Professional services firm PwC has confirmed in the second edition of its 'State of Digital Transformation in the South African Mining Industry: Ten Insights into the Fourth Industrial Revolution (4IR) 2023' report that all CEOs are driving the digital agenda, with digital solutions being embedded in every initiative.

Since the first edition of the report in 2021, miners have distinctly moved from pondering the ‘why’ in terms of digital transformation to the ‘how’ and the ‘what’, which is encouraging to see, especially since mining is often viewed as a laggard in adopting 4IR and digitalisation.

To determine the implications of digital transformation on South African mining, the firm gathered insights from CEOs, senior leaders, organised labour and graduates from 20 organisations.

In the latest report, PwC identifies four categories of digital maturity, namely the digital novice, digital follower, digital innovator and digital champion, which range from those starting to see the value of 4IR technologies in silos without having embedded it into their strategies through to those mastering connected digital ecosystems.

Most companies currently find themselves in the digital follower category, at 56%, followed by digital innovators comprising 36%, digital champions comprising 8% and digital novices comprising 13% of respondents.

While all respondents confirmed they are on a digital journey and are leveraging technology in this regard, the programmes are at varying levels of maturity along the value chain. These variations are typically driven by the type of mining operation and technology above ground being easier to access than underground.

The complexity of integrating new technologies into legacy systems has forced miners to identify new revenue models and leverage existing infrastructure.

Another big insight PwC has gathered is that technology is being applied where it has the greatest measurable benefit. Key drivers to consider when going digital in mining include issues with legacy systems, as older mines sometimes struggle with digital transformation, the fact that new mines can be designed with digital in mind upfront, lack of qualified resources and resistance from the workforce to change.

To this end, miners are focusing on integrated reporting, integrated mine planning, logistics automation, digitally optimised supply chains, integrated source-to-pay and finance functions, and human resource standardisation, digital training and skills development.

Mandela Mining Precinct Real-Time Information Management Systems programme manager Jean-Jacques Verhaeghe says the value of digital transformation is evidenced by increased visibility and transparency, by having all stakeholders knowing what is going on, reduction of bureaucracy and the ability to make better decisions.  

Digital tools are helping miners move away from historic siloed ways of working, changing the way people think and empowering people to be successful together.

“We are still, however, defining what value means in a mining operation,” Verhaeghe points out.

Another insight, PwC smart mining partner Harmeet Katari points out, is that business priorities have changed but cost is still king. The hunt for value requires cooperation and compromise, he explains.

Thirty eight per cent of respondents put cost leadership, efficiency and profitability as their number one concern, with 11% citing it as their number two concern. Overall, business sustainability and longevity is the second-highest result with 22%.

Although environment, social and governance (ESG) has not been selected as a first priority, it is present in all respondents’ decision-making.

Katari highlights that ESG pillars are often being managed in silos and the application is fragmented, with 29% of respondents incorporating ESG issues into business risks, 14% viewing ESG as a measure of sustainable development and 43% of respondents saying ESG is part of the core business strategy and operating model. The remaining 14% say there is still no common unified standard definition of ESG or its goals.

ESG may be time-consuming and costly to undertake, but it will be worth the time, effort and money in the long run for South African miners, Katari says, citing the consensus PwC found among respondents.

In terms of what the mining industry needs, PwC smart mining associate director Chrisna Evans says a uniform and consistent reporting framework is necessary, one developed by the mining industry for the industry.

Some mining houses are more transparent than others, Evans states, with listed companies often using imported frameworks from the international sphere and adapting it to their needs.

However, respondents feel that mixed reporting is wasting money and value that could have been achieved with a more uniform framework and properly defined compliance.

Evans believes digital tools do not just measure asset performance but also contribute to socioeconomic value. “The greater purpose of digital technology is enablement. Digital tools help provide insights into better ways of working and help miners achieve certain targets. It also promotes an open culture of communication,” she states.

Meanwhile, Katari says the fight for capital allocation is based on measured benefits, but digital programmes are often difficult to quantify before execution, and therefore require a leap of faith. The indirect benefits are also difficult to measure, as is the ability to enable future value.

The most popular value-for-money programmes currently are those centred on safety, security surveillance, supply chain, payroll automation, reporting, community sentiment tracking and maintenance.

PwC’s five-year forecasts show the ongoing upside of digital and 4IR. There will soon no longer be low-hanging fruit, as benefits are increasingly tied to specific programmes and precise expectations. PwC expects companies to gain more efficiencies from information management systems and continue to reduce costs based on data.

Moreover, PwC smart mining specialist Ian Mackay says the world is starting to de-globalise, owing to various global shocks having been experienced. This while the green transition is playing out against the rising cost of living.

Data will likely be the most intensely managed part of the business over the next ten years, in this regard. Miners want to drive asset utilisation, they want automated and integrated reporting, especially on ESG, and measures to proactively manage the business.

Miners wish to be able to trust information that is gathered in real-time and implement more remote operations, with employees based in control centres and not in the field.

To this end, scarce skills is a global challenge for miners.

The mining skills mix will change over time as technology adoption matures and the number of highly skilled employees will continue to increase markedly in the next five years, PwC anticipates.

There is also an expected reduction in unskilled employees with the aim to use digital tools to upskill the current workforce.

“With the digital transformation of mining, we expect new roles to emerge that may not require traditional mining skills or may require traditional mining skills to be supplemented,” Mackay explains.

CHALLENGES TO ADOPTION
PwC finds South African miners are not satisfied with their progress in digitalisation and that there is more to be had from 4IR.

Miners are struggling to generate actionable information that is easily consumed by leadership.

It has become evident that it is immensely complicated to distil information down to pieces of data that are useful in a specific context.

This is evidenced in fatal incidents remaining high globally and operations still being archaic – nowhere near autonomous decision-making. Additionally, Mackay says original-equipment manufacturers are slow to adopt 4IR technologies, and safety systems such as proximity detection should be offered with the hardware and not left to mines to integrate.

It takes time and data to start achieving meaningful results – PwC expects maturity of the first of these platforms only in 2025, according to respondents’ expectations.

Only 50% of respondents have piloted artificial intelligence systems, with 25% of respondents planning to do so in the next five years. Half of respondents have implemented Industrial Internet of Things and connectivity, and 25% are using collaborative robots, or robotic process automation. Only 25% have piloted virtual reality (VR) or augmented reality solutions in operating environments, while 100% of respondents have used VR in training of staff.

About 25% of respondents have implemented predictive maintenance systems and no pilots or implementation have occurred for blockchain technology or integrated end-to-end supply chain planning.

On top of the local challenges of energy security, water, transport and security, CEOs face social and digital tension as transformation to new ways of working is taking place.

Ultimately, miners are focusing on climate change initiatives, energy programmes and transformative technology projects, while trying to keep costs in check and navigating global and local challenges, all the while learning to use data and digital tools meaningfully.