Digital technology is transforming mining, although there can be financial pitfalls. One company taking an aggressive approach is Newcrest Mining, which is looking to be a ‘leader’ in its application of digital technology, according to Gavin Wood, the company’s Chief Information Officer.

Newcrest technician Louis Wanpis, PNG’s first CASA-certified drone pilot

Wood, speaking at the International Mining and Resources Conference in Melbourne earlier this month, said the company is keen to control the costs of its investment in digital technology.

Newcrest’s Gavin Wood

Newcrest Mining operates the Lihir gold mine in Papua New Guinea and is a venture partner in the Wafi-Golpu gold and copper project in PNG’s Morobe Province.

‘With the Cloud, you don’t need to spend big bucks to get a good outcome,’ he said.

‘When the gold price was low, we looked at an agile delivery model.’

He said the company’s IT investment over the last two years had more than paid for itself.

Variables

McKinsey’s Heyning said technology can improve geological modelling, and reduce margins of error in operations.

‘Companies are using Artificial Intelligence (AI) to run processing plants in a way that is hugely profitable,’ he said.

‘Companies are moving from equipment optimisation to whole-of-plant optimisation.

‘Despite the investment in technology having more than tripled since 1980, many companies are struggling to get an adequate return on their investment.’

‘You are talking about tens of thousands of variables.

‘Suddenly, you get a whole new layer of value. Processing and advanced analytics is where the money is.

‘Robotics is more capital intensive. Increasingly, pairing robots is where the money is.

‘For example, combining drones and autonomous trucks can reduce the margin of error in [extracting ore from] soil volumes by 20-30 per cent.’

Return on Investment

McKinsey’s Christiaan Heyning Source: IMARC

Heyning said 53 per cent of the impact of digital technology comes from advanced analytics, 25 per cent from process digitisation and 21 per cent from robotics and remote control.

He noted, however, that despite the investment in technology having more than tripled since 1980, many companies are struggling to get an adequate return on their investment (ROI) in digital technology.

Only half of all mining companies get an ROI above the cost of capital.

The challenge is in laying the digital solution across the company.

‘How do you scale the technology up to get a company-wide effect?’ he asked.

Heyning outlined five key success factors to achieve scale:

1. Doing things that make money in the next 6-12 months;
2. Making sure that the business is “pulling” the solution rather than the technology being “pushed” on to the business;
3. Use small pilot projects in multiple settings and change course often;
4. Address the culture head on to build a digitally capable organisation;
5. Develop a data architecture that allows the business to scale up.

Culture

Cultural challenges are often critical, according to Heyning.

‘People will be asking: “Will this robot take my job?”

‘Eighty per cent of the new skills need to come from the people you already have.

‘You can’t go out and recruit an entirely new organisation.

‘The model must be fully tested.’

‘Working with people on the front line is also essential.

‘Using very plain language also goes a long way to easing fears.’

Heyning said the digital technology has to work technically, change the approach to maintenance and inventory, and the model must be fully tested.

He said the mining company must then reallocate money saved on maintenance to other activities or profits.

‘If you don’t do that, it won’t work.’

Gains

GoldCorp’s Luis Canepari Source: IMARC

Luis Canepari, Vice President Technology, for the Canadian miner Gold Corp, said the company’s digital system,Robots, drones and profits: how digital technology is revolutionising mining IBM’s Watson, is faster than humans in analysing the company’s existing data to locate opportunities.

‘Watson is using 100 parameters and took 4.5 hours, rather than 165 hours, to identify new targets successfully.’

Canepari added that the digital technology improved shovel precision.