min read

Digital Transformation in Mining: Why it's a Necessity

Download our free Digital Transformation Strategy Template Download this  template
Article by 
Tefi Alonso
  —  Published 
October 24, 2022
June 7, 2023

The mining sector is at a pivotal moment in its history due to changes in technology that could transform the industry. While technology adoption has been slow over the past few decades, recent pressures from the COVID-19 pandemic, supply chain challenges, and falling commodity rates have accelerated the need to rethink how mining operations are performed.

Digital transformation has the potential to help mining companies reduce their costs and improve profits by streamlining their work processes and providing greater data insights to drive strategic decisions. 

Invest in your strategy with the #1 Digital Transformation Platform!

Check out other articles on digital transformation:

Table of Contents

  • Embracing the Technology Revolution in the Mining Sector
  • What is Digital Transformation in Mining?
  • Solving Mining Sector Risks with Technology
  • Benefits of Digital Transformation for the Mining Industry
    Case Study: Leveraging Artificial Intelligence
  • Key Strategies of a Successful Digital Transformation
  • The Risks of Not Implementing a Digital Strategy
Free Template Download our Digital Transformation Strategy template Download this template

Embracing the Technology Revolution in the Mining Sector

Many mining companies and executives are cautious to embrace new technology as implementation can be costly. However, carefully selected and implemented technologies can have a positive impact on the cost of running the business. We’ve seen this across many industries including food and beverage, manufacturing, and banking.

One thing to keep in mind is that mining is unique compared to other industries. Each operation can vary based on numerous factors including regulation, market demand, safety plans, and worker availability. 

Many mining executives have big ambitions when it comes to technology, but the industry is moving much slower than other industries.

According to BCG’s Digital Acceleration Index (DAI). the metals and mining industry is 30% to 40% less mature digitally than other similar industries. This creates opportunities for leading mining companies to be early adopters and break away from the pack.

The first step? creating a digital transformation roadmap.

Our goal is to help mining executives and leadership better understand the opportunities that come with digital transformation, the risks of moving too slowly, and consider the strategic benefits that come with embracing technology. We know that mining throughput can increase significantly (10% to 20%) as a result of digital transformation.

Unfortunately, a rapidly changing landscape could force mining companies to embrace innovation or risk survival. The key to solving this challenge is a combination of implementing new technologies, as well as, rethinking the way the company leverages technology to plan, track, and execute strategic initiatives. 

What is Digital Transformation in Mining?

Digital transformation in mining is the integration of digital technology into all areas of a mining company, optimizing operations and value delivery. A required component of a mining digital transformation is also a cultural change, mining companies specifically need to challenge the status quo and differentiate. Identifying and utilizing technology in new or improved use cases provides a major competitive advantage.

Solving Mining Sector Risks with Technology

The mining industry has been in a precarious position in recent years due to workforce impacts from the COVID-19 pandemic, supply chain disruptions, and changes in market demands. In 2020, a report from EY outlined some of the key challenges that are keeping mining industry executives and leaders up at night. 

  • License to Operate - This was the most significant risk factor identified by 44% of industry leaders. As governments across the globe put additional pressures and regulations on the mining industry, leaders are expecting additional restrictions in the coming years.

    Much of this regulation is a result of public and consumer scrutiny as more people are becoming aware of the environmental impacts and carbon footprint of the mining industry. 

  • Future of the Workforce - Ranked second on the list of concerns (up from being ranked #7 in 2019), industry leaders are concerned about the future of their workforce. First, worker shortages are making it difficult to find and retain talent. In addition, there is a major skills gap when it comes to the use of technology.

  • Digital and Data Optimization - Mining executives ranked this as the third highest risk for the industry. It’s clear that industry leaders understand the importance and impact that data will have on the future of the mining industry.

    However, many have struggled to execute their digital strategy. Mining operations need to figure out better and more efficient ways to extract and leverage useful insights from the data they are collecting. 

  • Increased Operational Costs - It’s no surprise that costs are rapidly increasing due to inflation, rising wages, poorer ore quality, and availability, and stricter regulation. Technology and data optimization can help large companies better control their costs and drive better efficiency. 

