4 Myths that prevent Innovation in the Mining Industry

Recently I've noticed a lot of people in the news talking about the importance of innovation and commercialisation as potential drivers of enhanced productivity in Australian industry.   With a number of recent studies talking about how Australian industry productivity levels have fallen behind our peers, many argue that this has to do with a lack of investment in innovation.   In a powerful talk, Mark Cutifani (CEO AngloGold Ashanti and now CEO Designate of Anglo American) discusses, among other things, the importance of mining to the world economy and its innovation challenge.  Click Here to watch Mark speak.

A lot of industries around the world are investing in innovation that is being driven by advances in information and communications technologies.   These advances include: New wireless communications technologies, smaller and more powerful mobile computing platforms, access to big data and big computers over the internet (think Cloud computing) and whole new ways for people to collaborate (think Twitter and Facebook).  The combination of all these technology trends forms the eye of a perfect storm that will allow many companies and industries to re-invent the way they operate.   

In a mining context these trends present opportunities to work and be effective in remote areas, or across geographically dispersed footprints, or in difficult operating conditions.   New approaches that these ideas will allow are machine and process automation, operational control and monitoring from a distance, mobile equipment automation, and comprehensive sensor networks that allow unprecedented vision of an operation.   So why aren't mining companies investing hell-for-leather in these new ideas, to try to find competitive advantage in their marketplaces?    

Over the last 15 years working around mining companies trying to bring new technological approaches to the table, I have been rebuffed more times than I can count.   This is not to say that all mining companies are luddites.  Some companies are rising to the innovation challenge with major step change initiatives.  However, they are the exception, not the rule.   Here are some of the myths that are used by miners to avoid innovation.

Myth Number 1.   We are different to other industries.   Many of the ideas that I talk about to miners are ideas that have already been proven to work in other industries.   But the first response I often get is that mining is different to other activities.   It is true that there is inherent operational complexity in mining and processing an ore body that is not homogenous and invariably different to every other ore body in some significant way.  This means that miners need lots of flexibility.   Fair enough, but once the ore is out of the ground and loaded into the transport medium, the process becomes as predictable as any industrial chemical or manufacturing plant, all of which are leaps and bounds ahead of mining in terms of automating their operations.    And even parts of the upstream mining process have outside analogies.  For instance, there is a direct analogy between operating and automating a truck and shovel fleet in an open cut mine to operating and automating a tank warfare operation.   Lots of large machines hooning around the countryside with a need to know where all of the others are, avoid crashing into each other, and deliver an efficient outcome for the operation.   Yes mining is different, but it’s not that different, and parts of it are very similar to other industries.

Myth Number 2.   Ours is a simple business.   I often hear the refrain that mining is a simple business - that “we just dig stuff up and send it to our customers”.  Interestingly, I often hear this argument from the same people as argue for complexity being a big issue.   The level of complexity that we observe depends on the scale at which we look.   At the highest level mining is a fairly simple matter, but this masks levels of great complexity within the industry.   It is true that no two ore bodies are the same; geographical issues introduce variability and even the nature of the metallurgy will dictate the complexity of the extraction and concentration processes.   Miners do much more than dig stuff up and sell it.   All of which leads me to conclude that smart new information technologies must surely be able to lighten the load.   For instance, with all of the computing power available today, and with clever new analytical programs, the simulation of multiple potential outcomes becomes relatively straight forward.   If complexity of the ore body means we can't make decisions in advance, then simulation holds the key to building multiple mine plans from which we can choose as we go along and improve our knowledge of an ore body.   As the ore body knowledge is improved, previous simulations would help operators quickly home in on the right course of action.

Myth Number 3.   Innovation is risky.   Yes innovation is risky.   But it is not as risky or expensive as flawed investment decision processes involving billions of dollars.   It is not as risky or expensive as exploring for minerals, and it is not as risky or expensive as not innovating at all.   Innovation through R&D is a process.   It should be undertaken strategically, and it should be managed like all other business processes with one small exception.   Early in the innovation process, ideas need to be given seed funding to help them deliver a business case and they need to be protected from those whose interests are vested in the status quo.   That seed funding needs to ensure that the biggest risks, the biggest assumptions in an innovation idea, are tested early, and failed early.    After developing a sensible business case and identifying a path to commercialisation, the idea must be managed as rigorously as any other project.

Myth Number 4.   We can't afford Innovation.   I am often amazed that highly profitable mining companies feel they can't invest in their future.   Of course they do - mineral exploration is the most visible example that they do.   And most mining companies over a certain size will have some significant investment in R&D, either in-house or as investments via university research.   But almost without fail, mining companies invest in incremental innovation that is focussed on the existing portfolio of problems.   Very few take bold steps.   What I find interesting is that mining companies, especially big ones, are more than happy to make flawed (in hindsight) investment decisions that can destroy billions of dollars of shareholder value, but baulk at spending a few million dollars on doing some fundamental research into step change innovation.  

Not all miners are adverse to innovation.   I was recently involved, with many others, in an innovation activity at AngloGold Ashanti (www.aga-tic.com).   Faced with the problem that their South African gold mines were becoming too deep to mine profitably, and the knowledge that there remained enormous reserves of gold below 4000m, AGA initiated an open innovation forum with all of their major suppliers to attempt to re-invent underground mining at depth.   The outcomes are impressive, and are now being tested on a block of ground to see if the new technologies are up to the task.   It's a great example for the industry.   

4000 metres deep and counting.

