Insight | Research Programme 2018: Mining
Enterprise
The mining data reveals the sector lags behind other industries examined in this report in term of IIoT progress. Our IIoT readiness tool ranks the vast majority of respondents as either laggards or starters, with not a single respondent qualifying or the leader category overall. While this may seem surprising given some of the IIoT projects being developed by some of the major mining companies, our data found skills shortages and approaches to security and connectivity precluded our respondents from classification in this category.
The mining industry is in the early stages of IIoT adoption with just 2 per cent of our respondents having fully deployed an IIoT solution. However, a further 29 per cent are trialling IIoT solutions, with the remaining 69 per cent planning to do so within the next two years, testament to the importance placed on the technology amongst R&D and innovation teams.
While mining organisations lag behind other industries connected in the global production and supply chain, there is evidence they are beginning to seriously consider the benefits that IIoT can bring to the bottom line. 84 per cent agreed that IIoT will revolutionise their organisation, and 79 per cent agreed that the technology is essential for their organisation to gain competitive advantage.
The priority forms of IIoT are focused on asset tracking and smart monitoring, and the greater use of wearables to track employees.
The health and safety dangers in the mining sector makes IIoT an obvious choice to help make staff safer, and the complexity of mining operations – vehicles, engineering tools, and other devices needed for an effective site – makes getting detailed data to create efficiencies an early win for many.
It is also clear that 2019 is set to be a year where many trials in vehicular and asset tracking, among other areas, come to fruition.
In terms of the benefits achieved by those who have made or are trialling IIoT deployments, greater automation (41 per cent), improving health and safety (32 per cent) and improved environmental sustainability (28 per cent) rank highest.
Overall, mining respondents have achieved less from their IIoT deployments than respondents in other industries, pointing to the challenges they face and the nascent state of IIoT within the industry.
However, there are high hopes for IIoT in the future for a number of applications: greater physical security (67 per cent), better decision making (66 per cent) and increased staff productivity (64 per cent) the top three.
The mining industry faces a wide range of challenges as it adjusts to changing market conditions and seeks out new mineral deposits, and while these pose a threat to the sector’s future prosperity, those companies that successfully harness digital technologies will be best placed to weather the storm.
of mining companies are trialling IIoT initiatives
The mining sector has three clear priorities on how it wants to use data collected from IIoT infrastructure – to improve health and safety for employees (68 per cent), build better physical security of mines and the assets used onsite (58 per cent), and increase resource efficiency to reduce costs (48 per cent).
However, respondents made it clear that there are some significant challenges in being able to use and share data to improve operations, which place the majority of respondents in the IIoT laggard or IIoT starter categories.
Only 23 per cent stated that data from IIoT was available to anyone (following security clearance) in the organisation to interrogate, and 34 per cent said that data was only for the IT department and senior management. This level of restriction has an impact on the pace of innovation.
As digital transformation has spread through organisations in recent years, innovation also needs to be dispersed if it is to be effective. While the involvement of senior management and IT departments are important, the best ideas for deployment do not come through a top- down hierarchy.
More flexible approaches to innovation are needed in the mining sector where those working on the frontline can work hand in glove with specialists developing IIoT solutions.
Historically, the mining sector has not been known for this level of flexibility in the way that it manages change. However, growing competitive challenges in the market are now forcing new cultural behaviour to more flexible approaches to innovation.
When asked what is holding back the sharing and use of data half said that they do not have the skills to extract and use data, 42 per cent said data was being stored in unusable formats, and 35 per cent said that there was just so much data that they were overwhelmed in being able to understand and use it.
So, as well as needing to be more flexible and open in how data is used and shared, IT leaders need to quickly improve their data analytics functionality to enable better use of the wealth of data that is being created.
expect to use IIoT-generated data to improve health and safety
Mining businesses expect to invest considerable sums into IIoT over the next three years – with an average investment of approximately $3million. This equates to just under 8 per cent of mining companies’ overall IT budgets and represents around a six-fold increase from the amount spent on IIoT solutions since 2015.
