A DIGITAL transformation in mining is vital if companies want to address the productivity challenges facing the entire industry. Mining companies can start the process immediately by incorporating readily available digital applications to change the way they operate.
|A number of digital applications are available to address the productivity issues facing the mining industry. Images: GE Mining.|
Global industrial company GE is showing the way in this regard through adoption of digital applications, including its ‘Brilliant Mine’ concept. Global commercial leader, Digital Mine, Ian Larsen says undergoing a digital transformation means miners can start getting the improvements they are seeking now.
“One of the big challenges for miners is to better negotiate the industry’s boom and bust cycles. During the bust there is no money to spend and in the boom there is a chase for tonnes. As prices climb it is a race to get tonnes to market before competitors and anything that gets in the way of tonnes out the door tends to get lower priority.
“What I sense in the market now is that companies believe they cannot keep going through the regular cycles and need to do things differently. This is where digital transformation comes in … but I don’t see it as the same thing as innovation. You can do a lot of transformation by changing the way you work without seeking new innovations. It is definitely innovative thinking, but not necessarily innovative product.”
He says that there are entire departments within the major mining companies that deal with innovation and are looking at 3-5 years-plus for implementation. They are examining methods such as adding sensors to the entire value chain, but these developments take a lot of time, significant capital investment and expertise in many areas. “You don’t have to wait for the process to be completed or reinvented to achieve better productivity now.”
Why the need?
Ian Larsen says industry trends are driving the industry’s future priorities and the need for change. As well as negating the impact of boom and bust cycles, these trends include:
- Poorer ore quality - grades declining, more impurities, complex processing and need for controlled blending.
- Ore availability – miners forced underground or to more remote locations as near surface/open pit ore and coal is depleted.
- Miners want to buy solutions, not equipment – total cost service models will be more common.
- Shortage of skilled labour and increasing labour costs.
- Energy saving equipment increasingly important.
- Mine safety an important differentiator.
- Increasing social, environmental and regulatory pressures on miners and suppliers.
The evolution of digital applications in the mining sector has become crucial to the optimisation of mine sites and the companies that run them. Digitalisation encompasses technologies such as wireless communications, real-time analytics, machine learning, commodity sensors, machine automation and embedded systems.
Digital transformation is actually business transformation, according to Ian Larsen. “The only reason to change your business is to be more profitable and deliver better value for shareholders.
“Every miner is somewhere on the cost curve and the higher on the curve, the more susceptible you are to be taken over or go out of business when the down cycle comes. Productivity improves as you move down the curve. This also means that more ore reserve is mineable at a profit, which increases the asset in the ground. Mining differs from manufacturing and other industries in that a large part of asset value is product still in the ground. It is like a two-for-one deal – shareholder value through productivity as well as reserves not yet mined.”
GE believes global GDP can be impacted through digitalisation. “We are a global company and global GDP is our growth engine, however it is a purpose beyond just ourselves as a large percentage of mining profits go into super and pension funds - the benefits are widespread.”
Ian Larsen says tier two and three companies are best placed to make maximum use of digitalisation because they are small enough to be agile but big enough to actually matter. “South32 is a good example and has been moving along this path. Similar companies like Anglo, Newmont and Vedanta will get there faster because they want to get there … and they must. The big players are already at or near the bottom of the cost curve and are running major tier one assets at low-costs while many tier two and three companies are further up the curve, and are determined to be as competitive as possible.
“Many of these companies also do not have the internal resources to transform themselves and need external help and guidance. The majors have their own departments to drive this process and within these departments are multiple groups looking at various ways of increasing productivity but it is a slow process for them. In some cases the big boys are first cab off the rank with innovation, but often will be overtaken by other more agile players.”
Time for change
Ian Larsen says the mining industry is in the early stages of a productivity transformation and many involved believe it is necessary. There is broad agreement on the need for mining companies to adopt advanced technology and end-to-end value chain optimisation to improve outcomes.
The majority of companies also concede that current methods have seen only marginal improvements over the last 50 years and that the industry is behind on capabilities that are standard in other industries.
He says most companies believe the current economic conditions in the industry will persist, creating openness to adopt innovative approaches in a traditionally conservative industry. While some mining companies and OEMs have implemented islands of improvement, including areas such as truck automation, no one has addressed the challenge comprehensively.