Benefits of Digital Transformation for the Mining Industry

  • Enhanced Operational Efficiency - Operational efficiency focuses on reducing the impact of numerous variables and relies on smart technology to identify trends and adjust forecasts and scheduling.

    By looking at data flows being communicated between mining machinery, as well as, the output of various steps in the mining process, companies can gain meaningful insights to guide the planning and coordination of mining activities in the future. 

  • Cost Reduction - Mining costs have greatly increased over the last decade due to material costs, increased labor, and additional processes due to regulatory requirements. Technology can help reduce costs by making processes more efficient and reducing waste. 

  • Improved Discovery and Exploration - The mining industry relies heavily on the ability to find new sources of raw minerals and metals. Unfortunately, due to cost restrictions, exploration budgets are now half of what they were in 2012. Technology can help make finding new sources of ore more efficient.

    For example, innovations in the space of muon tomography allow mining companies to conduct deep earth scans which can improve the ability to find mineral deposits instead of relying on “blind” drilling for core samples. This can have huge benefits on the bottom line since 55 percent of exploration costs are associated with drilling. 

  • Reduced Impact of Market Changes - Changes in technology and the application of raw materials can greatly impact the industry. For example, a new type of material could be discovered that could affect the usage of certain types of metals.

    Technology can help support the running of scenario-based simulations so executives can get ahead of major business upsets. 

  • Human Risks - There are significant risks when it comes to worker safety within the mining industry. Companies can reduce the high rates of death and injury by implementing technology that is focused on safety such as automated machinery and monitoring sensors. 

  • Improved Communication - Technology can be highly beneficial to mine operators who need to maintain constant lines of communication with their workers, mine supervisors, and machinery operators. 

Case Study: Leveraging Artificial Intelligence

Mining companies have the potential to generate massive amounts of data that can provide important insights into how to best optimize day-to-day operations. In 2019, Codelco, the global leader in copper production, has chosen to embrace artificial intelligence and machine learning to support the processing of data to help boost productivity, reduce costs, and keep machinery operating in a safe manner. 

The Chilean metal conglomerate will work in collaboration with Uptake to transform its data processing systems as a part of a $40 billion facility upgrade. The project is expected to take 10 years (2019 to 2029) and will include modernizing its data processing, as well as, automating equipment and supplying electric vehicles. 

In addition to operational efficiencies, Codelco is positioned to cut its carbon footprint to align with the U.N. Sustainable Development Goals (SDGs). 

Key Strategies of a Successful Digital Transformation

1. Expand Platform and Network Capabilities

One of the biggest technological limitations for the industry is the ability to deploy technology solutions to the many remote locations where mining operations are happening.

With an increased demand for interconnected machinery and an open flow of critical data and information, mining companies will need to address how to provide network infrastructure that is both powerful enough to process the necessary data plus also portable and flexible enough to be set up anywhere. Solutions such as edge and cloud computing can provide a good solution to reduce the cost and limitations of data storage. 

With mining equipment becoming increasingly digitized and interconnected, mining operations have an increased risk of cybersecurity breaches. In the past, stand-alone equipment was impossible to hack or disrupt.

Today, more equipment is being designed and deployed which connects and flows data to centralized hubs for monitoring. While this brings many benefits, there are also risks that mining operators need to consider and mitigate.

Network capabilities are also a critical component of being able to fully or semi-automate mining operations. Operators will need to be able to connect to their autonomous equipment to ensure they are running smoothly and avoid any disruption from connectivity issues.

This will require strong wireless networks. Companies such as Nokia are working with mining operations to build privatized WiFi and 5G cellular networks that can only be accessed by the mining operation workers. 

Key Takeaway - Mining operations need to find a way to balance improving their networks and technology platforms to improve interconnectivity while providing a safe and secure environment for data to be processed and stored. 

Free Template Download our Digital Transformation Strategy template Download this template

2. Focus on Remote Monitoring and Automation

Pressures from the COVID-19 pandemic and the rising cost of labor have forced mining companies to reevaluate the human resources required to operate mines and other processing facilities. Some of the hardest-hit commodities like uranium, nickel, zinc, and copper, required mining companies to lay off thousands of workers.

