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The role of digitisation in mining
Mining firms today are facing a barrage of challenges that only a concerted focus on digitisation can address. Across the broad range of ferrous, non-ferrous and precious metals, commodity prices remain subdued and are unlikely to enter any new growth cycles in the near future, writes Scott Mcgowan, global mining practice director: Africa at Wipro.
However, the growth cycles in commodity prices over the past decade or so has thrust mining stocks into the spotlight. To maintain their attraction to investors, and maintain the strong margins seen in times of higher commodity prices, mining organisations are increasingly considering technology to drive operational efficiency and transformation.
Due to the importance of scale of economies in this sector, waves of consolidation have left many large mining operations with fragmented systems – sprawling reams of outdated legacy systems. Due to this complexity, mines have generally been slower than most other verticals to invest in new enterprise technology.
Now, the rules of the game have changed. Mining houses need to mine at deeper and deeper levels; while dealing with volatile labour dynamics, and a dearth of skilled engineers and technicians in the sector. Perhaps the most fundamental change has been from a supply-driven market, to demand-driven which essentially means that the industry is moving away from stockpiling material ready for sale to providing visibility of material to the marketing departments. This optimises the value of the material that they have in process. We call this the ability to optimise the ore-body balance sheet.
Having the right technology assets is crucial in meeting the needs of this more challenging, more competitive market. Miners need the most advanced tools to predict the productivity of mines or shafts; and ensure that output achieves the buyers’ desired state of ore. They must create cost-efficiencies wherever possible to offset the increasing cost of production.
Mining technology is essentially divided into two areas: back-office or administrative technology, and operational technology (which actually touches the ore). At the heart of digitisation in mining is the concept of ‘standardisation at the back, differentiation at the front’. The goal should be to create an efficient, centralised back-office environment, combined with cutting-edge technical innovations that differentiate the miner from its peers.
These on-site innovations include the likes of:
For mining firms to continue expanding, to continue consolidating, and to retain the interest of profit-hungry investors, digitisation needs to take place in every area of the mining operation. The new sources of competitive advantages may no longer be things like scale, or location – but will be found in areas like technology investment and speed of integration. Today, a wealth of new mining technology is available for those that are most committed to adopting and capitalising on it.