Digital solutions in the mining sector are typically disconnected, with each solution designed specifically to deal with one element of the mining value chain.
Companies operating in the sector are, however, being advised to pursue long-term, integrated solutions that work across the mining value chain instead.
This was emphasised at EY’s Mining and Metals Forum, held in Johannesburg, on Tuesday, where the current digital landscape of the sector was unpacked and the best way forward for mining companies was explored.
While some headway has been made in the mining sector in using digital solutions effectively, mainly for the key agenda of improving productivity, it was indicated that a myopic approach of this nature would not generate a competitive advantage for mining companies.
Further, the mining sector lags behind other sectors when it comes to digital effectiveness, with very little of its budget typically catered towards innovation.
Therefore, EY urges mining companies to adopt a cohesive approach to implementing digital initiatives across mining sites, rather than pursing individual technology programmes and local optimisation.
EY encourages mining companies to adopt a progressive, multiyear strategy that also accounts for business risk and the primary drivers of value, and not a complete digital transformation, as this would be very disruptive.
EY global mining and metals advisory leader Paul Mitchell indicated that EY champions digital transformation through a series of “waves” – perpetually implementing new digital solutions as part of an integrated strategy.
Wave one activities are focused on the productivity or performance agenda, typically operated within a single function.
Wave two activities are broader and encompass the entire value chain, inclusive of initiatives to better manage margin through interactions with customers and suppliers.
Wave three deals with the rise of disruptive factors that may create considerable changes to the way in which the sector operates, and this may necessitate a step change in the business strategy.
However, it is important to be cognisant of the fact that, as more strides are made in digital solutions, companies will become exposed to a myriad of risks that need to be managed.
Therefore, cybersecurity is vital and affects every part of mining companies, and should be viewed as such, rather than being perceived as a small facet of the business.
For example, entities such as mining competitors, traders or even sovereign States looking to get ahead will often sabotage other companies. Operational equipment, especially if it is completely autonomous, can be stopped completely or false information could be fed to databases, for example, which could considerably impact on productivity.
The forum also highlighted that digital transformation comes with its own set of challenges, and that these need to be dealt with effectively.
The biggest challenge is changing culture, as workers need to be acclimatised to new technologies and fears must be assuaged that these will not cause them to lose their jobs.
Therefore, one challenge when pursing digital transformation will be offsetting digital strides against jobs losses.
Digital approaches must encompass accommodating affected workers through comparable employment. This will also ensure that labour regulations are followed and that companies do not lose their licence to operate.
Mitchell posited that digital transformation would lead to a change in workforce demographics and the skillsets required across the sector.
“This presents an opportunity for mining businesses to retrain employees and restructure their organisations to pivot the focus of work away from manual tasks and toward improved decision-making and efficiency of execution.”