Digital transformation necessary to improve productivity in mining – EY

20th October 2017 By: Ilan Solomons - Creamer Media Staff Writer

Digital transformation necessary to improve  productivity in mining – EY

DIGITAL IMPERATIVE Digital transformation in the South African mining sector will be a critical enabler to addressing the industry’s productivity and margin challenges

The current digital disruption that is occurring worldwide and upending industries has resulted in a digital disconnect – a gap between the potential that digital transformation has and the reality of a track record of unsuccessful implementations – in the mining and metals sector, states professional services firm EY Africa mining and metals leader Wickus Botha.

He says that this disconnect is not a result of a lack of engagement by the sector, but is rather due to unsuccessful implementation, perceptions of high costs relating to information technology (IT) and a disconnect with current operating models.

Botha notes that, as productivity remains the number one operational risk in the mining sector, digital transformation in the sector will be a critical enabler to addressing the industry’s productivity and margin challenges.

“Mining companies will be able to better manage variability and improve productivity by merging digital with a manufacturing mindset that focuses on productivity across the end-to-end value chain,” he states.

Botha remarks that the closing of the digital disconnect will position mines to be “fit for purpose” for the future, thereby ensuring practical and sustainable solutions.

However, he points out that many mining companies are yet to seize the advantages of digital technology, as the current rate of digital progress is out of sync with the scale of the opportunity.

EY’s recently published global report, entitled ‘The Digital Disconnect: Problem or Pathway?’, found that 31% of 700 global respondents in the sector said digital was high on the agenda for their organisation, while 15% said it was not on their agenda at all.

EY Africa advisory mining and metals leader Wim Hoogedeure notes that an example of one of the many ways digital can transform operations can be found in one particular South African mine.

He says that this operation has overcome its “numerous structural challenges” through the use of digital radio technology to monitor slope failures. Hoogedeure says that the technology used by the mine has advanced to a point where it tells the mine’s operators where and sometimes when slope failures are likely to occur, allowing for evacuations to take place.
A second example he cites is a mine that uses digital technology to track equipment and employees throughout the entire operation. “It allows them to optimise the use of equipment, reduce stoppages, minimise bottlenecks and improve asset productivity and use,” Hoogedeure highlights.
He remarks that these mines show potential in terms of both productivity and safety. Hoogedeure states that a pragmatic digital strategy starts with clarity of purpose and understanding where it will create value, supported by an overarching, integrated three-year to five-year roadmap of digital initiatives that are margin accretive.

He comments that it is key to understand what that requires in terms of governance, leadership, culture, capacity, capability and digital process maturity.

Other examples where mining and metals companies seized digital opportunities include optimising production plans and productivity rates across any operation and managing variability under any conditions.

Combining detailed orebody data with digitised equipment performance and maintenance data in a real-time environment allowed scenario analysis of alternative operating plans and made it possible to refine these plans for variability.

Enhanced asset availability and reliability are achievable by moving to digitally enabled predictive maintenance, which allows for better planning of maintenance windows, reduced component and labour costs, and the minimisation of costly breakdown events. Further, once the effective maintenance practices are standardised, the introduction of robotic process automation and schedule optimisation tools is possible.

Hoogedeure notes that understanding “true” end-to-end capability and systems bottlenecks, as well as supporting loss elimination, is fundamental to a manufacturing excellence mindset.

He says that increasing agility and responsiveness to changes in market factors, such as freight rates and customers’ buying behaviour trends, is also possible. This would optimise shipping and scheduling to reduce demurrage, maximise port use and also enable miners to capture spot markets and price premiums through sales contracted at different points of the value chain.

“Digital enables mining companies to increase productivity and also solve safety problems. “It is less about when to go digital and more about how to successfully operate in a digital world. “Mining companies that will win in the digital age are those that use digital to solve busi- ness problems,” Hoogedeure concludes.