On September 10, OZ Minerals announced that, together with project partners, Inspire Resources and Unearthed, it had selected a cohort of seven companies with which to explore alternative mine designs and processes as part of the Scalable & Adaptable Mining Challenge.
Scalable. Adaptable. This kind of thinking is perfectly aligned with my own for this month’s theme and, after introductions and some mutual business admiration, we sat down virtually to talk innovation.
But first, some background…
The Scalable & Adaptable Mining Challenge is focused on finding flexible and modular solutions that could potentially be deployed as part of an integrated mine design.
Together, OZ Minerals and Inspire are working to identify solutions, technologies and systems that can contribute to the development of a new approach to mining; one that could prove a game changer in unlocking different resources and in allowing companies to capitalise on the rapid advancement of new technologies.
In the press release announcing the cohort, Katie Hulmes, General Manager Transformation at OZ Minerals said: “Today’s mining projects favour economies of scale, resulting in large projects that are capital intensive with bespoke designs and little flexibility.
“Traditional project valuation processes don’t place a value on flexibility. We are looking to explore the concept of modularity as an enabler of flexibility and new models for project valuation, asset ownership, development and operation. We are curious to discover if flexible, modular architectures might unlock future assets that are currently uneconomic.”
Modularity in the mining sector
So, what exactly is modularity and how could it benefit mines?
“Modularity is technically related to the degree of interconnection between subsystems, or parts of a system,” Andy Reynolds, President of Inspire Resources, told me. “If there is complex integration within the parts, but comparatively limited interconnection between them, then the system is more modular.
“If the interfaces between the parts are standardised, then it becomes easier to add parts, subtract parts, or substitute one part for another, and this makes the system more flexible. More flexible systems can be upgraded and fixed more easily, which can reduce project risk and facilitate innovation.”
Modularity shows up whenever complex systems need to be easily assembled, managed and changed. Today the most ubiquitous examples are plug-and-play computer hardware and software. But, Reynolds explained that there are also good examples in military equipment, manufacturing facilities, temporary infrastructure, toys and transportation infrastructure.
“Imagine how hard it would be to operate an airport if every type of aircraft had unique ground power connectors, fuelling points and galley cabinets,” he added.
Modularity, as a concept, is not new to the mining industry. What is new is the way in which it’s being applied to create a scalable approach to mine design and construction.
Brett Triffett, Transformation Technologist at OZ Minerals (cool job title, right?!), explained…
“Modularity can be applied to any step in the value chain – loaders and trucks are already modular, processing plants (at the section or equipment level) and renewable energy can already be built in a modular fashion, although for reasons of economies of scale they often aren’t,” he said.
“The value comes when the system is considered holistically from end-to-end and built with flexibility in mind. We think modularity is more likely to be applicable to small higher-grade deposits with a greater degree of variability rather than very large low-grade deposits.”
Reynolds expanded, “Most people in mining think of off-site fabrication when asked about modular approaches. This method has been used to reduce the cost, lead time and risk of on-site construction by allowing parts of the system to be built under factory conditions, transported to site and assembled together (this is also the primary driver for small modular nuclear reactor concepts).
“However, this is only a small subset of the potential benefits of modularity, because it is usually not intended to facilitate easy change of the system during its life. Small-scale mobile processing plants have been available for a long time and used, for example, in on-site pilot campaigns.
“And, of course, truck-based haulage is essentially modular, because trucks have consistent interfaces, arrive fully commissioned and can easily be introduced to or withdrawn from service.
“But for the most part, capital equipment gets more economic as it gets larger, more fixed and less changeable. So, modularity shows up as a net cost. This net cost is not offset by a net benefit, because mining projects need to show investors that uncertainty has been driven out, so the value of flexibility is rarely calculated.”
Being able to quickly start small and grow new mines over time as we learn more about them could potentially open up new assets that might be uneconomic using traditional methods of development.
“Current project valuation methods based on static cash flow modelling don’t place a value on flexibility,” Triffett echoed Hulmes’ thoughts. “Alternate approaches and options will allow us to see value that others are missing.”
“Our shared interest is in scalability and adaptability,” added Reynolds. “The former is the ability to start an operation at small scale, enabling early cash flow, and to ramp it up or down in size as required by, for example, metal prices or energy and water availability.
“Adaptability, on the other hand, is the ability to cope with disturbances like unexpected ore properties, regulations or environmental constraints. Together, scalability and adaptability could enable an operation to, for example, move between sites or incorporate innovations.
“Ultimately, flexibility could unlock new kinds of exploration projects or business models.”
Ready for change
The value of flexibility is related to the change or level of disturbance that a system is expected to encounter through its life.
The team therefore expect that large, well-defined, open-pit, long-life mines far from communities and with adequate power would benefit less from flexibility than small, less-explored, socially or environmentally constrained operations, particularly those powered by on-site renewable power.
“We think that clusters of small underground mines with novel mining methods may be particularly amenable to flexible solutions,” said Reynolds. “But we need to test that through simulation.”
The Scalable & Adaptable Challenge will use a satellite deposit at OZ Minerals’ Prominent Hill copper-gold mine in South Australia that has already been mined as its case study deposit. The challenge exercise will collaboratively simulate a complete value chain for a small underground mine.
