There is a growing recognition among mining companies globally that the adoption of new technologies will play a vital role in how their operations function in future, states research and consultancy firm International Data Corporation (IDC) Asia and Pacific energy and worldwide mining practices research director Emilie Ditton.

She highlights that this imperative is not solely driven by economic realities and low commodity prices, but also the increased emphasis on innovation in the sector, such as the adoption of mechanisation and automation.

“This innovation can help in improving operational efficiencies, integration of information technology (IT) within mining operations and enabling data collation, thereby creating a new working environment for mines,” says Ditton.

She comments that over the past three years IDC has found through its research that between 30% and 40% of mining companies worldwide have increased the amount that they were spending on IT, in particular in their operations units.

“This has ensured that a foundational layer of technological investment has been established within mining companies; it has also shifted the culture internally about the role that technology needs to play in mining,” Ditton explains.

She says that there is a substantial shift in what these imperatives mean for mining companies, with digital transformation becoming a core imperative for many mining companies.

According to According to IDC research, by 2017, 20% of mining companies globally will achieve operational excellence through the ‘manufacturisation’, that is the application of methodologies from the manufacturing sector, of mining. This entails implementing lean approaches and standardising enterprise resource planning (ERP) and operational software integration.

“I am not suggesting that we are going to see mining companies that mine according to demand throughout the sector. However, there is a willingness among mining companies to look at different approaches to drive extreme efficiencies, similar to the approach taken by manufacturing companies.”

To achieve this improved efficiencies outcome, mining companies have to place a greater emphasis on the importance of data and their digital readiness is “critically important” as mines cannot have a data-focused business unless they have the foundational layers of connectivity, security and data management in place to enable this.

Ditton points out that Canadian gold mining company Dundee Precious Metals is an example of a mining company that is implementing ‘manufacturisation’ of mining in its operations. The company deployed Wi-Fi and radio-frequency identification and implemented short interval close loop controls to better understand how its underground copper mines in Eastern Europe were functioning.

The aim of this exercise was to improve production rates and reduce costs without introducing any new equipment. “Over the course of the past three years they were able to double their production outputs and halve operational costs without investing in any new technologies. All this was achieved by adopting the ‘manufacturisation’ of mining approach to the company’s operations,” Ditton highlights.

What is Digital Transformation? Meanwhile, she says that, ultimately, digital transformation’s primary focus is the application of data across all of the operational processes and supply chains to customers, to enable processes and activities to be undertaken in a different way.

Ditton notes that there are a number of challenges and opportunities associated with this, but essentially digital transformation is changing the way that decisions can be made, changing the extent to which things can be automated (incorporating technologies and processes) and driving the ability that mines have to use that intelligence.

Diversified mining giant Rio Tinto recently told Ditton that the company only uses about 10% of the data that it collects in their operations. Therefore, there exists an “enormous opportunity” to generate significantly more insight into their operations, thereby placing themselves in a better position to adapt and respond to market conditions.

A large portion of IDC’s analysis centres around the concept of the ‘third platform’, which incorporates the solutions and capabilities built around the cloud, computing, analytics, social and mobility. These technologies form the foundational layer of the technology implementations that are being made.

“If we look forward into the total global growth trend of IT spending, 80% of it is being ring-fenced for ‘third platform’ technologies. Overlayed across that, is that these technologies enable the ability for the innovation accelerators to be deployed within organisations. Innovations accelerators include security; augmented and virtual reality; Internet of Things (IoT); cognitive systems and robotics.”

Importance of Digital Transformation Ditton stresses that transformation within an organisation is a business strategy and it is “not something that should just be left to the IT department to handle”. She notes that is also something that is fundamentally enabled by technology and, therefore, involves iterative business process evolution and leadership, enabled by the technology.

“Hence, the companies in the mining sector that are having the greatest success in driving their transformations are those that have that leadership in place that can see the relationship between the company’s business strategy and the technology strategy that is required to enable the realisation of the business strategy,” she says.

Digital Transformation in Mining
Ditton comments that IDC undertook a global survey, in May, in the mining sector to establish how far along mining companies were in their transformation journeys. The survey found that the “overwhelming majority” of mining companies were still in the very early stages of transforming.

She elaborates that the digital transformation of the mining sector is just one component of the transformation process that is taking place there, but that it is a “very critical component”.

IDC’s framework for digital transformation in mining consists of four key elements. The first element relates to empowering mining companies’ leaders to drive initiatives to implement digital transformation throughout the organisation. The second element is information transformation that results in the creation of an organisation that values data as an asset. The third element is the application of operation automation, which includes the adoption of IoT and the automation of equipment and processes. The fourth element pertains to works source transformation, which is about integrating internal and external, third-party service providers into the organisation seamlessly.

“The implementation of digital in the mining sector is aimed at creating the bidirectional flow of information across the operation from extraction to process and from delivery to the selling of product to clients.

“This will help mines manage their entire operation as a single system, as there will be greater informational visibility throughout the company and this will place mines in the position where they will be able to respond effectively to market demands with greater agility,” Ditton concludes.