Others that were fortunate enough to have lesser impacts were pressured by governments to take action to minimize the spread of COVID-19. Leaders found themselves balancing the health and wellbeing of their workforce with keeping the global supply of minerals, precious metals, and energy supplies flowing.

The best solution to solve both of these challenges is leveraging technology to allow more remote monitoring of mine operations and automation of critical equipment and vehicles. 

Because of the remote location of many mining operations, securing talent has always been a challenge. The high cost of travel and relocation of employees has always been a significant logistical expense.

While more companies embraced remote work out of necessity during the COVID-19 pandemic, it has yielded unexpected benefits. Simple technology additions such as cameras, sensors, and automated equipment help operators to monitor mine operations without having a physical presence in many situations.

Some projections are indicating that this is likely to continue with a majority of the mining industry workforce expected to be working remotely by the year 2035. The key to this will be a company's ability to collect, process, and analyze data that will be useful to workers who are in locations around the globe.

These technologies are now allowing mining companies to expand their available talent search globally, instead of just within their normal operating territory. This gives mining companies the opportunity to secure high-quality workers at a lower cost with the only limiting factors being language and internet access. 

Case Study: Fully Automated Mines

There are a lot of challenges involved with sending human workers into mines including worker safety, limited working hours, and operational delays from mistakes or errors. Without the human element, mines can be more productive and safer.

This opens the door for companies looking to transform the industry through automation. Komatsu, a Japanese company that produces heavy machinery for mining, forestry, and other industrial applications, is leading the space with a fleet of autonomous dump trucks that have been operating at more than a dozen mining sites across the globe.

Komatsu’s Autonomous Haul Trucks (or AHTs) have the capability to haul billions of tons of material from mines without the need for a human operator on-site. Instead, an entire fleet of trucks can be monitored by a single human controller who is located anywhere in the world. One mine in Australia which has 50 AHTs estimated that the trucks brought nearly 4,000 hours of productivity in a year (valued at 50 million euros).

3. Implement Simple, Sustainable Solutions

Implementing a full-scale digital transformation can come at a high cost and require major shifts in operational procedures and company culture. The good news is that most mining companies can get major benefits from making simple digital changes.

For example, sensor networks that evaluate and record mine conditions, equipment performance, and production rates are relatively inexpensive and can provide a wealth of useful data points.

Employees are also becoming more familiar with handheld devices such as mobile phones which can easily be equipped with tools and applications that allow them to provide and access valuable information about scheduling, maintenance activities, and workflow challenges. 

Once data is collected, companies can best decide how to leverage this information to make decisions about their operations. This can later be enhanced with AI to provide predictive insights such as preventative maintenance alerts or potential supply chain challenges. 

Adaptability is a major hurdle as digital technologies need to be customizable for each mining location. Each location and facility can be different with varying levels of worker skill, ore quality, manufacturing processes, and access to technology networks and technologies.

Many companies have resorted to rolling out off-the-shelf digital solutions, but these have limited ability to make an impact or account for the variations in each operation. According to one study by BCG, only 25% of mining operations have leveraged customizable digital tools. 

Key Takeaway - Mining operations should focus on leveraging simple and sustainable technology solutions instead of complex and universal technology platforms. This will provide the flexibility needed to create customized solutions for each facility while keeping technology costs low. 

4. Employee Training and Company Culture

The mining industry dates back hundreds of years. Many of the processes and equipment in use is outdated and provides low-tech solutions. Without widespread access to the latest technology, the workforce within the mining industry is at a disadvantage.

While deploying the best technology can have its advantages, companies need to consider how they will provide the appropriate training and management support to shift the company’s culture to embrace the digital transformation.

For organizations that are just starting their digital transformation journey, they may face some resistance from workers who are familiar with traditional work processes and manual efforts. 

  • Training - Between the top 10 risks and opportunities for the mining industry in 2023 we find Workforce, Cost & Productivity, and Digital & Innovation. To better productivity, safety, and mine operations technology will play a crucial role since many employees within the mining industry are blue-collar and less familiar with the technology.

