The global resources industry is a constantly evolving beast, and it is now entering a new age of development.
Mining is currently seeing the start of what will be the great convergence of IT and operational technologies.
Many pundits have touted it as the foundation for the industry’s next technological step change, which will be focused on an effort to facilitate productivity gains and reverse much of the loss in productivity the mining industry (particularly in Australia) has seen over the run of the boom.
A study by consultancy firm McKinsey showed that multi-factor productivity was growing up until 2005; but it dropped 0.7 per cent per year until 2011, when the study was carried out.
A report by the Mineral Council of Australia also highlighted that the mining industry last delivered a productivity increase in 2003, but since then overall productivity in the minerals sector has fallen by 30 per cent.
According to a recent report by Ernst & Young mining labour productivity has declined by about 50 per cent since 2001.
IBISWorld chairman Phil Ruthven explained that the mining boom, or more specifically a pricing boom, protected the industry from the worst of the productivity slumps, but stated that the sector “desperately needs transformation as it is one of the most inefficient industries right now".
Ruthven explained that mining's productivity has dropped over the last ten years, and seen "a 9.8 per cent dip in productivity from 2001 through to 2011".
Late last year IBM, as part of its Smarter Planet initiative signalled that the industry is reaching the tipping point for productivity and must innovate.
“This right now is the tipping point, we believe, where the risk of inaction outweighs the risk of action,” Andrew Stevens, IBM Australia and New Zealand’s managing director, said.
TheReinventing Australian Enterprises for the Digital Economyreport considered what the year 2025 might look like for those companies operating in a range of industries.
It found that the future relied on how well they adopted to new technology and used it to “deliver unique value to customers and citizens with the speed, efficiency and ubiquity they demand.”
Yet despite this slower productivity backdrop there are 26 projects under $500 million at the committed stage, with a combined value of $4.8 billion, 16 mining projects with a value of over $500 million and six projects with a value of over $2 billion, showing that miners are still pursuing growth regardless of productivity.
So how can the industry push through this productivity slump and make mining more efficient?
Productivity in mining has been falling dramatically in the last decade.
FLICKING THE SWTICH
It is a critical time for miners as the investment cycle switches from capital expenditure to capital efficiency.
“The size of the problem is too large for conventional solutions to work,” Ernst & Young’s global mining and metals advisory leader Paul Mitchell said.
“Making productivity gains isn’t as simple as further cost reduction efforts. The length of the super-cycle and the pursuit of growth led to the subversive change to the organisational DNA of many mining companies. Their structures, processes, performance measures and culture have all drifted to favour growth over productivity,” he explained.
“Real productivity gains will only come from a whole-of-business, end-to-end transformation. A narrow focus on point solutions or continuous improvement won’t solve the problem and could even be counterproductive.
The NIEIR’s executive director, Dr Peter Brain, told Australian Mining that "the major point about the mining sector is that it’s going to come under more difficult times as commodity prices decline and their profitability is going to come under threat".
“What the leaders will do is invest heavily in new technology to integrate the front, middle and back office; much more remote control from remote operations, and looking across the entire supply chain, integrating not just simply pit-to-port, but pit-to-customer.”
Rio Tinto has been a major proponent of this implementation of technology throughout an entire operating chain, demonstrating it with the Mine of the Future remote operations centre in Perth.
According to Deloitte miners need to go beyond traditional cost cutting measures and re-evaluate their entire operational models, cost structures and company culture that became ingrained during the boom.
“Reducing costs over the long term requires mining companies to prepare for a hard campaign of changing the way they do work. This, in turn, should spur them to look closely at their culture to determine if that needs changing too,” managing director of Venmyn Deloitte South Africa, Andy Clay, said.
The firm explained that implementing new technology including automation, using analytics and big data processes to identify trends for greater productivity , rationalising supply chains through six sigma processes, right sizing capital projects and transitioning to modular plants and projects are all strategies which can drive continuous improvements.
This merging of automation technology and computer hardware in to existing processes is increasing mobility on and off site in regards to information and operational control, and giving miners a sharper edge.
This is part of what has been touted as the fourth industrial revolution, which is gaining ground with forecasts of its complete implementation within the next decade.
THE NEW INDUSTRIAL REVOLUTION
This next evolution of industry is essentially the computerisation and automation of many traditional industries such as mining and manufacturing.
GE’s notion of an industrial internet and what others have dubbed “The Internet of Things” (IoT) is about this wider convergence of IT and OT in the workplace, and life in general.
These, coupled with existing technology advances such as cloud computing, ‘Big Data’, as well as machine-to-machine communications already being brought about on many mine sites globally, are making headway in the resources sector.
This convergence is allowing for technology and process improvements to support more automation and operations visibility in mining.
Superfast broadband will play a very important function in logistics, virtual operations (including robotics), ore grade use optimisation, and exploration analyses.
"This will become much more important as mineral prices pause and fall after the current cycle peaks in the 2020s, if not earlier,” Ruthven stated.
The proliferation of remote control centres (such as those developed by BHP, Rio Tinto, and Hancock Prospecting for its Roy Hill mine) will be seen, as well as increased levels of tele-remote operations on- and off-site.
