The mining sector's automation agenda

Miners are still not spending enough on technology and need to breakout of the conservative mindset that will only hurt their bottomline.

As the resources boom slows and costs continue to rise, the pressure to improve productivity through technological means is increasing. The sense that the resources boom will become static at best has been reinforced by the news that BHP is predicted to announce a fall in profits this week, the first time they have experienced a fall in profits in three years.

Analyst firm IDC has reiterated this point with the release of a report saying that the Australian resources sector will be increasing spending on ICT to $3 billion by 2015. They cited that the driver for this increase would be the attempt by the industry to contain costs and increase productivity.

There has certainly been evidence that the larger mining companies have been investing in technology that allows them to operate mines, wells, processing and transportation autonomously, thereby reducing the most expensive and scarce resource of the production process – people.

Earlier this year, Rio Tinto announced that it would spend $483 million installing 41 autonomous trains in the Pilbara. The trains are driverless and are completely operated by software, not even requiring remote operators. BHP stopped short of following suit but also recently purchased trains that were “autonomous capable”, meaning BHP could move in that direction if they chose to. 

Both BHP and Rio Tinto operate remote operations centres in Perth, WA where workers control autonomous drills, trucks and other equipment operating in the Pilbara. The machinery can not only operate without a local operator but can be controlled by software incorporating artificial intelligence that ensures that their operations are optimal. This sort of functionality is the subject of much research by a number of universities and the CSIRO who have worked on technologies that allow for autonomous blasting, excavation and rock breaking.

To illustrate the potential cost savings of this technology, resource companies have pointed out that it can cost them nearly one million dollars a year for drivers to operate a single truck on a continuous basis. This more than covers the cost of the autonomous versions of the trucks.

According to Mr Tim Shanahan, Director of the Energy and Minerals Institute at the University of Western Australia, the incentives to invest in technology are more than just about increasing productivity. It is also to do with “keeping humans out of dangerous and hostile environments” he said. This is especially important in undersea and deep-water oil and gas platforms operations. Autonomous underwater vehicles already operate routinely in these environments and are used for monitoring and maintenance tasks. Sensor networks are also becoming ubiquitous to avoid the need for inspections.

One interesting aspect of the ability to bring autonomous control to mine sites will depend on fast and reliable communication. This is something that would only improve with the rollout of the NBN and so perhaps this is another component of the move to this type of operation.

Although the IDC has stated that the resources sector’s level of investment will increase over the next few years, the level of investment is actually relatively modest. The resources sector makes up for nearly 10 per cent of Australia’s GDP. An investment of even $3 billion is less that two per cent of this income, which is significantly below the national expenditure on ICT of eight per cent  of GDP.

Even the banking and financial services sector is forecast to spend nearly 3 times as much on ICT as the resources sector by 2015.

All this goes to show that even though there are some highly visible uses of technology by the industry, and the rhetoric of Rio’s “Mine of the Future”, the resources sector is still a relatively conservative environment that could be doing more.

Insiders have confirmed as much as I have been told that internally, resources companies are still struggling with the same ICT decisions most corporations are dealing with: moving to the “Cloud”, incorporating mobile technology in their environments, allowing “bring your own devices”, etc. 

At the end of the day, this is not entirely surprising and not entirely the fault of the companies involved. The pool of ICT talent in Australia is still relatively small and the culture for ICT adoption generally is not one of bleeding edge early adopters.

Perhaps instead of the mines, the resources sector should be looking at ways of making the development and implementation of ICT completely autonomous?

David Glance is a Director at the Centre for Software Practice at The University of Western Australia