A fundamental feature of the mining industry is its exposure to the global commodity marketplace.

As the key supplier of the raw materials that make up the modern world, from the foundations of skyscrapers to the intricate electronics of an iPhone, the industry is subject to the global economic forces that determine demand for its goods. The result is that mining organisations have historically been conditioned by the global commodity cycles, characterised by boom periods followed by downswing phases, and back again.

This can be seen most dramatically with the global commodities boom of the 2000s, which followed a period of significant depression during the 1980s and 1990s. This has had a distinct impact on the industry’s approach to innovation – and not necessarily in a positive way.

International Monetary Fund, Metals Price Index, 1990-2017
SOURCE: IMF, Metals Price Index

Metals Price Index

The predictability of this cycle means that mining organisations often maximise pure volume during the favourable conditions of boom phases, while turning to sharp cost-cutting measures during downswings.

— Joe Carr, Director, Mining

The problem with this approach is that it is necessarily short-term – boom periods are for generating as much profit as possible to shore up the organisation during the inevitable downturn, where the focus turns solely to surviving long enough to reach the next boom. In this mind-set, every move which deviates from the norm must have an immediate and calculable pay-off in profitability terms.

At a time when the depletion of easily accessible seams is putting structural pressure on mining organisations, it’s becoming increasingly important for them to find ways to improve productivity in a way that transcends the ebbs and flows of the global commodity market and create a long-lasting change to profitability.

How can mining businesses develop new ways of working when such a cyclical, shorter-term worldview pervades?

There is certainly a more cautious approach recorded in our research, but there are signs that IoT, alongside machine learning, robotics and 3D printing, is being explored.

While mining is lagging other sectors in its adoption of new technology it can afford to be bolder – as the returns on innovation are starting to be seen across other sectors, bringing greater confidence to ‘fastest followers’. The World Economic Forum has calculated that the economic impact alone from digital transformation for the mining sector could be between $428bn to $784bn for the period 2016-2025. So, the potential gains are significant enough to attract senior level support to think longer term when it comes to innovation, and there has been some significant progress in mining businesses taking a digital-first approach.

A stunning example of innovation in the sector is the Rio Tinto Mine of the Future – set up in 2008. The initiative has resulted in the deployment of several automated systems – Rio Tinto operates the largest fleet of automated haulage trucks in the world, and has developed an automated long distance railway system – both of which have increased transport efficiency while reducing cost and waste. The automated trucks have already saved approximately 40,000 litres of fuel every year, and reduced haul and load operating costs by approximately 13 per cent. The company has also trialled an automated drilling system, making it easier and safer to operate mines.

Other examples of where IoT-based solutions can be pivotal is in the development of automated exploration drones, enabling a more accurate assessment of territory before drilling begins. Precision readings mean wasting less energy and resources when trying to access ore for extraction.

 

Robotics and automation are also able to improve the recovery and recycling of materials and removes humans from the need to be present at the most hazardous points of the mining process.

However, while there are plenty of examples of innovation in the mining industry and the potential of digital transformation is accepted as just around the corner, it is impossible to not see in our latest research that the mining sector is in the very early stages of development, particularly when we compared the results to the other sectors in our survey.

How would you score your organisation's achievement of expected benefits of IoT so far and for the future?

More effective asset utilisation

Reduced cost

Safety and security

Reduced downtime

Greater automation

We have already achieved this
We have not achieved this but still expect to in the future
We have not achieved this and now do not expect to in the future

This picture of a prohibitively restrained approach to innovation is supported by the way mining organisations deal with the data they generate through IoT. Generating data from novel sources and sending it between devices is at the core of the technology, and the application of this data to business problems is key to unlocking its value.

To what extent does/will your organisation share the data created through IoT deployments? (%)

2% Available to anyone in the organisation to access and use
25% Available to anyone in the organisation but access must be granted
27% Only available to certain departments involved in the IoT deployment
46% Only available to the IT department and senior management

Despite this, almost a third of mining organisations have no plans for the data collected through IoT. Without putting this data to use in the business through experiments that seek to fuel innovation, the industry will always struggle to identify ways to dramatically improve productivity or cut costs. Moreover, when access to this data is restricted to IT and senior management, the potential for it to be used to address operational and business problems throughout the organisation is severely restricted.

 

Innovation thrives in an open ecosystem, where information is shared, different disciplines collaborate, and new approaches are brought to the fore. The conditions of the mining industry – subject as it is to the global commodity market – has made it function in a way which isn’t conducive to this approach. The proximate objectives of either maximising a boom or surviving a downturn tend to take priority over creating an enduring advantage through innovation. With persistently low productivity taking its toll, however, the industry needs to adjust its approach if it is to find its way out of the doldrums.

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