A ‘social licence’ continues to be the top business risk for the mining and metals industry today. While it is promising to see the industry start to embrace new ways to more effectively engage communities, one could argue that the inherent problem still remains: the way we mine. JONATHAN LAW writes
Economies of scale over the past 50 years have seen mines become increasingly larger and larger.
With the deepest mines extending kilometres below the surface, large scale mining is a feat of engineering that has enabled unprecedented rates of production.
Rethinking mining approaches
But this focus on producing high volumes for as little cost as possible, has led the industry down a path that's out of step with community and environmental expectations.
Large-scale mining operations lead to large volumes of waste in tailing dams, as well as waste rock facilities that store barren material moved to access ore. These are high risk, and given recent disasters, are genuine causes for community concern.
Equally problematic is the large mine footprints of open pit mines. No one wants one in their backyard and questions remain over what to do when the mine is ultimately closed.
A more recent trend, is consumers questioning whether the metals in their smartphones or other products are ethically sourced.
Sustainability in mining addresses ethical, social and environmental outcomes
This is the industry's current predicament. The old way of operating is not sustainable long-term – a complete mine redesign is needed for a true triple bottom line approach.
Moving away from large open pit mining to digitally-enabled precision or 'keyhole' mining – that is discreet, low waste and low emission – is the future.
Of course, bulk commodities where the valuable product forms the bulk of the orebody, such as iron ore and coal, provide very different challenges to lower grade ores where the opportunities for change are greater.
Future mines will be low capital, fully autonomous and based on whole value chain decision-making.
But how will the industry get there? At the heart of new mine design is a greater understanding of the ore, waste and broader rock mass. If we know exactly what is in the ground, and where, before we dig it up then the mine can be designed in such a way to maximise value with minimal land disturbance and waste.
Data and automation
Accurate knowledge of ore deposits has been a huge challenge and gap to date. But this gap is rapidly being filled thanks to real-time sensing to understand ore variability at all scales.
Two other key areas are essential: the ability to make fast value-chain based decisions; and integrating the real and virtual world using industry 4.0 solutions.
Many of the technologies that form part of the puzzle are progressing at pace: rock cutting, renewable energy, autonomous vehicles, drones, 3D printing and self-assembling robots.
The key challenge is integrating all these technologies to enable a fundamentally different approach to mining rather than simply making today's large-scale operations more efficient.
Miners are understandably focused on digitising and automating what they're currently doing, because complete transformation of an existing mine is extremely difficult. The industry is tied to their capital investments with golden handcuffs.
This means real transformation can only happen in the design of new mines. This, coupled with the current disequilibrium and tension between mining capital, social and environmental implications, leaves the industry's door wide open to disruption from outside players.
New technology entrants with a mine design solution that's more environmentally or socially acceptable, can circumvent barriers to entry. If they can adequately manage risks and compete with capital returns to secure their own resource or supply chain it will fundamentally change the industry.
But the transformation towards a true triple bottom line approach won't be isolated to the way we mine; it will extend to market dynamics.
Disruption through a shift in market dynamics
We can expect to see a shift from global markets to contracted supply of raw materials or metals linked to the unique mine footprint of each supplier. There are already signs of this happening in the market.
Major metal consumers, such as tech giants, are moving to control whole value chains right through to product delivery. If not securing their own supply, it may prompt innovative producers to secure a price premium for more environmentally sustainable commodity products.
As the boundary between the value in the resource versus the value in the enabling technology is blurred, new entrants can disrupt the industry in the same way that Uber did with no cars; and Skype with no telephone infrastructure.
While mining industry players seem content with the evolution of digital technologies, the risk is competition from new technology entrants with capital and no existing market constraints.
Mining's future lies with those prepared to challenge every aspect of production and rethink mine design using technology as an enabler.