Mining’s digital transformation is driving the next generation
of operational improvements.
By Chris Livitsanis
Just as the global mining industry reaches the limitations of productivity gains through traditional means, a new wave of digital technologies is poised to transform the sector.
As is clear from other industries, the scope of digital technologies is virtually limitless. We are now seeing this in the mining sector, from exploration and development to supply, production, distribution, sales and trading, and even mine closure. The top-five global miners have already committed significant capital to a digital agenda, and many others are realizing substantial benefits from the new solutions. The sector’s relative lag in digital innovation now offers mining companies an unprecedented opportunity to bypass incremental reform and take a step change with the potential to increase profits by up to 45 percent within two to three years.
While it is a given that most organizations understand that consistency, predictability and standardization are fundamental, it seems that many are still making important decisions based on delayed information or human observation, with their inherent capacities for error. Sound predictive planning with consistent, integrated systems allow for better, faster decisions.
In other words, technology can unlock significant benefits by improving the quality and pace of decisions. We see the highest returns from digital in areas where there is potential to capture real-time information and enable more effective decisions.
Jumpstart the Journey
The potential is both in new digital solutions and maximising the use of what already exists. Although investments have been made across several areas (automation, analytics, IoT, remote sensing and augmented reality), most organizations are yet to unlock the full potential of these solutions. The key is to take a value-led approach to digital rather than a view led purely by technology.
Understand that the gaps in decision-making – from safety to throughput to costs, in the biggest impact areas – must be the underlying premise. This will then support investment in the right technology. This investment must then be supported by a solid operating model that is the foundation for both the new ways of working and the ability to manage the sheer pace of change brought by a digital step change.
Our experience has led us to take a three-phase approach to integrating technology at sites and workplaces.
It begins with understanding the value drivers of the business and determining the most crucial digital technology applications in your company. This entails taking stock of what you are already using, what key opportunities and challenges the business now faces or expects to face in the future, and where stakeholders and leading suppliers sit in the field. This prioritization of challenges and opportunities will start to create your organization’s digital vision, and with your digital vision the immediate priorities become clearer.
The second phase is to build momentum in the organization by trialling the digital technologies in priority areas through pilots. Effective pilots do more than prove a concept; they deliver tangible value that can fuel further investment in the greater transformation program. Pilot results inform decisions about rollout and help refine the operating model requirements – governance, people, processes and systems that set the stage for the short- and long-term transformation.
By using pilots in this second stage, one of the world’s largest gold mining companies was able to define its best digital opportunities, identifying each process in the value chain and deciding the level of digitalization that it needed. The pilot process also kick-started a cultural journey, paving the way for future initiatives by encouraging employees to move from a cautious take-up to adopting and seamlessly integrating technology across functions.
With a foundation of a digital vision, prioritized opportunities, learnings from pilots and a cultural shift, organizations will be poised for successful scale-up and adoption: the third phase. Digital solutions are then embedded in organization’s existing business improvement programs.
Given the exponential level and pace of change, it is difficult to focus on every internal area but this transformation is a journey rather than a destination. Embedding digital capability across the organization to continuously improve and disrupt our own businesses is key to success.
And, a final key message: Organizations need to continuously engage with external providers and suppliers, and form partnerships. A partnership approach to this kind of holistic transformation will help organisations identify, implement and sustain the solutions that match both their long and short-term requirements, and their digital maturity. We see that organizations with trusted partnerships are more likely to get it right from the beginning.
Digital solutions that allow enterprise stakeholders to seamlessly share information and engineer improvements across organizations have been seen in other sectors. In the mining sector, the next five years will be pivotal in the development and quality of digital technology. With this approach, we are confident that the mining industry will be poised to draw down the productivity gains of a digital future.
Chris Livitsanis is A.T. Kearney‘s global lead partner for the mining practice. He has extensive experience in both consulting and industry, and has worked across Europe, England, Asia/Pacific and the United States.