“The biggest obstacles to optimisation and productivity improvement in mining are challenges that GE has successfully tackled in other industries.”
The digital transformation has to come from the top or very close to the top in order for it to gain traction. “At South32 the chief operating officer for the region led the process and took the CEO along with him. This is much easier for tier two or three companies,” Ian Larsen says.
Earlier this year South32 and GE signed a three-year strategic partnership to assist in development of South32’s technology roadmap and activation of its digital transformation. The partnership, GE’s first with an Australian mining company in the digital space, is a step towards playing a much bigger role in the global mining sector.
“Bringing the world of operational technology and information technology together to monitor equipment and systems remotely and predict future behavior is a game changer,” South32’s CEO Graham Kerr says. “It has the potential to identify and solve a problem before it affects operations.”
The company’s chief technology officer Ricus Grimbeek says, “By partnering with GE, we have an opportunity to transform the way we work. If we get this right, the result won’t just be an incremental improvement but a new level of efficiency and performance.”
GE CEO and chairman Jeff Immelt says, “We look forward to working with South32 to help them optimise operations and accelerate the digital transformation of the mining industry at large.”
An example of how GE is moving into the digital age is the ‘Brilliant Mine’ concept, which applies to underground and open cut operations. Ian Larsen says GE is working its way up the value chain puzzle with this digital ‘environment’. “We optimise processing well; we manage asset performance well; we are moving into the planning piece; we have our first customer lined up for ‘Brilliant Blend’; and we are working with a research organisation around the ‘Brilliant Blast’ piece. There are many opportunities to drive productivity now with these initiatives before we need to look at the exploration phase with ‘Brilliant Explore’.”
|Digital mining is enabling a safety culture.|
He says the concept is about providing solutions for each operation as every mine is different. “However it is not about rebuilding it from scratch - it is all about having a big bunch of building blocks that can be assembled to suit different applications.
“We have an ‘ecosystem’ and various bits can be plugged in. For example, a data science team might come along and say they have an algorithm for optimising conveyors. We can just plug this into our ecosystem rather than it being another technology that sits outside everything else.
“This enables us to partner with other METS community members. We have signed up a few already and are negotiating globally with about 15 others.”
He says the process of getting technology to market can be time consuming as well as costly, particularly where collaboration is necessary, and it usually is. “If the cost of collaborating is $50,000 for each party, with three parties the cost is $100,000 for each party for a total of $300,000, but if you add a fourth party, the total to work together becomes $600,000.
“Rather than costly mini-to-mini relationships, the GE ecosystem provides a large model with a common framework and common set of standards that smaller METS companies can simply plug into with their innovation.”
Protecting IP is another benefit of GE’s system. “METS companies can put their IP into our ‘ecosystem box’ – we can’t see it and the customer can’t see it, so the algorithms, the ‘special secret sauce’, are completely protected.
“We are big enough to be able to control that ecosystem and the benefits are productivity, safety and security. You need someone big enough to control the ecosystem and set the rules for how everyone plays together in the sandpit.”
This shift to digital enablement also has significant impacts on safety. The safety culture being enabled includes:
- Asset performance management - moving maintenance from unplanned in the field to planned outage or workshop activity reduces the potential for safety incidents.
- Agile planning and precision execution - well planned work executed precisely results in people being where they are supposed to be and doing what they are supposed to be in a safe manner.
- Operational technology (OT) cyber security protects assets, process and people from accidental and intentional sabotage.
- Operations optimisation - Optimised operations eliminate non-value add work in operations and reduces the number of people exposed to safety risks.
|Existing mining models combined with economic realities are largely unsustainable.|
Ian Larsen says the digital transformation has potential to take mining out of the dark ages and into the new millennium. “There has been very little innovation in the industry for 50 years. If you look at a mine truck today - it may have more sensors and a little more sophistication but it is the same shape as 40 years ago with six wheels and a dump truck body that looks the same - nothing substantial has changed except the size.
“By collaborating and partnering through digitalisation, we can ensure that mining and METS continue to innovate and grow – and that, in turn, will help secure the industry’s economic prosperity into the future.
“Advancements in these areas are changing at such a rapid rate that companies are constantly looking at what will give them the edge. Suppliers in consultation with their customers are striving to better integrate these technologies and there is truly limitless possibilities of where these advancements will take the sector,” he adds.