The race to make mines smarter

Lack of IT investment has resulted in a 3.5% drop in productivity per year in the last decade.

SAP, the German maker of enterprise resource management systems, is touting its services in predictive analytics and artificial intelligence to help mines who are planning a digital transformation.

Software vendors are signing up big miners. Last year Barrick inked a deal with Cisco to deliver better, faster, and safer mining at its Cortez operation. Cisco plans to automate Barrick’s equipment for increased productivity, and Cisco says it will also use predictive algorithms to enhance the precision and speed of maintenance and metallurgy.  Goldcorp tapped IBM this past spring to harness artificial intelligence and utilize all of the mine’s idle data to make smarter insights about geological modeling and mine planning.

Investing in technology is at the top of CEO’s minds. According to the consultancy EY, the number one risk miners face is digital effectiveness, that is making investments in IT that will have lasting and significant impacts upon the business. Profitability has come back with high commodity prices. Miners are no longer cutting back but are catching up on years of missed investment.

Eckhardt Siess, SAP’s Global Vice President of Mill Products and Mining Business Solutions

Eckhardt Siess, SAP’s Global Vice President of Mill Products and Mining Business Solutions, touted some of the company’s own successes in an interview with this month. SAP is an old-hand at selling software to miners.

SAP has been equipping mine with ERP systems since the ’90s. Siess estimates that nine out of ten of the top mining companies are all SAP customers.

Compared to other industries that have been investing year-in, year-out, Siess says that miner’s lack of investment has resulted in inefficiencies. He points to a McKinsey study estimating a 3.5% drop in productivity per year in the last decade.

Now that miners are investing in technology, some are seeing surprising, unseen gains.

Australian iron ore miner CITIC Pacific Mining is utilizing SAP Vehicle Insights, a monitoring tool for light vehicles. While the tool provides basic logging and trafficking of the company’s assets, there is an additional benefit that resulted in a quick ROI for the spend. In Australia there is a general tax on fuel. However, if vehicles are being used within a mine, the tax doesn’t apply. With automated logging of vehicle travel routes that was mapped to the mines boundaries, CITIC suddenly found it was paying less in fuel tax. A complicated, manual system used for logging travel was eliminated.

SAP has an artificial intelligence service, and Vale decided to try a proof of concept project to reduce the administrative headaches at its requisition department. Helio Mosquim, IT Innovation Manager at Vale, chose the project since it was a department that could be made more efficient. At Vale a big number of purchase requisitions end up being rejected because they are not linked to an existing contract.

“We wanted to avoid all the rejections and manual work required in procurement. It’s not just automating but putting intelligence into it,” said Mosquim at a SAP conference.

Mosquim said an administrator may not even know the contract exist. Human errors also slow fulfillment.  The SAP initiative increased requisition efficiency and accuracy.

Siess says the journey has just begun for transforming mines through the use of digital technology.

“Obviously there would be no transformation without the availability of big data and without the processing of big data. Collecting data is not new. Industry has been doing this for many years,” says Siess.

Siess points to a McKinsey study showing that only 1% of data is actually used.

“I think big data is very important. However, big data is only one facet, one element of an overall bigger picture. It’s all about the digital transformation that’s happening within the mining industry.”

Creative Commons image of truck by morebyless