A new digital transformation? From click & mortar to brick & software
09 May 2022
At the time of software companies, or rather "Brick & Software", the decisions to make or buy must be completely…
While technological innovation is recognised by mining companies as strategic for their economic, social and environmental development, why do so many sites in the mining industry remain outside the movement?
The mining industry is traditionally cyclical. Phases of high prices, characterised by structural under-capacity and massive investment, are followed by phases of cheap, over-capacity prices, where investment is prohibited. After a long boom in the 2000s, with revenue growth driven largely by consumer market expansion and Asian demand, the mining industry is now in a downturn, facing significant economic and industrial challenges. In addition, the growing environmental concern of companies and CSR-conscious consumers may reduce global demand for minerals in the long term, through new consumption models that are more oriented towards the sharing economy (e.g. Blablacar, Getaround in automotive production) and towards the circular economy (e.g. Backmarket in consumer goods).
In parallel with fluctuations in demand and prices for raw materials, the most easily accessible mineral deposits are being depleted. This forces mining companies to dig further, higher and deeper, increasing the pressure on cost prices. For example, the cost of producing copper has increased by more than 300% over the last 15 years, with the quality of the ore being 30% lower on average . The conditions of exploitation are also subject to reinforced social and environmental constraints, driven by civil, institutional, industrial and financial actors who are increasingly concerned about the rules of conduct of an industry that has historically been controversial and considered one of the most polluting on the planet.
In this pivotal period, forced to deal with greater complexity with more constrained means, the mining industry is challenged to renew itself to find new sources of productivity. However, while technological and digital innovation is providing tangible answers, its widespread adoption remains a challenge.
From the exploration of future deposits to the processing of minerals and their extraction, all mining operations can now benefit from multiple technological innovations.
The exploration phase, which was particularly long and risky, has now been shortened thanks to new technologies for capturing and analysing geological data. The progress made with drones and their on-board sensors (hyper-spectral cameras, thermal sensors, Lidar, etc.) has considerably increased the volume and quality of the data available. Many companies (Prioria, Precision-Hawk, Pix4d, Microdrones, etc.) are identifying new potential deposits by mapping remote areas that were previously inaccessible. Drone mapping methods are now reportedly five times more productive than traditional mapping methods . In parallel to data capture, new technologies for analysis (such as photogrammetry) and modelling (such as artificial intelligence) of this data now enable mining companies to exploit its full value. For example, the machine learning algorithms of the company GoldSpot Discoveries use the exploration data history of mining companies to better identify the most promising areas for future drilling.
There are also many innovations for the development and operation phases of mines. The use of 3D modelling software allows future mines to be simulated as digital twins from available geological data, shortening the time to develop and obtain operating permits. Once the mine is developed, real-time data from each entity present on the site (people, vehicles, infrastructure) can be used to optimise operations both above and below ground: better traffic management, faster evacuation, ventilation on demand, etc. For example, Mobilaris Technologies, a Swedish player, has developed real-time mine management software that is agnostic in terms of technology and network (LTE, WiFi, UWB, RFID, etc.). The increasing connectivity of mines is thus leading to better controlled and even automated operations based on increasingly autonomous equipment and vehicles (Sandvik, Komatsu, Atlas Copco, etc.), reducing the exposure of miners to the most dangerous areas.
Finally, downstream, predictive maintenance of transport equipment (conveyor belts, dumpers, etc.) makes it possible to reduce downtime and improve the planning of logistical operations, while new treatment technologies are moving towards less polluting and more efficient solutions, capable of treating rock and mining waste that was previously considered sterile (Phoenix Tailings, Lixivia).
Beyond the optimisation of existing mining operations, other technological innovations have the potential to change the mining operations chain itself. This is the case, for example, with 3D metal printing which, although in its infancy, could eventually allow mining companies to produce spare parts for their equipment directly on site. For example, Forstecue Metals Group (FMG), an Australian mining company, is currently experimenting with Aurora Labs’ 3D printing technology, with the aim of limiting the financial outlay associated with large stocks of spare parts, but also reducing the environmental impact of these parts by shortening the supply chain and relying on a less energy-intensive production process.
The majors are no strangers to these technological innovations, seeing their potential from an economic, social and environmental point of view. Several mining companies have already begun the transition at the scale of one or more mines: The Kumba Kolomela mine in South Africa (Anglo American) now operates its drills remotely, the Eleonore mine in Canada (Goldcorp, Newmont) follows its employees in real time via a digital twin, Orano is currently developing site inspections by drone… However, despite a widely shared recognition of the potential of these technologies and the presence of several driving players, the mining sector is slow to accelerate a massive and global transition. The low rate of adoption of new technologies can be explained by difficulties specific to the sector, both upstream and downstream of a mine’s life cycle.
Upstream, juniors, small mining companies (less than €500m market capitalisation) in charge of the exploration phase, often do not generate enough revenue to invest. These companies, which take on the riskiest phase of the mining cycle due to the length of exploration (which can take 10 to 20 years) and the uncertainty of the outcome (in 2010-2011, only 2 juniors out of 500 went into production in the Uranium sector), are mostly financed by venture capital and rely on the resale of the discovered deposit to a major company to cover their investments and enter production. Although they are quick to innovate, the lack of capital hinders the technological transformation of the 3,000 or so juniors listed in the world.
Downstream, the majors, large mining companies that are often the result of major consolidation in the sector (over $500 million in annual revenues, market capitalisation over $1 billion), have greater financial resources. They are large enough to develop and operate diversified commodity portfolios on a global scale. However, despite their size, they too are slow to innovate due to high exposure to other risks. Exposure to human or environmental accidents, increasingly complex extraction conditions, difficulties in obtaining operating licences and, above all, volatile commodity prices, are all factors that explain the inertia of the majors to invest in innovation over the long term, despite their higher capital endowment. The volatility of commodity prices makes it necessary to make budget cuts at the bottom of the cycle, which no doubt explains why the sector’s digital shift is not taking place at the speed observed in other industries.
Exposure to human or environmental accidents, the increasing complexity of extraction conditions, difficulties in obtaining operating licences and, above all, the volatility of raw material prices, are all factors that explain the reluctance of the majors to invest in innovation over the long term
In addition to these difficulties specific to the juniors and majors, the non-standardised nature of the mines is another challenge. The topological disparity of the sites, the great diversity of equipment and technologies used and the significant heterogeneity of mining operations limit the potential for replication of innovations, slowing the rate of adoption of new technologies.
Faced with the structural uncertainty weighing on the sector, several levers can now be mobilised to enable the industry to accelerate its pace of innovation.
Firstly, the creation of inter-industry partnerships could allow faster access to new solutions. The innovations that have made their way to the mines have often come from other industries. The deployment of drones in the military sector has brought them to levels of sophistication and cost that allow them to meet the specific needs of the mining industry. This is still the case for industrial robots or LIDAR (Light Detection and Ranging) technology, which are now present in mines but were initially developed by and for the automotive industry.
Open Innovation approaches, such as the European Raw Materials Alliance (ERMA), also make it possible to share the costs and, above all, the benefits of innovation by bringing together start-ups, industrialists, institutional players and financial players, in a collaborative approach justified by the social and environmental dimension that the management of mines and their resources now has.
Finally, low-tech innovations, sustainable and technologically sober, could constitute a third way to be invented, while addressing the ecological and social challenges of the industry…
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