Has mining stopped innovating?

In the past the mining sector was characterised by tremendous innovations in the quest to extract minerals from the earth and beneficiate them. An example is the ability to extract ore from tremendous depths such as the single lift shaft system at the South Deep gold mine, which can lift 30 tons from 3km below in a single haul.

However, are new technological achievements still taking place, and is innovation taking place in all aspects of mining? Where is the next big innovation to yield competitive advantage in mining going to come from? Could it be from the world of IT?

IT in mining has a lot in common with IT in other manufacturing scenarios. Apart from some specialised applications relating to exploration, beneficiation and refining, the IT systems required to support mining businesses are very similar to those required by manufacturers of chemicals, petrochemicals and food and beverages. The same concepts described in the manufacturing-centred S95 standard, such as business planning and logistics, manufacturing operation and control and batch/continuous/discrete control, apply as much to a mine as they do to a chemicals plant. So it is no surprise to discover that mining is a fairly typical consumer of IT. At the same time, mining is subject to all the shortfalls of IT, such as ineffective ERP implementations, disconnected, fragmented systems, unstructured data and ineffective business reporting.

The business challenges facing mining are well known issues faced by other industries: commodity cycles, global mergers and acquisitions, global supply chain, the regulatory environment and the need for corporate governance and transparency.

The relentless cost-cutting pressures of recent years (particularly as the currency has strengthened in SA) have left a scar on IT systems as investments at mines to replace the fragmented and under-performing IT systems have been repeatedly postponed.

With the consolidation taking place in the mining sector, IT managers have had to adapt to a new and rapidly changing environment that is very different from the past.

Gavin Halse, MD, ApplyIT

With the consolidation taking place in the mining sector, IT managers have had to adapt to a new and rapidly changing environment that is very different from the past. Historically, IT departments in mines were relatively autonomous in nature and often the responsibility of the individual mine. Over the years, this culture has led to many fragmented, best-of-breed applications being implemented.

With consolidation and globalisation, however, these fragmented systems are being replaced with integrated solutions that manage business processes across the whole mining group. As a result, we see the emergence of "competence centres" and centralisation of IT management, also typical in many other industry sectors.

This consolidation and standardisation of IT systems does come at a price, however, and that is that innovation in the system can become much more difficult and cumbersome to implement because the rest of the world always needs to be considered. At the same time, while companies are implementing global systems, other areas of IT continue to be characterised by tremendous innovation. There is an increasing convergence of wireless technologies with traditional computing, and these innovations are all taking place faster than innovations in the typical business system.

Notwithstanding the standardisation and consolidation of business systems, the potential to innovate with IT in mining remains great, particularly at the operational level. As new IT platforms and technologies emerge, traditional problems that seemed unsolvable can now be addressed.

For example, in the area of safety, biometric identification can be used to rapidly identify and trace personnel involved in hazardous situations such as maintenance activities. Computer-based systems to accurately measure the cognitive ability of employees ahead of deployment in hazardous environments are now practical. Rugged mobile devices provide new opportunities to provide relevant information in situations out in the field previously thought impractical.

Radio frequency identification (RFID) allows almost anything to be tagged and traced, resulting in better operational decisions and better response to adverse incidents. A number of specialised companies have identified these opportunities and are successfully bringing these innovations to a wider market.

A relatively mature concept in one industry may represent a substantial innovation in another industry and visa versa. For example if a global positioning system (GPS) is good enough to direct a passenger jet, then GPS can surely be used to track or even control moving machinery at a surface operation such as an open cast mine. Increasingly IT managers now need to look outside their traditional industry-focused areas for good ideas relevant to their own industry.

IT managers in mining companies do need to continue with their projects to clean up the fragmented systems and replace them with a stable, integrated platform. They should, however, at the same time recognise that this consolidation alone will not yield much competitive advantage, as everyone else is doing it. They should understand that there is a real opportunity in mining to compete through innovation using new technologies.

The danger is that implementing a global business system can become such an IT focus that the many other technology-based opportunities are overlooked. A pragmatic approach is required by management, to accept some diversity and thereby build on the mining industry`s excellent reputation and track record as an industry where innovation is alive and well.