“If we are able to demonstrate the value in modularity, develop a new way of measuring value and activate an ecosystem of suppliers willing to go on the journey with us, then the next step might be to identify new assets where this could be applied,” explained Triffett.
Of course, modularity is just one system attribute that can contribute to greater flexibility and, as such, the team is also exploring other concepts that could help create a more scalable and adaptable mining process. For example, process storage that would allow the system to time-shift its electrical demand to match available renewable energy is also promising.
Triffett outlined the next steps: “Inspire will be building the simulation. We will then use the simulation to test scenarios where the system needs to adapt to a shock such as described above. We aim to have some early learnings by the end of 2021.”
For Inspire Resources, a flexible systems approach is one of the key enablers for the company’s Mineral Impulse business model.
“We foresee that the optimal governance and capital model for some kinds of mining projects will be community ownership,” said Reynolds. “To optimise small mine designs to the unique and diverse needs of local communities, and do so efficiently, absolutely requires a mindset of flexibility supported by model-based design tools.
“It is essentially mass customisation applied to small mine design.”
Doing innovation differently
The Scalable & Adaptable Challenge is one of a number being run by OZ Minerals through its Think & Act Differently incubator – TAD for short.
The focus of TAD is to create a community of like-minded innovators of all sizes and stages, who can each share in the benefits of realising new and, sometimes, radical ideas.
In her role as General Manager for Transformation at OZ Minerals, Hulmes heads up TAD. She spoke to this new approach.
“This is an experiment,” she told me. “Through the [Scalable & Adaptable] challenge, we have found different innovators and have selected a cohort representing different parts of the value chain. This group is willing to work together to understand what a flexible, modular and scalable mine could look like and how all the pieces along the value chain could work together.”
Hulmes explained that TAD is focused on unlocking ideas and technologies that will help accelerate the OZ Minerals strategy of creating value for its stakeholders and, more specifically, create a smaller footprint future for mining.
“OZ Minerals’ strategy is centered around creating value for our five stakeholder groups – employees, communities, shareholders, governments and suppliers,” she said. “The incubator has five focus themes that have stemmed from OZ Minerals’ strategic aspirations – Energy and Emissions, Clean Products, Data and Technology, Waste and Water, and Scalable & Adaptable.
“Each of these themes takes a unique lens over a challenge that the broader industry is facing with the intent of finding a way to attract like-minded innovative and brave individuals and organisations from within mining and outside mining.”
Importantly, TAD is focused on tomorrow’s growth opportunities, rather than activities that could be regarded as incremental business improvements.
“With the rapid global changes that we are seeing today, we know that the current mining model will undergo significant change and, because of this, as an industry, we need to build skills in emerging technologies and other areas outside of traditional mining,” said Hulmes.
“This is important because mining projects have very long lead times, and although significant change is still a few years away, it’s not 20 years away, and it is likely to come faster than we think. So ultimately, we are trying to learn as much as we can about our future options so that we can make better decisions today for the longer term.”
Building a future-proof business
“How will this open and collaborative approach to innovation help to shape OZ Minerals as a business and position it going forward?” I asked.
“We know that our industry doesn’t have all the answers, and we believe that some of the big technological breakthroughs for mining are likely to come from outside of the mining industry,” Hulmes answered honestly. “So, our goal is to build an ecosystem of innovators and harness the diversity of thought.
“Crowd challenges are just one of the ways we attract the broadest audience possible. Each challenge we have run has attracted hundreds of people who want to work differently, many are trying open innovation for the first time. The reason we have run the crowd challenges is that it helps us connect with people who might not traditionally be in the mining ecosystem.”
Many of the innovators that OZ Minerals is now working with were previously unknown to the company, and many hadn’t even considered working with the mining industry. The Scalable & Adaptable team vetted 36 diverse submissions from 33 countries before selecting seven companies to move forward with.
“We have delivered more mining 101 sessions than we could have predicted, to help people understand the opportunity for their technology to translate over to our industry,” added Hulmes. “This is an enormous opportunity for us as an industry.
“Innovation pipelines can inadvertently filter things, so that’s something we’re trying hard not to do. Our approach is to start with an idea, a hypothesis, a risky assumption, and the right people who want to work together and go from there.”
As an industry, there is normally a preference for trialed and tested solutions; commercial investment usually only funds solutions that are Technology Readiness Level (TRL) six and above.
“We have had feedback that our willingness to support early-stage technology is invaluable, and the ability to run experiments in an industry context gives both the innovators and our industry early answers to valuable questions,” said Hulmes. “It enables all parties to test assumptions.”
To facilitate the sharing of ideas, OZ Minerals has also implemented a unique approach to intellectual property (IP).
Hulmes explained: “From the outset we have not tried to own IP. We are very happy for the IP to stay with innovators, and we see the value in co-developing ideas that can benefit our industry. This has been a surprise for many of our challenge participants.
“We are starting to see great collaboration between innovators gaining and sharing insights, transferring knowledge and collectively supporting each other. It’s encouraging to see ripples and crossovers occurring in places with people that we could have not predicted, and we look forward to where this journey can take us.
“By working in an inclusive and collaborative way, as a business, we are likely to understand our future options much faster.”