Advisory

The global mining industry has been under pressure for some time now to undertake bold changes in their operating models to restore profitability. The challenge has been enhanced due to falling ore grades affecting labor and equipment intensity, increasingly remote mining locations that influence logistics costs and other unique factors impacting real operating costs.

Many of the initiatives that were easy to implement have already been done. The next profitability breakthroughs will increasingly been abled by digital and technology innovations that are available to the industry today. Potential areas that could benefit from the application of such technology-based solutions include:

• Breaking down process and organizational silos from pit to port to optimize total delivered profitability leading to dynamic and integrated production planning

• Viewing asset conditions and the needs of proactive asset management at different stages of its lifecycle in near real time

• Improved understanding of risks to safety and labor welfare as well as the associated needs of management for decision making

These digital and technology improvements have the capacity to enhance labor productivity by 15-17 percent and equipment productivity by as much as 25 percent from average industry standards witnessed today. Improving safety and working conditions can also boost and preserve company reputation, increase shareholder value and reduce direct and indirect regulatory costs up to and including mine shutdown.

Realizing these benefits starts with initiatives that implement effective fatigue risk management systems and progresses to much more automated, robotic solutions, reducing or eliminating human risk exposure in many facets of an operation.

There is an opportunity for many companies in the industry to bring together multiple types of data and develop actionable information in close to real time. These insights will enable more effective actions across functions from planning to operations and support services.

This mobilization of data so that it can be leveraged in real time will require new organization, process and systems models. First, organizations need to create capabilities to extract and analyze large volumes of data on a near real time basis in a cost effective manner. Then they need to be able to generate powerful insights that are relevant to the business, creating opportunities for value optimization. Finally, users must be empowered to make value-based, highly collaborative decisions. Such transitions require sophisticated change management efforts in order for these insights to be delivered successfully.

The innovation engine will trigger the adoption of a completely different process paradigm that no longer reacts to events, but anticipates opportunities and risk events, enabling employees to make prompt decisions to improve enterprise productivity.

The data management portion is the primary area of focus for a successful analytics and innovation initiative. Decisions based on incomplete, incorrect, and untimely data can significantly impact the quality and accuracy of insights and pose a major change management hurdle. Adequate preparedness at this stage can set up a company to successfully undertake a comprehensive transformation. Both captive and third party cloud solutions provider scan be used cost effectively for this purpose. Once the data management foundation is set, it is essential to ensure that innovation is closely tied to business priorities, such as asset optimization, and that it is designed in close collaboration with employees directly engaged in mining operations. This is important because many initiatives fail due to flawed assumptions made when the people who understand the business best are not engaged at the outset.

In order for this automation and technology to become a strategic need within an organization, it will be important to build the capabilities to derive the benefits and demonstrate value with quick wins. In parallel, existing automation standards, technology systems and data management practices will need to undergo a change in a timely manner. Leading companies will find ways and means to adopt a dual track to ensure comprehensive benefits. A long-term strategy with the right levels of capital budget support will clear the path to the mine of the future.

The mining industry has always been associated with volatility and economic uncertainty due to external factors such as fluctuating demand conditions, socio-political changes in mining locations and energy market developments. Embracing change and preparing to adapt quickly to newer business conditions will be core to operational excellence. Digitial and other technological capabilities can play a strong role in supporting a proactive operating model that constantly “sees, feels and hears” the health of operations and provides management with strategic insights to facilitate value-based decision making, creating a sustainable industry model for the future.

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