Will electrification spark the next wave of mining innovation?

By

Paul Mitchell

EY Global Mining & Metals Leader

Experienced mining and metals leader. Contributing insightful points of view to the market around productivity and digital.

8 minute read 15 Jul 2019

Harnessing the potential of the mine of the future demands reskilling, collaboration and rethinking mine design.

Around the world, more and more mining companies are looking closely at options to electrify their mines, motivated by the potential to cut costs, boost their license to operate and contribute to a more sustainable sector. EY teams surveyed leaders at mining companies and original equipment manufacturers (OEMs) with operating mines in all continents except Antarctica, to reveal the greatest opportunities presented by electrification, and highlight where changes will be needed to fulfil its potential.

A stronger license to operate and improved economics

The cost of energy represents up to one-third of a mining company’s total cost base, making it a keenly managed component of operations. But, over the past 30 years, energy cost pressures have been steadily increasing, as average grades have halved, and over burden has doubled. Mines are extending to greater depths, increasing the demand for power.

At the same time, calls to reduce mining’s carbon emissions are growing louder. Swapping diesel for electricity is a way forward, but only if it comes from renewable sources. While, in the past, clean energy was not cost-effective, costs have fallen fast putting renewables on track to outpace all other sources of energy and account for 60% of all capacity additions by 2040.

5,285GW of net capacity to be added in the period 2018-40

Sources: IEA World Energy Outlook and EY analysis, March 2019.

Survey respondents also cited the workplace health benefits of replacing the diesel-powered engines of underground mining with electrified equipment. Fumes from diesel exhausts are dangerous for workers and removing them via gigantic ventilation systems is expensive.1 Switching from diesel to electric not only makes economic sense, but enables a greater level of onsite health and safety and helps mines strengthen their license to operate. “The biggest issue I see driving underground is human health. Over time that's going to push us toward electrification” commented one survey respondent. “We’ve got to be investing more in the technology to provide that safer working environment.”

The biggest issue I see driving underground is human health. Over time that's going to push us toward electrification … We’ve got to be investing more in the technology to provide that safer working environment.
Survey respondent

Electrification needs different skills

Electrified mines will require less maintenance and human intervention. The use of automation and the internet of things (IoT) will increase as drones, autonomous vehicles and remote-controlled operational systems are rolled out more widely across mining operations. Data and digital literacy skills will be in demand across all phases of the value chain and redefine the mining workplace of the future. A recent EY report, commissioned by the Minerals Council of Australia,2 found that:

  • Employment in the mining sector is set to increase over the next five years.
  • Skills with growing demand include system evaluation and analysis, mathematics, active listening, instructing, data analysis, data and digital literacy, and judgment and decision-making.
  • Skills in decline include vehicle operations, materials extraction, operations and control, equipment maintenance and blast-hole drilling.

This workplace won’t necessarily be smaller but it will be skilled differently. For example, “driverless trucks” will result in shifting skill profiles from heavy license drivers, to employees with data processing, digital literacy and technical planning skills. For employees, the ability to transition, upskill, cross-skill and reskill will be essential. And for companies, investing in an adaptive workforce will be critical to sustain their competitive advantage in global markets. However, to achieve this, a significant investment and an adaptive workforce will be required. In Australia, for example, as the skills gap grows, Rio Tinto’s US$2m vocational education and training initiative, Resource Industry Collaboration group, has delivered the first nationally recognized course in automation. This will prepare the next generation of workers for mining’s brave new digital world.3

Innovation is also changing the modality of mining work – from mine site to remote and integrated operating centers. Moving workers to safer environments closer to communities can attract new employees, improve retention and help build a more diverse workforce with sophisticated skillsets.

Collaboration will unlock better electrification solutions

The successful expansion of electrification in mining will require clever solutions to integrate new technologies across the sector. But these cannot be developed in isolation – many participants said it was time to work more collaboratively with OEMs, but also within the sector and, potentially in a noncompetitive way.

This represents a big departure for a traditionally risk-averse sector, but collaboration – for example, the partnership among Newmont Goldcorp, Sandvik and MacLean at the Borden mine in Canada – can create value for all parties.

