As the mining sector undergoes significant technological shifts, exacerbated by the Covid-19 pandemic, a new report reveals an encouraging people-centric, Fourth Industrial Revolution- (4IR-) enabled approach to the modernisation of the sector.
The first edition of ‘10 Insights into 4IR’ report, launched on February 1 by advisory firm PwC and mining industry employers’ organisation Minerals Council South Africa, shows South Africa’s mining industry increasingly making use of innovative and cutting-edge technologies to run more efficient operations, to manage risk, to improve health and safety and reduce the cost of maintenance and extraction, as well as pursuing a skills uplift.
“South African mining needs 4IR. We need to be globally competitive on costs and on environmental, social and governance issues,” said Minerals Council South Africa CEO Roger Baxter, pointing out that, over the last decade, multifactor productivity in South Africa has fallen by 7.6%.
“Mining cost inflation was 2% to 3% higher a year than general inflation, leading to two-thirds of our output being on the upper half of the global mining cost curve. Mining output declined by 10% and minerals sales contracted by 11%.”
Using 4IR technologies will make the South African mining sector more globally competitive, more attractive to the best talent and, ultimately, enable mining to contribute even more as the economy and society are reimagined, he commented.
“With the high levels of unemployment, poverty and inequality, a pure technology-focused approach will not be socially acceptable. It is hence encouraging that this report does not only focus on technological issues, but also on issues related to culture and the upskilling and/or reskilling of the workforce,” he continued.
The report, outlining the state of digital transformation in the South African mining industry, revealed that CEOs are driving the digital agenda, with the biggest portion of survey respondents, at 47%, stating that the CEO was the primary driver of digital transformation in mining businesses, with only 5.2% mentioning the CFO.
Beyond this, PwC South Africa senior manager Ian Mackay said that the executive head for technical or the group engineering head was seen by 9% of the respondents as being a driver of 4IR within their business.
Further, another insight provided by the report is that 32% of respondents considered their companies digital champions and innovators that would pilot new technologies without waiting for others to prove it first.
However, according to the criteria for digital champion listed in the report, only one company made the cut with its integration of safety, people, production and cost, and was starting to experience the link between 4IR and better bottom line results.
The report defined three other categories, namely digital novices, which are companies that are still in the early stages of technological maturity; digital followers, having developed a clear strategy and putting together the building blocks needed to progress; and digital innovators, which are companies finding new value by sharing information and data and working collaboratively between business functions.
According to the survey, 69% of the respondents were digital followers and 13% digital innovators, while there were “very few” respondents considered digital novices, where the company has not yet connected their functional silos and embarked on the digital journey.
“We expect several more companies to join the digital champion category in the coming years, particularly as more businesses are finding the value of technology and starting to experience the connection between 4IR/Digital and better bottom line results,” says PwC South Africa smart manufacturing lead Vinesh Maharaj.
Meanwhile, investments into digital technologies are growing.
“All companies surveyed were investing in digital technologies, with the average investment portfolio across all respondents around R111-million a year. However, 25% of respondents were spending more than 0.3% of turnover on digital investments, an average of R166-million a year,” he said.
This growth was attributed to digital technologies delivering benefits such as throughput increase, efficiency increase, lower costs and improved health and safety.
More than 90% of the companies surveyed expected at least a 10% throughput increase, with some as high as 30%, while the majority expected more than a 10% reduction in costs.
One of the greatest benefits, however, is expected in the core operations, including asset management, maintenance and repair, mine support services, mining production, processing, engineering and safety, health and the environment.
The report also questioned the extent to which South Africa’s mining community was using or planning to use 11 4IR technologies in their businesses over the next five years.
The most implemented technologies were condition monitoring at nearly 80% and connectivity and the Internet of Things at almost 60%.
“Nearly 50% of respondents had piloted artificial intelligence programmes recently and we expect the implementation numbers to increase significantly over the next five years. 35% of respondents were using robotic process automation, with another 10% planning to implement it within five years.”
“Nearly a third of all respondents already use virtual reality (VR) to train staff, while 20% were currently piloting and a further 28% intended to implement VR training within five years,” the report highlights.
Meanwhile, another insight emerging from the report is the changing workforce landscape, with 95% of the respondents believing that there would be a change in the nature of the workforce over the next five years in response to a need for more skilled employees.
More than 60% of respondents expect the number of unskilled workers in their companies to decrease, in contrast to just 5% who expect it to increase.
While almost 80% expect production costs to decrease over the next five years, 11% expect them to increase since a more skilled workforce will result in a higher wage bill. However, this increase will be offset by the expected increase in productivity and efficiency.
“In addition, the onus would be placed on mining companies to upskill their workforces to work in this new world as it would require new skills and 30% of respondents had actively started to invest in skills uplift in order to unlock the benefits of digital transformation.”
Meanwhile, less than a third of respondents believed that their employees had the requisite skills to realise their vision of the digital future, while over 70% believed that their leadership had a clear vision for the digital future and acted as role models for digital transformation.
In terms of challenges in implementing 4IR technologies in their businesses, 54% of mining companies highlighted not-yet-mature data management practices; 47% said the workforce lacks the skills necessary to implement 4IR technologies; and 32% listed data and cybersecurity concerns.
“Only a quarter of respondents mentioned the challenge of return on investment as an obstacle to digital transformation.”
The report surveyed 23 executives across 19 Minerals Council members.