June 2019

Digital optimisation: lessons learned from other industries

  • By Simon Yacoub, Vice President, Mining, Minerals and Metals, Worley

This is an excerpt of a paper to be presented at AusIMM’s 2019 Iron Ore conference. Visit ironore.ausimm.com to view more abstracts and register.

The fourth industrial revolution (Industry 4.0) is well under way, but the mining industry lags other more advanced industries (defence, aerospace, advanced manufacturing, etc) that leverage digital best practice.

Maturity in Industry 4.0 results from early adoption, competitive drives, industry focus, willingness to collaborate and government requirements (or expectations) from embracing new technology and innovative practice. In stark contrast, the mining industry is a relatively late adopter, with few of the above drivers. The industry boom years from 2007-14 fostered unprecedented commodity pricing, where speed to market was the key goal for most, which did nothing to encourage embracing new technologies or approaches.

Now as mining recovers from the post-boom dip, when ‘business as usual’ no longer meets business needs, and new government requirements for environmental reporting and transparency add complexity, the time is ripe for a new world approach with the resources sector rushing to Industry 4.0.

Although a late adopter, the opportunity for our sector to build from the knowledge of other industries is strong. Arguably, the Pareto principle (which, in general, states that 80 per cent of results come from 20 per cent of inputs) will equally apply to Industry 4.0; as it has to many others, and the insights of the successful can be used to identify the important 20 per cent on which to focus.

However, understanding your company’s digital capability and position on the digital maturity spectrum is a key step in the journey to Industry 4.0.

In an iron ore context, the experience from mature sectors who have already transitioned to Industry 4.0 indicates that digital capability can unlock significant value for the next generation of iron ore mines to be digital, remotely operated (or supported) and set up to collect data that can be interpreted and presented to inform precise operational decisions. 

Realising this value in the form of improved safety outcomes, step change productivity and uptime availability is the goal. This can be achieved in part by adopting real-time management of the pit-to-port value chain through coordinated data acquisition, analytics and machine learning algorithms developed to identify and inform production before the events occur.

However, every journey begins with the first step and the road is not always straight – which can be challenging.

The ‘glass half empty’ version of the sector’s slow transition to Industry 4.0 could be regarded as an example of how mining self-harms through down cycles, driven by anxious lenders and shareholders demanding reliable return on investment. 

The ‘glass half full’ version presents an opportunity to adopt tried and proven methods of improving productivity without the attendant ‘bleeding edge’ risks and development costs associated with being among the pioneers. Leveraging these digital implementation strategies and lessons from highly sophisticated industries avoids reinventing the wheel, and shortens the development pathway to digital environments.

This paper will explore the opportunity available to the global iron ore industry, with particular relevance to Western Australia and Brazil, where many of the iron ore mines are in remote locations, with challenging environments, and rely heavily on a fly in, fly out (FIFO) workforce. The call to embrace automation, remote control, machine learning and robotics is much stronger in these facilities, changing the need for people and skills, with the prize of improved cost and safety at the heart and sustainability and environmental responsibility also benefitting. 

But the push towards Industry 4.0 is world-wide and not only in the mining and construction industries.

Industries at the forefront of digitalisation

Other industries have confronted this digitalisation challenge before, delivered there by a variety of factors and influences that demanded a step change response. For example, the aerospace industry was driven by the simple fact that several space exploration missions could not accommodate humans on board. Hence the pairing technology or ‘twin’ concept has existed in that industry for several decades, transitioning to the digital twin in the most recent decade when the technology enabled it, as outlined in Marr (2017). In a similar vein, the entire theatre of air and ground defence systems has transformed through the advent of drone/UAV technology.

Both of these examples have immediate application to the mining industry and are repositories of lessons learned in defining a pathway towards a digital environment.

Other advanced industry examples are enabled by an institutional investor, the most profound being the US Government, in funding year after year and having patience in terms of getting a return on that investment. This enables companies to make much more strategic decisions about the development and advancement of technology than the mining industry has ever been in a position commit to.  

Likewise, the automotive and advanced facilities industries, faced with competition on a truly global scale and without differentiating elements such as ore bodies, can only thrive in a productivity and cost efficiency contest.

These and other complex and sophisticated advanced industries provide the greatest opportunity for the mining industry to deliver next generation iron ores today, without the need for conceptual redesign. Proven technologies and solutions that have been tried and tested, both on decades old facilities and greenfield projects, already exist and can be adapted to serve the mining industry requirements.

As outlined above, the global mining industry generally has been reluctant and has lagged in the take-up of technology to drive better outcomes. There are several reasons for this, which must be considered if the inertia embedded in the industry to be overcome. Principal among many others is the fact that from 2007-14 there was no significant imperative to do things any differently because miners were benefiting from unprecedented commodity prices and the focus was all about speed to market. 

The depth of the bust cycle which started in 2014 caused significant damage to the confidence of investors in mining. Compounding the problem was the position of the debt owners, resulting from aggressive capital spending and acquisitive activity during the height of the boom, along with slow-burning capital programs that continued to consume borrowed capital. Consequently  miners have not adopted technology with the same appetite that other, more marginal, industries were forced to do many years prior to protect margins; there has now been a thrust to adopt digital solutions to deliver productivity and cost efficiency improvements.

So, the point we are at today is that our mining industry has come to recognise that while we are not quite the worst, we are not far off being the worst in terms of position and the level of work required to catch up to what is considered best practice.

Image: Edward Haylan/Shutterstock.com.

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