The digital disconnect in mining
Contrary to the hype, digitization isn’t new to the mining industry. The sector has seen multiple waves of digital transformation since the 1950s – from computer simulations to modern GPS-controlled heavy haulers. The question is how much has the industry benefited from previous digital waves, and how much will it benefit from the latest wave? For example, the manufacturing sector adopted a digital mindset to help remove variability and improve productivity.
With productivity being the number one operational risk in the mining sector, companies ought to consider any approach that lowers that risk.
In mining, variability always exists. By applying three key manufacturing concepts, mining companies can now focus on managing variability, rather than removing it. The three key elements to this approach are:
- Align digitization to the productivity agenda.
- Take a market-to-mine approach to business.
- Make sure leadership and overall company culture support the elimination of loss.
Learning from the past to move forward
The link between the manufacturing mindset, digitization and productivity is probably best summed up by the idea that digitization enables new ways to drive productivity and manage the challenges of variation across the value chain.
Yet experience shows us that from the first computer simulations 50 years ago to the GPS-controlled heavy haulers of today, there has been a gap between what companies want to achieve and what they actually achieve: we call that the digital disconnect.
I see this disconnect characterized by a skepticism of new technologies which serve as a barrier to adoption in mining organizations. Most of us can think of an instance where a new technology was deployed with the best intent yet languished because users failed to adapt.
With the renewed focus on productivity in the sector and the disruption in all sectors around things like artificial intelligence, Internet of Things, cloud computing and advanced analytics, there’s enthusiasm for the current wave of technologies in mining. With these variabilities in mind, the mining sector is experiencing the perfect opportunity to adopt the manufacturing mindset and adopt digitization.
A marginal upswing in commodity prices is accelerating technology implementation and providing capacity to take on transformative initiatives. In a recent survey, EY asked where digitization ranked on companies’ agendas. We found that just over 62% of our clients had either started the journey or had digitization embedded as a part of their day-to-day business.
Many companies need to ask themselves questions like:
- How could knowing more about my orebody improve mining and processing productivity?
- Would monitoring and modelling real-capacity losses and bottlenecks across the value chain help me with my overall productivity?
- How would I respond differently to unforeseen impacts from things such as weather events if I were able to change my production strategy?
Companies need to start thinking about how to integrate a full cultural shift. In Canada’s mining sector, we’ve seen a rapid increase in digital initiatives over the past 18 months. Most companies are planning on deploying multiple solutions including: real-time decision-support solutions, real-time performance management systems, augmented reality solutions, artificial intelligence solutions, advanced mine-production management systems, and predictive maintenance solutions.
Mining events are once again filled with exhibition floors of enthusiastic technology vendors eager to demonstrate how they can solve productivity and safety challenges with the latest technology.
Our experience shows that for mining companies to extract the full value of the next wave of opportunities, they’ll need to develop a comprehensive digital implementation strategy to close the gap created by the digital disconnect.
Connecting the disconnected
In addition to developing a strategic path forward, when considering digital solutions mining companies will also need to address the perception of high costs, accountability for digital projects and their benefits, how educated employees are on new technologies, and how to use existing systems and processes that are not being optimized.
The digital agenda needs to be paired with a market-to-mine approach to business, strong leadership and a culture that supports reducing loss and increasing output. Companies that maintain the status quo can expect the same results. Those that adopt a manufacturing mindset when building their digital agenda have a higher probability of improving productivity.
IAIN THOMPSON is EY BC Mining & Metals Advisory Services Leader.