(As originally published in LinkedIn, May 2017)
Making the jump to digital mining means increased productivity
By: Iain Thompson, Associate Partner in Advisory Services at EY Canada
It’s no secret there’s a gap between productivity and digital adoption in the Canadian mining sector. Those companies that are working to close to the gap, increase productivity and decrease costs. While the reasons for closing the gap seem obvious, the path to making it happen can be tricky to navigate alone.
The mining industry has been embracing digitization for more than half a century through advances like mainframe and personal computing, processing plant control systems, Global Positioning Systems (GPS), mobile and broadband, cheap sensors and data storage, and recently, cloud computing.
All of these technologies serve to increase productivity and bring down costs. Some specific examples are:
- Simulation modeling: In Australia, some companies have used simulation modeling to reduce risk and make informed decisions about iron ore and coal expansions over the last two decades.
- Mine planning and optimization tools: Using software developed at McGill University to increase mining optimization, some companies have seen production forecasts increase from 5% to 25%.
- Mine monitoring and control systems: From testing the grade of metals being mined and processed, to tracking people and equipment, to improving the efficiency of operations via satellite, companies can now monitor their activities more closely, from afar.
Despite the track record of successful implementation, companies in the mining sector still tend to be apprehensive about the digital transition. But with proper up-front consultation and a thorough plan for implementation, the way to digitization can be thoughtfully, effectively and efficiently navigated.
Putting digital transformation on your corporate radar
Of 700 mining companies recently surveyed by EY, only 31% acknowledged that digital was part of their day-to-day operations. Fifteen percent of survey respondents said that digitization was not on their agendas at all. While organizations generally recognized that digitization and automation is critical to future success, they struggle with three common themes:
- The large amount of information available
- The costs involved
- The change processes required
There are still many organizations and people that believe mining is simple enough to not warrant up-front and continued investment.
But when companies implement technologies correctly, they realize that digital is an essential part of achieving greater productivity. The problem is not whether a company should go digital; the issue is how to go digital in a well-planned and systematic way that shifts the whole business culture in the process.
Navigating the pathway to digital integration
According to EY’s Top 10 business risks facing mining and metals, 2016–2017, productivity is still the number one challenge for the mining sector. Even though there have been improvements in cost reduction and labour management, asset productivity continues to fall behind.
By looking at other sectors and their utilization, miners can find examples about how to better manage variability challenges. The manufacturing sector mindset, for one, focuses on improved production through variability management and is a prime example of effective implementation of digital technology.
There are three elements to successfully integrating digitization into mining operations:
- Digital alignment to the productivity agenda
- A market-to-mine approach to the business
- Leadership and culture to support elimination of loss
Only through understanding past successes and failures can mining operators develop a clearly defined path towards increased productivity and lower costs. The key to a successful approach is ensuring a competent navigator helps guide the way.