The pursuit of “economies of scale” has seen mines proliferate in size and output over the last few decades. With some of the deepest mines stretching kilometres underground, and open cuts becoming multi-pit complexes, this has facilitated a volume of production never seen before. However, with larger mines comes more complex operations that challenge our traditional ways of working. In light of the challenges the industry is currently facing, it begs the question: how can mining continue to maximise production profits in a sustainable way?
Mining corporations needn’t look far to find a key part of the solution — it’s already been transforming the industrial sectors for almost a decade. Peer industries such as manufacturing, property, construction, and rail are all in the midst of the fourth industrial revolution. Automated technologies, cloud computing, and the Internet of Things (IoT) have revolutionised the way data is collected and managed. This has opened the door to new ways of streamlining and optimising operations that prioritise both people and profit.
“Industry 4.0 has been making an impact globally for some time now and mining is forming a Mining 4.0 thesis of what this digital transformation will look like over the next 5-10 years,” says Rob Foster, Head of Mining at Willow. “We think there will be many and ongoing entries into mining from other industries by tech companies who are built from the ground up on the basis of as-a-service solutions.”
The transition to Mining 4.0 is already underway — albeit slowly and in pockets, as the industry has unique obstacles to overcome. In this article, we’ll explore some of the challenges and changes affecting the mining sector, and how digitalisation can help organisations navigate the new era of the industry.
Current challenges for the mining industry
Some of the key obstacles the mining sector has faced in recent years include:
High variability of commodity prices
The volatility that defines the mining industry has only intensified in the midst of global political uncertainty and challenges to license to operate. Strong demand for commodities pushes up prices and fuels an increase in production. However, when demand plummets or supply suddenly rises with a new mine coming online, prices can suddenly drop, leaving miners with an oversupply of capacity and great difficulties in ramping production down and up profitably. The never ending cycle of feast or famine for mining operators challenges capital investment in a world of tech unicorns.
Increasing variability of environment
Recent natural disasters have further contributed to the unpredictability of mining production. From the COVID-19 pandemic to the Australian bushfires and extreme flooding, these force majeures often demand mining operations come to a halt or radically change the way they operate. These periods of disruption can add expensive delays to mining projects and severely impact traditional communication and decision making processes.
Difficulty attracting top-tier talent
In the wake of COVID-19, the priorities of the working world have shifted. Generous Fly In Fly Out (FIFO) salaries are no longer enough to attract high-quality talent — there’s now a greater focus on the quality of life, work/life balance, and flexibility.
“Fewer young people are coming into mining, fewer people are willing to move their families to remote locations, and the poor track record of health and safety and environmental stewardship is no longer acceptable and in fact very unattractive to all,” says Rob. “We are facing an existential crisis of needing to change how we work, not just what we do.”
If mining organisations want to remain sustainably profitable, people must be treated as their greatest capital.
High-risk work environment
Adding to the difficulty in attracting talent is the mining sector’s reputation for unsafe working conditions. While fatality rates have dropped considerably in recent years, the mining industry continues to rank fifth in worker fatalities by all industry groups across Australia.
While mining operations are inherently risky, many of these hazards are caused by avoidable issues such as design and maintenance flaws, failures in inspections or safety management systems that are overly focused on administration rather than prevention.
Social licence challenges
For mining operators, community support matters more now than ever — with social licence to operate becoming almost as essential as a mining licence. However, ever-growing scepticism around the environmental impact of mining (and the validity of the concept of a social licence in itself) makes it increasingly challenging to get buy-in from key stakeholders. The smallest misstep can jeopardise access to capital, or even result in complete loss of social licence.
Data management issues
Like many industries with large-scale operations, the mining sector experiences challenges around data governance and management. From engineering and excavation to site management, siloed and disparate data restricts visibility across the many different operations.
Mining operators often rely on point solutions pieced together, each with their own proprietary interfaces and data protocols. Siloed systems reflect the siloed nature of the organisation, resulting in unclear or inadequate data that restricts informed decision making.
All of the above challenges make it difficult to build mining entities that can survive in lean times and thrive in the good times.
Implications of digitalisation for the mining industry
In order for the “economies of scale model” to continue to be viable in mining, substantial operational changes are required.
“The big incumbents are spending up to acquire more products and more capabilities,” says Rob. “They will face a real challenge to make these enormous ecosystems usable and valuable at the coal face, in a very dynamic and rapidly changing environment.”
If mining corporations are to thrive despite the inevitable challenges that are still to come, the way forward is digital solutions that are usable by front line supervisors, interconnected with the global supply chain, and enable transformation of how the industry operates. A growing number of industry stalwarts have already begun to implement the SaaS data solutions that have been steadily transforming other sectors of the built world for the better.
For example, digital twins bring systems and teams together into a single data-driven solution, resulting in improved system visibility and surfaced actionable insights. Through the digital twin’s ability to visualise relationships between static asset data, dynamic OT data, and work planned and performed, implementing a digital twin can not only improve decision making, but systematically learn what reduces production and measure the effectiveness of improvements.
The use of these interconnected data solutions are positioned to become standard practice in the next 5-10 years, from billion-dollar corporations through to small to mid-cap entities.
Mining 4.0 is on its way. Are you prepared?
Risk is a hallmark of the mining industry, and this appears unlikely to change anytime soon. However, perhaps the biggest risk of all is to enter the new frontier of mining unprepared. The fourth industrial revolution is coming, and with it comes a need for digital transformation. For those who are willing to embrace it, smart systems can work alongside smart people to produce better outcomes and higher profitability at lower risk.