Mining industry digs the ‘internet of things’

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By James Wilson, Mining Correspondent

Just 0.5km below ground at Chelopech in Bulgaria, a hard-hatted miner jabs his finger at one of the most useful tools aboard his vehicle: a tablet computer.

Nikolay Hristov, general manager of Chelopech, says producing gold and copper here has become more efficient since Dundee Precious Metals, the owner of the mine, installed 45km of fibreoptic cable to build an underground WiFi network.

“It is the next generation of underground mining. It lets us go to the next level of planning and scheduling and drilling activities that need to happen – and the next level of progress and monitoring those tasks,” Mr Hristov says, showing how miners using tablets can feed data between the face and a control room on the surface. “It is like taking the lid off the mine and having a complete look at what is going on.”

Chelopech’s network is one example of how the mining industry is starting to appreciate the benefits that the “internet of things” can bring to the age-old business of scratching minerals out of the ground.

“The internet of things is now in mining too,” says Mike Elliott, of EY in Australia. “These were dumb bits of equipment 10 years ago. If the computer in the office fell over, who cared? Now underground mines are full of optical fibre and bits of equipment that talk to each other.”

Miners’ interest in joining the data dots and connecting their operations comes as the expansionary ambitions of the commodities supercycle have given way to a focus on reining in costs and improving productivity. Easy steps in terms of cost-cutting – laying off staff and contractors and cutting budgets for exploration – have been taken. Now miners are having to work harder to find additional gains.

Grant McCabe, team leader for “next generation mining” at BCG, says: “There is enormous slack in many mining systems. The industry has not been run with manufacturing discipline. Companies know they have to run a lot more productively.”

They must also overcome an industry trend of falling ore grades, forcing them to extract and process more waste to recover the metals and minerals they seek. They are having to do all this in more complex locations.

Rachael Bartels, head of the global mining practice at Accenture, says: “They really need to work out how to get more from less.”

In some mines, achieving more from less via technology means using unmanned vehicles to run efficiently at low cost. Rio Tinto and BHP Billiton use autonomous trucks in Australian iron ore mines and Rio is investing in driverless trains. Drones – unmanned aerial vehicles – are also starting to be used.

But smarter mining also means using technology to produce data that help miners measure their performance and adjust where they fall short.

“It is not just having automated trucks – it is the degree to which you are creating a connected worker and a connected asset,” says Ms Bartels.

Mr Elliott says: “The most substantial contribution to mine productivity may be the ability to deal with big data around the operation – analyse it, process it and react quickly enough to make a difference.”

At Chelopech, the reading of data from operations means problems that used to take one or two shifts to solve can be addressed in a fraction of the time.

Or consider the million or so holes that Rio drills each year for blasting in its iron ore mines in Australia. John McGagh, the company’s head of innovation, says sensors in drill holes provide “insanely valuable data” that can help Rio understand its ore much more quickly and precisely.

Drilling for samples has always been the way miners have understood the rock they work with – but now “technology allows them to understand the resource in a much more sophisticated way”, says Mr McCabe.

At BHP Billiton Mike Henry, president for health, safety, marketing and technology, says “downhole” assay (analysis of a metal or ore) techniques being developed are improving the understanding of a mine’s geology. “In the old days you’d drill the core, send it away and results would take months to come back,” he says. “This allows us to optimise mine planning and increase efficiency.”

Ms Bartels says better data on what material is emerging from a mine can also make miners’ marketing more effective – an often under-appreciated part of their business. “You can optimise your output from pit to port and beyond,” she says.

The technology and data drive is being supported by the industry’s new generation of chief executives.

Mark Cutifani, chief executive of Anglo American, who has accused miners of lagging decades behind other heavy industries in its processes, says the mining industry is “on the brink of enabling a step change”.

Ms Bartels says there are still questions about the degree to which miners can industrialise and integrate. “Most have good pilot projects but moving it beyond pilot stage and rolling it out across the entire organisation is difficult.”

Supply chain shake-up

Companies such as Komatsu, Caterpillar and Sandvikare working out how they can design the systems needed.

“Lots of these machines have been sending data for more than 30 years but we did not have the ability to use it,” says

Al Frese, solutions and technology manager at Caterpillar. “Now we have that and can do it effectively.”

Some in mining see a growing role for suppliers whose traditional strengths are not in mining – even the likes of Lockheed Martin, which has a history of developing autonomous vehicles for military use. Last year a subsidiary won a contract for minerals exploration on the seabed.

Richard Helm, a partner in BCG’s technology advantage practice, says many suppliers “have some way to go to work out how they are going to capture some of the opportunity. It may be smaller companies that are more innovative, nimble and more able to benefit,” he says. “Many of the traditional suppliers are still scratching their heads. It could be very disruptive and some will struggle.”

In any event Mr Helm says the incremental costs of technology are rapidly declining. “Things are really maturing and once the technology is in there it will set a new base for the industry,” he says.

Copyright The Financial Times Limited 2014

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