A couple of weeks ago, my colleague Colin Farrelly and I travelled to Johannesburg in South Africa to participate in a "Technology Innovation Consortium" with AngloGold Ashanti - http://www.aga-tic.com/agatic/.

The idea of this group of invited participants is to redesign the mining process, from the ground down (if you like). We have a marvellous time brainstorming solutions to really hairy problems The fundamental issue facing AngloGold Ashanti (AGA) is that at depths of greater than 4000 metres the working environment and the logistics and energy requirements to operate become very difficult indeed. Col and I went to the bottom of the mine, 4000 metres below the surface and I have to say the trip was an eye-opener. I've been to a few underground mines before, and they pretty much look the same once you are below the surface, but this one is a doosy. Just the thought of all that rock above you makes you take a pause for reflection.

For a start the temperature of the rock down there is 65C (160F), and at 5000 meters, where the company hopes to be able to mine in the future, the rock temperature is 85C (200F). In the presence of up to 100% humidity, people cannot work at these temperatures. Enormous amounts of energy are spent on making the environment livable for the workers, and at greater depths, even more energy will be needed if current methods are continued.

In addition, the logistic challenges at these depths are enormous. Large amounts of water are pumped from the top to the bottom of the mine, and even more is pumped out (groundwater leaks in). Thousands of tonnes of ore are lifted out of the mine every day. On my visit it took me nearly 2 hours to get to the working face, and the same to return. Its like that for every miner as well so of their 9 hour shift, 4 hours is spend travelling underground.

AGA have decided that they will not be able to mine at greater depth safely (only a week after we were there there was a fatality in the mine) nor will they be able to use current methods economically. This consortium is a real expression of their desire to change with new ways of mining, automation, innovative use of energy etc. Its pretty exciting and all of this innovation will fundamentally depend on robust, reliable, and safe IT and communications systems.

Have a look at the website to get more of an insight into where the mining industry is going in the future.

Mining underground in Mponeng Mine, South Africa

Automation in Mining

Most mining companies are about to embark on the journey towards ‘automation’. Companies like Rio Tinto have made a good start, but they all have a long way to go. Automation is much better progressed in many other industries, especially where automation of fixed plant is where they have had to focus: manufacturing and other process industries, Oil and Gas and other chemical type industries, and rail / transport systems. Mostly these are industries in which the processes are constrained by the engineering. The challenge for mining is very different, very few mining operations are constrained by the engineering, indeed they are geographically unconstrained (at least within the boundaries of the ore body).

One way to look at automation is through the lens of the future objectives – what is the mining process to look like? Currently the major constraint is that the mining process is essentially a batch process; drill, then blast, then collect the ore, then load it into the transport system. Current automation efforts are really about pushing the continuous process as close to the mine face as possible. What we see people like AngloGold Ashanti doing is investigating what technologies are available to make the actual mining process underground continuous. They seek to get out of the drill and blast paradigm. This is the future of automation.

In the meantime, there are things that can be done to extend ‘automation’ into other parts of the mining process, but for every company, that will mean something different, so each needs to define their automation objectives and a high level view of how to get there. These matters need to be considered (in order) as follows.

Automation Objectives. Mining companies obviously need to understand what problems they are trying to solve – nobody else can really do this for them, although the AGA Technology Innovation Consortium (AGA-TIC) has taken an ‘open innovation’ approach. (www.aga-tic.com)

What is Future Vision. Every journey has a first step. Understanding the future state is informed by the objectives and needs to be developed without constraints in the first instance, that is don’t worry about where you are today. Big innovation will probably replace the current state anyway.

Technology. Future technology is perhaps the hardest thing to quantify – current trends only loosely inform where technology will be in even the medium term. The trick is to plan for the no-brainers and build agility into the technology plan. Any automation story will however be underpinned with better and more pervasive communications, smarter ways of collecting and analysing innovation, and robotic technologies that will drive new machines.

Culture. Culture will be the most difficult thing to change, and will take a long time. Companies can’t afford to lose the knowledge in the current workforce, and anyway new technologies are driven by the young, and they will take quite a while before they are impacting how you do your mining business.

What is Current State. Once the end state is defined, you need to know how ready your current environment is for the changes that will be necessary. Knowing where change is needed and where it can be ignored is all part of doing an Automation Readiness Evaluation. Besides, there will be some things that can be done early that will improve the business and help to finance longer term initiatives.

Technology Innovation Plan. How you go about innovating is the core of the implementation problem – will it be open (like AGA) or closed (like Rio Tinto). Both of these methods require investment, but open innovation will probably get a faster result.

Technology Vision. Prototyping automated technologies, Innovation in iterations...

Systems Integration. Making sure that the systems you design can act in awareness of each other is a key to machine automation. Machines will need to negotiate with each other in the mining environment because they will have freedom of movement. For instance, to truly automate a haulage fleet, each machine will need to know its own place in space and system, as well as every other machine. This means a common language, decision rules, etc.

Knowledge Management. Automation is really a way to embed intelligence that currently resides in people’s brains into the systems and machines of the future mine. There is a huge cultural change issue in this.

Further Observations

Many industries have been on this journey before – mining companies starting out should make themselves informed on the lessons they have learned – petroleum, aerospace, military in particular.

As a concept of operations, automation in any context will ultimately be made possible by how well you can collect, transport, and analyse data automatically.   We currently know a great amount about this, and recent advances in intelligent sensors, mobile communications and advanced analytics are making the issue more addressable – complicated to be sure, but the technologies are becoming ever more capable.