Data collaboration will be a critical element to mine electrification. But, although the benefits of data sharing are widely publicized, concerns, such as loss of intellectual property, competitive advantage or perceived loss of data monetization-related opportunities, have created a protectionist attitude toward data from mining organizations, suppliers and OEMs. This has limited the ability to unlock the full potential of data-driven decision-making:

  • Mining organizations: Mining’s end-to-end systems rely on a common integrated data model to support related business processes. For example, optimizing maintenance planning, scheduling and execution requires an integrated view of equipment performance, asset health, maintenance costs and the economic impact to production. The inability to access, or only partially access, this data compels organizations to explore alternatives, including moving away from tier 1 OEM providers.
  • Suppliers: Suppliers need to understand how their equipment is used to achieve consistency, quality of service and greater levels of customer satisfaction. Suppliers also require a real-time understanding of equipment performance, operating behaviors and conditions, and key operational KPIs, such as mean time to recovery and mean time between failures.

Mine design needs a rethink to build in optionality for future innovation

Realizing the full potential of electrification will require rethinking how mines are designed. Building a technology road map in parallel with mine planning can help embed optionality into design, allowing new technologies to be added as they reach maturity.

Realizing the full potential of electrification will require rethinking how mines are designed.

Companies also need to understand the risk-reward profile of investing in technology and automation – considering how their adoption will generate returns or reduce costs, as well as changing the risk profile of their operations. A phased approach enables mines to immediately lower costs and carbon footprints and deploy technology in stages, as it becomes scalable and more cost-effective. It also helps companies limit their upfront capital investment, which can be challenging to navigate.

Many of the technologies enabling electrification are still prototypes, and moving from lab to mine will require patience – and a new mindset. Safety must remain the priority, but the traditionally risk averse culture of mining should also commit to supporting and shaping the development of emerging technologies. 

For example, electric fleets present sector-specific challenges that go beyond the relative newness of the technology. Electric haulage vehicles have a more limited range than traditional diesel equipment and the need to introduce charging facilities, and factor in time to charge vehicles, adds a layer of complexity. Miners need to follow a staggered approach to charge vehicles to manage charging time and minimize downtime.

Prepare now to mine tomorrow’s deposits

Consider a world where:

  • The supply of energy to mining sites goes far further than fuel mix.
  • The IoT forms part of site design, sending data on energy usage and production schedules to central or area processors.
  • Artificial intelligence identifies patterns in usage, intensity, frequency, or mixture of staff or assets.
  • Power supply is based on renewables and battery storage. Conventional power is directed only to the parts of the site that require it, leaving batteries to charge in other areas or excess power to be sent back to the grid.

Integrated, linked, thinking and responsive systems will bring the new technologies that are transforming the power grids of today, into the mining sites of tomorrow. Electrification represents a viable channel for the mining sector to increasingly adopt or develop new technologies, and processes to explore mineral resources, while meeting environmental and social expectations. But it will not happen overnight – safely and cost-effectively integrating conventional and renewable energy in mines may best be tackled in stages. An initial addition of renewable capacity could be balanced by including flexibility in power contracts that allow for incremental increases in clean energy during the contract term.

Above all, miners need to remain competitive in terms of productivity, reduced operational risks and improved mineral recovery rates and recover metals and minerals of higher quality. As deposits are increasingly becoming deep, remote and difficult to access, new innovative processes are required — yesterday’s expertise may not be able to mine tomorrow’s deposits.

  • The Sustainable Minerals Institute at The University of Queensland and the Norman B. Keevil Institute of Mining Engineering at The University of British Columbia undertook extensive interviews of mining companies and OEMs located in Australia, Canada, Colombia, New Guinea, Peru, Russia, South Africa, Sweden, the UK and the US. These companies have operating mines in all continents except Antarctica.

    The job roles of the interviewees included CEO, CFO, COO, global head of underground mining, vice president (VP) – product line, senior project manager – technology, executive head of technology operations, head of technology, chief innovation officer, VP – sustainability and director of digital technology.

Electrification in mining survey

EY teams surveyed miners and original equipment manufacturers to uncover the opportunities and challenges of electrification.

Read the full report here

Summary

Electrification offers huge potential to reduce the energy costs of mining, while making it safer and more sustainable. But moving from conventional to electric equipment represents a fundamental shift for the industry, and will require new workplace skills, collaborating with equipment manufacturers and other sectors, and rethinking how mines are designed.

About this article

By

Paul Mitchell

EY Global Mining & Metals Leader

Experienced mining and metals leader. Contributing insightful points of view to the market around productivity and digital.