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Increasing agility in mining via digital transformation

Ailbhe Goodbody finds out how digital transformation can help small and large players in the mining industry to be more agile

More and more mining companies are recognising the importance of agility in their operations – the ability to move quickly when needed. When Mike Henry was announced as the next BHP CEO in 2019, he observed that resource companies will need agility to be competitive in the future.

One of the ways that companies can become more agile is to implement digital transformation. According to consultant McKinsey & Co, “many leaders in asset-heavy companies first hear about agility through their internal digital transformations. Digital and agility go hand in hand, and digital efforts that don’t embrace agile delivery models will struggle to sustain themselves and scale up later.”

Dr Vassilis Roubos is the head of DMT Group Consulting Services, which provides multidisciplinary services to support all aspects of mine development, including digital transformation. He told me: “According to BCG’s Digital Acceleration Index (DAI), the metals and mining sector is around 30-40% less digitally mature than comparable industries – but digitisation is costly and time consuming, leaving many SMEs behind.”

Of the executives at 75 companies in the metals and mining space that BCG surveyed, 30% had no digital upskilling plan at all, while another 45% had only recently begun training initiatives. BCG said: “Shaping this culture requires time and can be arduous, but the potential payoff is tremendous.”

“To bridge this ‘digital divide’, DMT is building on 280 years’ experience working across the mining sector and is expanding its digital portfolio of consultancy and engineering services to help owners, operators, and investors be more agile, more transparent, and more resilient,” explained Roubos. “We call it the Digital Transformation Office.”

This Digital Transformation Office, which DMT recently launched, aims to strengthen the company’s support capabilities for small- and medium-sized mining businesses in their digital transformation and across their people, operations, processes and sustainability obligations by helping to identify the best fitting digital solutions at any stage of the transformation process.

The company has a four-step toolbox for digitisation: Digital readiness assessment, roadmap creation, digital process engineering and implementation supervision.

Roubos said: “With this intervention, the entire mining value chain can benefit from greater use of digital tools, in an industry which increasingly demands improved productivity, sustainability, competitiveness, transparency and safety.”

DMT’s Digital Transformation Office supports mining customers with digital transformation using a four-step toolbox. Image: DMT

Impact of the pandemic

In many ways, the Covid-19 pandemic has accelerated the adoption of digital technology. In its ‘Tracking the Trends 2021’ report, which was published in February, Deloitte noted: “While the conversation around digital transformation and the future of work has been continuing for some time, Covid-19 has caused a significant change in how many organisations approach and manage their operations. This has created an opportunity for miners to streamline the adoption of digital technologies and capabilities in line with the significant increase in remote working.

“There is a window of opportunity to accelerate digital transformation and advance the future of work.”

Roubos agreed: “Agility has been a watch word for the mining sector – particularly in the developing world – for the past several years, but the pandemic has really brought home the need for operators and operations to adopt a more agile stance.”

He gave an example from Indonesia that shows how DMT’s work in digital transformation can help mining companies with agility. “Our own work here was stress-tested very intensely by a major coal project in Indonesia – the Pasir mine, operated by Kideco,” he said.

The Pasir mine has been in service for more than 30 years and is the third largest single mine in Indonesia. It produces approximately 30Mt/y of coal, and is a major source of employment and revenues.”

As a result of the Covid-19 pandemic, coal prices around the world crashed in 2020, causing uncertainty for mine owners and operators. In July 2020, McKinsey noted that the price decline for metallurgical coal was 21% and for thermal coal was 23%. Indonesia, which is the world’s largest exporter of coal, was badly affected.

“The Covid-19 pandemic saw coal prices around the world decrease significantly – almost overnight – creating a stark need for increasing efficiency in production, in particular via digitisation and a smarter, more efficient utilisation of data,” said Roubos.

“With the need for agility now tantamount to the project’s viability, DMT was appointed by Kideco to lead a major restructuring of the mine’s data modelling, with a view to providing Kideco with a scenario that would allow for production to be maintained whilst introducing cost savings across the operation.”

Over a six-month period, DMT consolidated the individual models for nine individual pits into a single model. Roubos added: “[DMT] provided an optimal scenario for how Kideco could adapt its business to remain agile in the uncertain circumstances and aggressive price fluctuation.”

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