quo. I think in five years we’ll still be having the same discussion,” Stubina said. “If you go to high schools they think of this industry as ‘mules and pick axes.’ Something is seriously wrong there and we have to fix it. The things we’ve done in the past don’t appear to be working.”
“We have to look at innovation completely differently,” Weatherell added. “When Steve Jobs got up there and said: ‘We aren’t going to buy products from the mining industry anymore.’ We have to understand why he said those things and who is behind him. The mining industry isn’t looking at the big challenges.”
Eira Thomas came to the defense of miners and noted that the industry “was built on innovation.”
She cited the technology needed to exploit Alberta’s oilsands, as well as innovations needed to operate mines in remote, Arctic regions. Thomas added that miners have been “rightly criticized,” however, for not being “progressive” in approaching environmental and social commitments. She also criticized the industry for not “embracing corporate diversity.”
The discussion then shifted to addressing the profitability and operating challenges that had plagued the industry during the recent commodity downturn.
For example, PwC notes US$200 billion in valuation losses over five years from the top-40 mining companies, and US$53 billion alone in 2015. SAP adds that “in the last decade mine productivity fell by 28%, while capital intensity has doubled over the past 15 years.”
“In the past ten years there haven’t been very many discoveries, despite money going into exploration,” Radford said. “So the miners are dealing with lower grades pretty constantly, mining deeper than ever before and looking at higher stripping ratios. So we see a lot of references to rising unit costs in terms of per ounce or per pound. I’m happy to be working at smaller underground mines right now because I think that’s the wheelhouse for where technology and innovation can really make a difference.”
Ash added that the industry has worked through many “diseconomies of scale” that come along with large-scale megaprojects, which are often higher risk. She argued for a need to “look at diversification of investment dollars” when it comes to putting capital into large development projects versus funding a portfolio of smaller mines.
“The beauty of the technology we’re bringing in is that we can use the power of machine learning and analytics to become smaller and smaller. I’d love to see the day that processing plants aren’t on surface anymore and we’ve instead got many of them underground,” Ash continued.
Lombard agreed that “bigger is not always better,” and noted an increased focus from mining companies on “pinpoint accuracy and project execution.” He said emerging computer technologies are allowing for “better mine planning from day one.”
“It’s really powerful to see a project in its entirety as you move towards development, and we’re seeing really large projects using new techniques. I believe reducing waste is really what it’s all about long-term,” Lombard said.
Thomas noted that there has been a “fundamental shift” in the past 10 to 15 years in the way the market values mining companies. She said the focus is now on “performance versus simply growth,” and continued that the shift has brought more discipline to the industry.
Thomas concluded that the focus on innovation is largely being support by the “need to deliver” and “create viable, sustainable mining businesses.”
“The business model has to keep the shareholders happy, and I’d agree it’s about going smaller and being modular,” Weatherell argued. “You also have to look at the definition of a ‘mine.’ There are examples of many historic mines in Ontario, where the tailings appear more profitable than some of these greenfield opportunities. Why aren’t we looking at reconceptualizing tailings?”
The roundtable concluded with a discussion on the importance of transparency and good communication in optimizing operations, as well as attracting the next generation of skilled workers.
The WEF noted in its report that the mining industry could lose 330,000 jobs, or nearly 5% of its workforce, over the next decade due to increased digitalization.
Meanwhile, the Mining Industry Human Resources Council notes that older workers in the Canadian mining industry have risen from 11% in 2007 to 16% in 2016, while younger workers have dropped from 13% to 5% over the same period.
“We have to look at how we attract talent in terms of promoting diversity. We need to attract more entrepreneurial minds, or the innovative types,” Stubina said. “The problem with being viewed as an old-fashioned business is that it becomes difficult to attract younger workers. I don’t think we’re doing a good enough job explaining mining in general. We talked about branding, and I think if you have ‘mining’ in your company name you should just take it out.”
Lombard says that there are now “open ears” among miners in terms of how technology can improve mine sites. He notes the proliferation of WiFi, and how multiple divisions and platforms are coming together to give operators the information they need. He stressed that younger generations have a vital role in implementing the rush of new technology.
Weatherell added that mining is competing with industries such as, aviation and Internet technology that have a better reputation for innovation and progressive thinking among the general public.
“I don’t think it matters what we think about ourselves. What’s fundamentally important is what everybody else thinks,” Weatherell said.
“We certainly have challenges as an industry in terms of replacing an aging workforce, but also what impact technology will have on jobs and recruitment,” Ash mused. “It’s about breaking down barriers and pushing data all the way down to our operators. It’s amazing how giving people information and centralized communication makes a huge difference across the entire business.”