“The ultimate success of these remote operations centres lies in their ability to control and automate processes on-site,” Ventyx’s John Jessop and ABB’s Eduardo Gallestey said.
This requires a synergistic convergence of IT and OT systems across the mining value chain to create a unified, highly collaborative enterprise able to be controlled remotely, either in these remote operations centre or via tele-remote machinery on site.
“Teleworking will continue as a key trend, with possibly one in four people in the workforce working at least partially from home if not full time by the middle of the century,” Ruthven said.
“This would also address some of the major fly-in fly-out issues currently plaguing the industry, as skilled workers will be able to live anywhere if they so choose”.
Speaking previously to Schneider Electric’s solutions vice president for mining, minerals and metals (MMM) Diego Areces, he told Australian Mining the industry is starting to prepare for this next great leap forward, which will be focused “less on the capital equipment itself and more on the technology progression side, seeing the full integration of Informational Technology and Operational Technology, more simple plug and play process, and most remarkably, augmented reality”.
The opportunity for developing mining, and in turn, productivity levels in Australia lies in optimisation which is supported by increased automation as “Australian operations aren’t at the level they should be for the levels of knowledge it has locally, it has a huge amount of engineering knowledge and process facilitation".
“It will be more pragmatic, as it moves to a more sustainable mining model and miners use sustainability as a yard stick to measure their operations," Areces said.
In essence, developing a ‘mining factory’ that provides operators with clear, sustainable outcomes that boasts more integration, visibility and operational intelligence within their production chain.
This is being implemented both underground and on the surface.
Fortescue recently signed an agreement with Caterpillar for automated fleets that are aimed at cutting fuel usage, increasing safety, and precise haulage across its Pilbara operations
As part of the second phase of automation implementation, following the installation of the technology and vehicles at the Firetail mine, Fortescue will have the same system running at its 40 million tonne per annum Kings mine.
Eight 'Command for Hauling' Cat 793F CMD trucks have already been commissioned and started operations.
However while much focus has been on the surface, it is in underground operations that major strides forward have been made, particularly in the development of block caving operations which have utilised automated processes to essentially turn the system in to a rock factory.
A survey conducted by Timetric found the share of underground mines using autonomous vehicles is expected to increase from 32 per cent to 45 per cent in Australia over the next decade.
“While there has been much press focus on the use of autonomous vehicles at surface mining in iron ore operations, the real use of automation has been in underground operations where LHD loaders have been operating since 1990,” Trimetric lead analyst Cliff Smee said.
According to Ventyx’s John Jessop and ABB’s Eduardo Gallestey production line processes are another sector of the industry where progression has been made.
“Take, for example, the optimisation of dosing and flow rates,” Jessop and Gallestey stated.
“While many miners already have Advanced Process Control (APC) solutions automating the management of dosing and flow rates in real-time, most are unable to easily align this data with the real time conditions out in the market.
“For instance, miners are unable to connect information on relative product pricing, data on feed material and information from sales contracts, because this information is stored in disparate systems – often in a completely different department than the control room operators.
“With the convergence of these IT systems and the process control OT, the APC can refine the set points to maximise returns for the current feed material and product pricing based on information from the sales system driven by the global pricing index.”
Rio Tinto has taken major steps on this front, earlier this year unveiling its Processing Centre of Excellence.
Based in Brisbane, Rio says this “is a world first, state-of-the-art facility that enhances monitoring and operational performance by examining in real time processing data from several Rio Tinto operations spread across the globe”.
Known by some colloquially as 'the excellent centre for excellent excellence', it will provide processing solutions and initiatives to mine sites in Mongolia at Oyu Tolgoi, in the US at Kennecott, and across Australia (at five different sites).
A massive interactive screen will show and analyse technical data in real time, "allowing processing improvements to be immediately introduced and operational performance to be optimised,” the miner said.
Early trials have already led to improvements such as adjusting the flotation process for gold and copper recovery at Oyu Tolgoi.
In terms of vehicle optimisation, this has been advanced with systems such as Caterpillar’s Minestar, Sandvik’s Automine, Komatsu’s automated system, Atlas Copco’s Rig Control System and many others seeing increased take-up.
Miners now “know what they want from automation, which is good,” Atlas Copco’s blast hole technology project manager Tyler Berens said.
“They’ve obviously accepted the technology and they are ready to push forward and go autonomous where it makes sense to do so.
“I think it’s [automation technology] appealing to any stakeholder in the mining environment – whether that’s an operator, a safety officer, a mine manager, or even a mining investor.
"There are opportunities to eliminate risks normally associated with certain mining activities; there’s the prospect of better efficiencies and lower operating costs; and, on a broader scale, there’s the opportunity to build a greater quality of life for the workforce,” he stated.
Berens went on to state that “I don’t see the industry’s embrace of automation slowing down in the foreseeable future”.
“In fact, I think peoples’ concept of automation is certainly maturing greatly. Just in the past year that I’ve been with the company I’ve seen it mature rapidly.”
Core enabling communication technologies combined with real-time input from sensors and logical devices will deliver connectivity and data from the heart of the operations.
The future of mining is bright, but that may be mostly from the backlight of a computer screen as it runs a site’s operation.