London — Automation and digitalization are becoming critical to the productive future of mining globally as mines get deeper, grades decline and mine investors adhere to Environment, Social and Governance principles which have pushed health and safety issues in mining to the fore. Still, the cost of mine automation needs to fall to ensure industry-wide uptake, industry sources told S&P Global Platts.
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Among the industry's biggest players, Rio Tinto, Vale, BHP and Anglo American have blazed the trail with driverless iron ore trains in the Pilbara, a truckless conveyor-belt ore transport system in Carajas, electric vehicles in the Olympic Dam underground copper mine and "FutureSmart" intelligent mine initiatives in South Africa, but at considerable expense. Medium-size mine operations will need to follow to be able to compete: so far only one mine, Resolute Mining's Syama underground gold mine in Mali, using Sandvik equipment, is reportedly fully-automated from extraction to haulage of the mined product, although human intervention is still required for pre-setting of where to blast.
"Against a backdrop of declining ore grades, mines which may already be hundreds of meters deep are moving deeper by an average of 30 meters/year and there is an acute need for companies to improve productivity at lower-grade assets," said Christian Hinderaker, an equity analyst covering European Industrials with investment bank Liberum. Automation may make mines 30% more efficient and is set to contribute most in hard-rock mining, he noted. As mines get deeper, ventilation to support human operators becomes increasingly challenging and costly, more material needs to be shifted and more time is needed to get it above ground.
Equipment makers and technologists are set to thrive in the quest for mine productivity. Among medium-size operations, underground machinery typically has a utilization rate of less than 30%, due to the human safety element which causes regular production stoppages, when evacuation is required to avoid risks. Digitalization -- with just 20-25% market penetration -- can prevent burning of diesel fuel during idling, which can contribute to an average annual cost burden of $50,000 per unit of machinery, industry sources said. Around 75% of assets are unconnected to "smart" networks.
"Miners are not early adopters," said Amit Rai, CEO of MachineMax, a software company describing itself as an equipment management platform. "Still, a few things need to change in the industry for automation to become scalable: costs need to fall." According to Rai, the mining equipment industry is still dominated by big names like Caterpillar, although disruption is set to occur.
MachineMax reports "phenomenal" growth in interest in mining automation since it set up less than four years ago with the backing of Boston Consulting Group and Shell. Revenues grew sevenfold in 2020 and it now has 65 major mid-tier customers around the world: "everywhere except Antarctica, and we will have customers there soon," said Rai.
The company uses the Internet Of Things (IOT) to interconnect pieces of equipment, using non-invasive magnetic gadgets placed on the side of machines. Automation can reduce mining costs by 20-40%; however, only 3% of mobile equipment in mines can be considered fully autonomous, said MachineMax's Jennifer Thomson. Automation underground will always be more expensive due to lack of GPS and connectivity infrastructure, she said.
Ola Kinnander, media relations manager of Epiroc, a Swedish mining equipment manufacturer, emphasizes the global nature of the trend.
"Automation used to be mostly in the most developed mining countries, such as Canada and Australia, but now customers all around the world want automation solutions," said Kinnander.
"Automation can mean a lot of different things, from collecting machine data to automating part of the fleet to full autonomous mode. With remote-controlled drilling rigs, the operators get away from the dangerous areas and into a safe and comfortable control room. This has an immediate positive impact on health and safety."
Mining automation started on the surface and has advanced furthest there. Epiroc is working on several surface projects involving full autonomous mode of haulers and loaders. "It will eventually come to underground, but it is easier on surface due to better connectivity (wifi)," Kinnander said.
COVID-19 accelerating automation
The COVID-19 pandemic has accelerated the automation trend. So have recent tailings dams collapses, spawning demand for sensory equipment to monitor dam movements, now used in more than 100 dams worldwide.
Underground mine environments are typically not COVID-secure. According to Liberum, 1,600 mines across 32 countries closed in first half 2020 as a result of the pandemic. Others furloughed 40% of their staff and curbed output. Resolute's fully-automated Syama mine was unaffected by COVID-19, with production in line with expectations. At the same time government stimulus and green recovery policies pushed forward metals-intensive infrastructure projects, including in the electric vehicles and renewable energy sectors, bolstering demand for copper, iron ore, steel and battery metals including cobalt and lithium.
Many metals prices are booming in what some describe as the start of a super-cycle. Copper prices have nearly doubled since March 2020, jumping to an eight-year high of $8,307/mt Feb. 12, in part on prospects of shortages following COVID-related restrictions in Latin American copper mines, sparking investments in new projects. Iron ore 62% fines delivered to China touched a nine-year high of $173.60/mt Jan. 18 after the pandemic curbed mine working in Brazil, squeezing steelmakers' margins and sending some steel prices to a 12-year high.
Unions, traditionally opposed to automation, notably in the big South American copper mines, in an effort to preserve jobs, have become more accepting as they perceive automation can allow cost-effective production at deeper deposits. Investors increasingly expect companies to bide by ESG principles, "upskilling" workers as mine-face jobs are automated.
Machines can drill in closed environments where costly ventilation would be required for humans to work: the energy-savings made from not using ventilation could lead to 20% lower carbon emissions in coming years, according to MachineMax.
Liberum's Hinderaker says the mining industry is recognized as responsible for between 4% and 7% of the world's Scope 1 and 2 greenhouse gas emissions and that there's pressure from the investment community to reduce this. Increased electrification in mines, including with the use of electric vehicles, is likely to play an important part here, he said.