    This skills gap has gained the attention of executives looking to implement a digital strategy. Most organizations in the sector are just beginning to implement these strategies with 30% having no digital upskilling plan and 45% just beginning to focus on training initiatives

  • Talent Acquisition - Mining companies should continue to focus efforts on attracting technology-focused talent. Because this type of talent is difficult to find within the existing industry resource pool, mining companies may need to hire people outside of the industry to fill this need. 

  • Executive Backing- A digital transformation strategy can only be effective if leaders at the top of the organization are fully supportive of the initiatives. Executives have the power to approve the budgets and show public support for the new direction.

  • Management Support - While executive leadership helps, middle managers, will play a critical role in helping the general workforce embrace new technology.

    Training should be extended to management levels to ensure that they are educated on the digital strategy, how to communicate and enforce the company’s digital transformation and encourage use.

  • Company Culture - Shifting a company’s culture, especially in an industry that is not used to rapid change, can be challenging. Leaders should focus on promoting a technology-first environment. Expressing the benefits and purpose of digital transformation can help employees see the “big picture” and make them more likely to embrace the new company culture.

    For example, show them how technology will improve their safety in the mines, make them more productive, or reduce costs for the company. Inspiration rather than control is a more effective way to motivate employees to embrace technology. 

  • Digital Strategy Execution - The tools and techniques used to execute the digital strategy are just as important as the technology itself. Companies that want to get the most benefit from digital transformation should leverage strategy execution tools to help plan and track digital initiatives.

Key Takeaway - Mining leaders will need to make major steps to change the industry culture and equip its existing workforce with the training needed to successfully deploy and embrace digital tools. 

5. Expand Beyond Mine Operations

Since many mining companies are just getting started with their digital transformations, the immediate efforts are being focused on the operational level. This is the right approach initially as the most benefits can be gained here.

However, digital transformation leaders should consider how they will address other divisions or departments beyond mine operations. Creating a complete digital roadmap or strategy will help guide the team as they progress through the digital transformation. 

About 75% of companies reported relying on manual processes within their procurement departments making this a great area to focus on after operations. Other key areas include supply chain, demand prediction, and financial planning. Overall, technology can help improve workflows and data analytics for better decision-making. 

Focusing on multiple departments and groups within the organization can also help reduce the limitations that come from technology being siloed. The goal is to create technology systems and platforms that can stretch across the whole organization. 

Key Takeaway - Digitally transforming mine operations should be the priority for companies. However, leaders shouldn’t lose sight of the benefits that can come from providing technology and digital tools to other parts of the organization. 

The Risks of Not Implementing a Digital Strategy

Mining companies need to move quickly to implement digital strategies to avoid falling behind the industry. Fortunately, companies that get started immediately can stay ahead as the industry continues to creep slowly toward the digital future. A well-planned digital transformation can come with many benefits and the costs of not embracing technology can be steep. 

  • Regulatory Compliance - Technology makes it much easier to adapt to new regulations. Falling behind on technology could result in operation disruptions due to government pressures or non-compliance. 

  • Higher Operating Costs - There is a cost to implementing a digital transformation strategy. However, relying on manual processes and equipment will continue to increase the cost of operating. 

  • Adaptability - Mining operations and processes change quickly as companies need to be able to adapt to changes in operational processes, significant increases or decreases in production rates, and shifts in consumer buying patterns. Technology makes this much easier and more efficient. 

  • Inability to Meet Demand - Demand will likely continue an upward trend over the next few decades. Mining operations that don’t innovate through technology may struggle to keep up with supply crunches. 

The future for mining operations continues to look bright for companies that embrace digital transformation. With the industry positioned to grow from $1.8 trillion to nearly $2.5 trillion over the next few years, companies that seize the opportunity to optimize their operations with digital tools and technologies will see the greatest benefit. 

Don't get left behind, execute your digital transformation with the world's #1 strategy execution platform!

Free Template Download our Digital Transformation Strategy template Download this template

Your toolkit for strategy success

#1 Rated Strategy Execution Platform
Less chaos. Better Decisions. Faster Results.