Research by EY analysts has highlighted digital effectiveness as the biggest business risk for miners in 2018. Plainly put, the industry is behind in its digital journey and missing out on improved operational efficiency and reduced costs, while simultaneously becoming a target for hackers. So what can be done to harness digital rewards while also protecting against cyber threats? Heidi Vella spoke to EY global mining and metals advisory leader, Paul Mitchell, to get some answers.
The concept of digital mining is nothing new. In fact, a 2017 EY poll of more than 700 industry representatives revealed that the majority had already started the digital journey. Their activities, however, mostly consisted of small-scale, initial ‘no regrets’ projects, but nothing near revolutionary.
Yet digital goes beyond simply adopting technology – it should be addressing key business issues and resolving the sector’s number one operational challenge: improving productivity across the value chain, according EY.
Despite the opportunity presented by the technology that’s already harnessed by other industrial sectors, EY insists the transformative benefits of digitising the mining sector is far from being fully realised.
Here, Heidi Vella gets some insight into the industrial benefits from EY global mining and metals advisory leader, Paul Mitchell.
Heidi Vella: In EY’s report, it states there is a disconnect between the potential from a digital shift and the successful implementation of new technologies; why is this still happening in the mining sector?
Paul Mitchel: Our Digital Disconnect report highlights some reasons. Mining companies have been innovators and early adopters in the past, but have a poor track record of implementing technology. Some key challenges relating to digital have concerned us.
These include a notable lack of clear direction for the implementation pathway; there is consensus between stakeholders on the digital vision but little discussion on how to practically and effectively move from current state to digital adoption.
A perception of high costs, namely that decision-makers think projects linked with IT systems often over-promise and under-deliver, often with significant budget overrun. This perception delays the decision to start a digital initiative. There is a degree of scepticism from leadership about the robustness of the business case for digital and a lack of clarity on what the new business model will look like.
Furthermore, ownership of digital transformation initiatives is often unclear, and siloed organisational structures create a mismatch between teams that operate differently.
Also, data systems often lack maturity to support a future vision – there needs to be an increase in the quality of data available for decision-making. In some areas, there are huge amounts of new data, while other parts of the value chain present with gaps in data quality and issues in gaining access to required information.
HV: Do you see a change in miners’ attitudes towards digitisation and is anyone in particular leading the charge?
PM: Digital mining has been with us for over half a century and the mining sector has already embraced the introduction of new technologies, such as plant control systems, GPS technologies, mobile broadband and automated haulage. Miners have been the leaders in this field but have reached an inflection point. They are now struggling to identify what the future digital state should look like, hampered primarily by challenges in executing strategically planned implementation.
I don’t think there is a clear leader in digital at this stage, but rather different companies are leading in different areas. Some are leading in the automation space to improve productivity, while we’re seeing ground-breaking developments in the innovation space from others.
HV: How does digitising help miners stay ahead of the competition?
PM: It’s not really about adopting technologies but rather thinking of it as a fully integrated business culture shift. Within operations, digital should initially be used to drive productivity.
Indeed, a number of applications provide an excellent way to manage the challenges of variability and to gain commercial advantage.
These include optimising plans and productivity rates by combining detailed ore body data with equipment operational and maintenance data; enhancing asset reliability with predictive maintenance systems that can improve haulage rates, reduce labour costs and minimise equipment downtime; understanding true end-to-end capability and systems bottlenecks, and supporting loss elimination; as well as using predictive analytics to increase agility and responsiveness to changes in market factors.
The second wave of opportunities is around improving the supply chain in the broadest way possible, and extracting commercial advantage in the sales process.