By: Nigel Bailey, Richard Helm, and Grant McCabe from The Boston Consulting Group.
Mining, those in the business will tell you, is not like other industries. Companies operate across geographically dispersed and remote locations, and working conditions can be severe and unpredictable.
Indeed, there is an extraordinary amount of variability, from the weather to the quality of the ore. And little of it can be controlled. Mining teams, often far-flung, have a hard time working together in a system, much less an optimized one.
For a long time, miners have simply accepted this lack of efficiency as a fact of life. But does that really have to be the case? No doubt, mining companies could better coordinate their operations if they more resembled manufacturing companies. Manufacturers can integrate their assembly processes under one roof and more easily target, control, and reduce variability—such as by improving the way they manage suppliers and train their employees. For miners, it’s not so simple. How does one control the weather? Or know for sure what is in the ground?
Not surprisingly, no one has yet figured out how to make mining more like manufacturing. But we think that prospect is no longer out of reach. Certainly, mining operations aren’t going to take place under one roof, but processes could be integrated end to end, and variability could be managed better. So while a mining company may never look like a manufacturer, it could nonetheless run like one.
The key to this approach lies in something mining companies have already started to embrace: automation.
To date, the industry has utilized automation mainly to optimize discrete subsystems within the mining value chain. In Australia and South America, for example, companies are starting to move to autonomous operations, piloting driverless trucks and drills and studying the use of driverless trains. But these discrete improvements, while welcome, only hint at the possibilities.
If more machines across the value chain were connected via the Internet, for example, data on performance and conditions could be collected and sent to a central control center. If this information were then fed into software with an optimizing algorithm, decision making could be transformed, because software can process far more variables than humans—and far faster, too. So the variability in mining could be better accounted for, resulting in more informed, and ultimately more successful, responses.
That such end-to-end optimization is now a realistic aspiration is due to five key technology trends:
- Low-cost, network-connected sensors and actuators
- Increasingly powerful on-board control systems in machines
- Ubiquitous high-speed network connectivity across mining operations
- Scalable, low-cost computer processing and data storage
- The advanced algorithms and off-line analytics of big data
Together, these trends empower the so-called Industrial Internet, through which different machines in different locations can interact with each other, allowing companies in the mining industry to better link and coordinate their operations. Given recent developments in the market, this ability has not come a moment too soon. Declining ore grades, lower commodity prices, and rising labor costs have squeezed margins over the past several years. Total shareholder return, meanwhile, has dropped markedly for the top ten producers, and even more for companies outside that tier. For producers large and small, improving productivity is essential.
But if mining companies are to create a manufacturing-like system where processes are coordinated, linked, and optimized end to end, then they need to change the way they approach automation. Deployments shouldn’t be ad hoc, implemented in projects that focus solely on specific steps in the value chain. What is needed, instead, is a holistic strategy for integrated automation: a clearly articulated vision for the role, extent, and purpose of automation across the entire value chain.
Developing this strategy is no simple thing. But by concentrating on several key areas—the scope of automation, the implications of more data, the role of vendors and standards, the protection of intellectual property (IP) and cybersecurity, and the challenges of implementation—mining companies can put themselves in the best position to craft an integrated automation strategy that fits their needs and circumstances. Keep in mind, too, that this is not a short-term effort. The transformation of mining that we propose is still at least five—perhaps even ten—years out. But that’s all the more reason to start planning and take the steps today that could lead to leaps tomorrow.
Visit www.miningreview.com on Monday, 16 March to read part PART 2 of this article.