Lorraine Meldrum, CEO of Swann Global recently interviewed Gavin Yeates – Principal, Gavin Yeates Consulting Pty. Ltd. Lorraine’s interview was based around a presentation Gavin gave on “The Digital Mine“, which was about using digital to change the way of doing things.
LM – Are companies embracing technology?
GY – I think they’re talking the right talk and I think they’re embracing technology in pieces of their business but I’m still not seeing the holistic sort of view, the fact that only around 6-9% of mining companies have technology as part of their strategic plan tells me they are dabbling, they are playing with pieces of the puzzle, point solutions but they’re not really taking it seriously.
They certainly see it as a risk, not the technology implementation itself so much as the impact on their existing business. They have a lot at stake, from the revenue flows that every hour of downtime costs them, I think there is reasonable reason why they have to be cautious.
LM – Utilising “the digital mine” process will this drive cost up in the short term however produce long term gains and quality for the future? How will this work?
GY – I’m not sure that it will push costs up, yes there will be an investment where there will need to be, but I think the nett cost production has to be a business case for companies to do it. I think the size of the opportunity is not well understood. There is an opportunity there, I believe, to really halve the operating cost and halve the capital intensity that we currently use, which is big numbers, and I don’t throw them out lightly, there is work being done behind my understanding of those numbers. The opportunity is there because the current approach is inefficient, there is a lot of wasted utilisation and there is a lot of wasted energy consumables on material that doesn’t give you revenue.
LM – As we know Millennials have a very strong focus on the environmental and humanitarian causes. Does the mining industry have to wait for the CEO’s of tomorrow to embrace this technology or are there Company Leaders already on board but being held back by historical processes?
GY – I think it’s probably a bit of both. I think there is some new blood in there and will always add to it but I think there is also people being held back by the way they have always done things. The concept of bigger is better is still the mantra in the industry and the fact that as grades decline and ore bodies get more complex we actually have to rethink that and go to being much more surgical in extracting and maintaining the high grade. That means we don’t need as big a process plant, we don’t need as big a tailings dam our environmental footprint is less, our energy footprint is less. At the moment we are adding a marginal tonne of very very low grade material to produce the marginal tonne of metal. A lot of these concepts are around being much more selective up front, rejecting waste early before you spent energy on it, they’re the concepts that when you take them to the end game, gives you the sort of numbers I was talking about. This is where I think the positive outcome of this is, that it has a fundamental good financial business case behind it and provides a social dividend as well, it’s an environmental dividend with less impact, less energy, less water, less waste.
LM – Do Boards require revamping to enable companies to embrace this technology and also have “younger” executives on these boards who can see the vision that technology can play in this industry?
GY – Yes I really believe that many of the Boards whilst they’re aware of technology are not really up to date with it. Part of the problem here too is we mix-up technology with IT and the COO who usually looks after IT in the current businesses and is in charge of reducing the cost of email, SAP and the standard business processes but adds very little to the core business processes such as the automation, the planning systems, the mock geographical modelling systems, those areas where I think we need to have a Technology Officer. BHP Billiton is an example where they have gone down this road and got a Chief Technology Officer who reports into the CEO and has IT and what we term Operational Technology (OT).R&D technology function report to that Chief Technology Officer and I think that’s the right way to go.
In terms of selecting the right person for the job, I think it comes down to selecting passionate individuals that have an interest and understanding of what technology can do. I think being brave enough to pull people from other industries. It is similar to the mandate I was given when working on the technology strategy, to speak to people who have done it, have a track record of using technology to transform businesses out of manufacturing or other industries I think is entirely applicable in mining, it’s not that different really.
LM – We hear a lot from companies in relation to their goals for “diversity”, are they missing the mark and should the emphasis be more about technology?
GY – I’m a very strong supporter of diversity but my definition of diversity is not just gender dimensions, it is multi-dimensional and I think having a diverse range of skills and backgrounds gives you that industry mix, skills mix and age mix. We are getting Gen Y’s and Millennials with some pretty serious qualifications and experience under their belt. If companies are going to be serious and take it on strategically, and then to be successful at it, they need to have the right skills mix. I’m not sure if in 10 years’ time we’re going to find the geology, metallurgy and mining people running the mines or are we going to have Generalist process engineers running the process. You may have Geoscience people interpreting the results, you may have metallurgists involved in designing some of the process but once it’s designed it’s about running the process.
I think more in terms of data analytics where you will have data analysts and software engineers in the mix, just as much as you have geologist and metallurgists today.
‘How we generate new talent from our education system?’ is a good question and ‘What does it mean for recruitment?’, ‘What does it mean for organisation structures?’We have already seen that as we’ve brought in remote operating centres it changes the organisational structure. This is where you need the generational change, these concepts of how you organise a workforce to achieve an outcome, what those organisational structures will look like in the future and KPI’s.
Also understanding the different business models is necessary because that’s the other thing technology brings that isn’t well understood is the potential for completely new business models and the mining industry. The oil and gas industry has let partners like Schlumberger, Halliburton, and Baker Hughes into managing parts of their business. Mining would never let people in and when it does it doesn’t open up its data platforms, an example would be many companies have a blasting company to do their blasting but they don’t give them access to the ore body model which is the fundamental material that they’re trying to blast. These sorts of closed business models I think will need to be challenged as well and again unless you bring people in from other industries who are not as fearful of that, you won’t get that.