This level of planned spend on IIoT places it as the number one next generation technology that mining companies expect to invest in over the coming period. Respondents expect to spend more on IIoT than they will on cloud computing, robotics and big data analytics (each at 7 per cent) over the next three years, coming as further indication of the sector’s faith in IIoT.
There is some significant variation within the average spend on IIoT, with around a third of respondents (32 per cent) expecting to invest less than $500,000 over the next three years. Although the size of the operation will naturally dictate how much companies are able to – or need to – spend on the technology, this may indicate that some mining businesses are falling behind in the IIoT innovation stakes.
Plainly, not all mining businesses have the same R&D budgets, and the perceived high cost of IIoT solutions was identified as a barrier to the success of IIoT projects by 37 per cent of respondents.
A lack of turnkey, off-the-shelf solutions is also an issue for half of mining businesses, meaning that IIoT projects must be largely bespoke, driving up the costs of implementation.
As the industry matures, and more off-the-shelf IIoT solutions come to market, these barriers should gradually start to subside. Increasingly, with fluctuating commodity markets driving organisational efficiencies, those companies who do not make the necessary investments will suffer.
However, when we consider the potential Return on Investment (RoI) of IIoT solutions in the mining sector, the implications for IIoT laggards become clear.
Mining businesses are generally confident in the ability of IIoT solutions to help them both save money and generate new sources of income. While the cost savings and turnover increases are negligible today, mining businesses expect their IIoT solutions to deliver an additional 9 per cent to their top lines and reduce their operating costs by 16 per cent within the next five years.
Respondents expect to realise increased levels of automation, more effective asset utilisation and lower insurance premiums as a result of their IIoT initiatives, all of which will contribute to their bottom lines and help to increase outputs.
Critically, those that are investing higher sums in IIoT are anticipating correspondingly high rewards. Multi-commodities respondents, who expect to invest 6 per cent of their IT budgets in IIoT over the next three years state that this should deliver an extra 6 per cent to their revenues by 2023. Iron ore companies, who will invest 9 per cent over the same time frame, expect to add 9 per cent to their toplines.
Those mining businesses that are slow off the mark, and fail to invest sufficient amounts in IIoT technologies will therefore be placed at a distinct financial disadvantage.
of IT budgets will be spent of IIoT over the next three years
The remoteness of many mines, combined with the challenge of multiple sites spread over great distances makes connectivity an especially pressing issue for the mining sector. Factor in a growing move toward automation, smart exploration and sample analysis and the need for reliable connectivity is more important than ever. However, 35 per cent of mining respondents cited connectivity issues as a barrier to IIoT adoption, a higher percentage than any other segment interviewed.
For control centre staff, connectivity issues may reduce visibility of data which will lead to a shut down in production, which could seriously impact upon a mine’s profitability.
It is a concern, then, that 61 per cent agreed that connectivity issues could disrupt IIoT deployments and 66 per cent reported that they struggle with reliable connectivity at least some of the time.
Satellite evidently plays an important role in an industry challenged by connectivity issues in its journey toward digital transformation. 39 per cent viewed it as the most important connectivity method, and those that viewed it this way were more likely to be enjoying the benefits from their IIoT deployments.
Given satellite’s potential to deliver connectivity to a remote site and mesh radio networks’ ability to facilitate data transfer in areas where line of sight is obscured, such as an underground mine, it is no surprise that radio networks also rank highly in importance.
Increasingly mining companies are using newer wireless data collection mechanisms: RFID was the most widely-used with 42 per cent using it, followed by LoRaWAN and SigFox with 10 per cent each. SigFox was more commonly used in Australia than LoRaWAN, while this was inverted as a trend amongst Canadian mining businesses. Only in Russia did RFID not rank as the top IIoT protocol, with respondents their instead citing Bluetooth Low Energy top.
cited connectivity issues as a barrier to IIoT adoption
To date the mining sector’s attempts to tackle the security of their IIoT initiatives in line with the overall research sample, the majority of mining respondents have a considerable amount of work to do to address the security issue.
