We know that mining in general lags the manufacturing industry in applying digital technology; or to put it more eloquently: connecting the relationship between people, capital and information. How we arrived here is easy to understand. Mines are designed to maximize volume through a capital investment model – NPV. Unfortunately, that calculation assumes a long term, stable commodity price. In a cyclic industry like mining, this is the worst position we can place management under. In a cyclic down-turn, devoid of any options, management is repeatedly forced to cut costs – right down to discontinuing the very projects that would have made the next up-cycle more profitable. In other words, we are removing optionality from the production system.
The root cause of this dilemma is that mining is trapped in yesterday’s big capital/long life mine design. We made assumptions about labor, productivity and equipment and locked the operating model down. We now know that a modern mine design’s core is not about deploying labor and machines in lock-step, but about utilizing information, knowledge, and anticipated optimization to flex in-shift production. Production design thus migrated from aligning equipment to aligning the production flow. The logic is VERY different.
Thus, for a digital mine, the ideal position is a fully automated system able to alter elements for each step in the value stream AND can adjust the production volume depending on the commodity price changes throughout the year. Gone are the lazy days when NPV drives a single production schedule with little or no variation.
It is then also not surprising that many leading mining companies have initiated some form of digital mining development – usually trough a team mandated to identify digital opportunities and to develop some roadmap into the future. The investment community simply does not tolerate boom-bust models very well. So, assuming we have a basic view of what a digital mine can look like, let’s walk though some concepts.
We start with the three core levers in delivering a better producing mine. They are the people, processes, and technologies. Then we focus on the easiest way to get to the money which is by establishing a Collaboration Center as the core vehicle to manage change. This goes hand in hand with an information platform that is transparent and aggregated. So, we design display screens with production metrics dynamically available to operations management and continuous improvement teams.
The benefits of a Collaboration Center include a fully realized digital operating model, broad production oversight and dynamic optimization. In many cases, the Collaboration Center also acts as the catalyst for short interval control. The Collaboration Center’s core elements include:
Miners should expect, because of successful digitization, a near 30% labor cost per ton improvement, up to 50% improvement in operations decision cycles, and up to 10% production improvements, depending on size and age of their respective mines. These benchmarks relate directly back to our people, processes, and technology framework.