38 per cent stated that cyber-security posed a barrier to the development of IIoT in their organisations and, worryingly, 87 per cent and 84 per cent, respectively, agreed that processes to protect against cyber-attacks and data misuse could be improved.
Mining is a major strategically-important industry and a well-executed IIoT-related cyber-attack could have severe implications for not only the company directly involved but also the wider economy. As mining companies come to connect evermore parts of their operations to the internet, through IIoT, they open up new vulnerabilities and the risks of disruption from bad actors multiply.
admitted their cyber security processes should be stronger
Despite this recognition, the response from the sector to address IIoT-related security challenges has been somewhat muted, and have for the most part revolved around creating internal and external security policies for staff to follow (45 per cent). While this will help to address data misuse by employees, this will do little to protect mining companies from cyber-attacks, which is where much more attention is needed. While 40 per cent have upgraded existing technology, just one in five (22 per cent) respondents report having invested in new security technologies to protect their IIoT deployments, which trails other sectors’ responses.
stated that cyber-security concerns were a barrier to the development of IIoT solutions
Skills shortages in mining have been more pronounced across the board in our 2018 research when compared to the other industries surveyed. Only 9 per cent stated that they have all the skills they need for a successful IIoT strategy, placing the majority of respondents in the IIoT laggard and IIoT starter categories in the maturity index. Unsurprisingly, 59 per cent of mining organisations stated that a lack of skills had caused a barrier to adoption of IIoT technologies.
Skills shortages can be seen across all levels of seniority but become more pronounced at implementation levels – 38 per cent reported that they required more skills to devise IIoT strategies, considerably less than the number of respondents that stated that they lacked the skills needed for effective delivery and maintenance (66 per cent). While we can’t entirely discount the potential bias of survey respondents (who were senior decision makers and therefore may consider themselves more skilled than they are in reality!) there is a clear pattern where those with both practical, hands-on experience of IIoT and the mining industry are in short supply.
Translating the theory of IIoT-enabled improvements into reality is clearly an area where improvements will need to be made.
The research attempted to understand which skills are most in need. The high level of concern about data security seen elsewhere in our mining data also came through when exploring skills shortages. Of all the skills in demand, the greatest was over data security – 70 per cent said acquiring additional security skills was a top priority. The challenges to effectively interpret and use the data collected also came through with 55 per cent saying that they need more people with an understanding of analytics and data science.
The lack of skills sits at the root of most of the major issues acting as barriers in the mining industry today, and is something that will only gradually improve over the next few years as IIoT matures as a technology with it through upskilling and the introduction of talent from outside the industry. In the intervening time it will be even more important for mining companies to establish partnerships with IIoT service companies.
The level of investment set to be put into IIoT development in the coming years supports the idea that its usage will be accelerated. However, our readiness tool reveals that there are some clear leaders in the packs, with some mining companies’ investment in and progress with IIoT remaining negligible, while others surge ahead.
Naturally, companies with higher turnovers are investing more, while geographically those from North America – are rapidly steaming ahead. For mining companies in the likes of Australia, South Africa and Russia, that appear to be lagging behind, this should serve as a warning sign. Broken down by type, meanwhile, the data suggests that iron ore mines have taken an early lead on IIoT deployment to accelerate the rate of production, reflecting the increasingly pressurised steel market.
Our research indicates that those organisations that are perfecting their IIoT strategies are already starting to reap the benefits, from reduced operating costs to improved environmental sustainability, and the mining sector is already showing some real promise. However, it is clear that many have some catching up to do.
reduction in operating
costs predicted through use of IIoT
in five years
The mining findings in this research project are based on responses from 125 senior IIoT decision-makers from companies with over 500 employees in the mining sector. To ensure a fully representative sample, we surveyed a broad mix of mining companies, including copper, gold and iron ore mining businesses, as well as support service providers and the mining majors that have multi-commodity operations.
The research surveyed mining businesses from across the globe, though particular focus was given to the mining hubs of Australia, South Africa, Russia and Canada, enabling us to identify key differences in IIoT adoption between these territories.
