Tech at the coalface

Published on the 11/12/2012 | Written by Stephen Withers

Tech at the coalface

The mining industry has transformed in recent years. Stephen Withers looks at the unique demands of this boom and bust industry and the role technology is playing…

During the last few years, demand for resources produced by mines has outstripped supply. The emphasis has been on developing new resources and getting product to market as quickly as possible. Mine technology suppliers have consequently had a really good period of growth, although traditionally the mining industry is not a big tech spender, especially for software. In fact, it spends less than half of the average for all industries, and one-fifth as much as technology-intensive industries such as health or aerospace.

As the boom has slowed the industry’s strategic emphasis has moved from a focus on maximising output to minimising costs, with a need to invest in solutions that will improve the efficiency of existing operations.

“IT can help with these new realities that miners are facing,” says Mark Batina, managing director of Precise Business Solutions a business software solutions provider. It can assist them to find smarter ways of working, such as adopting lean principles, removing non-value-adding processes, and more closely integrating operational and business systems.

Surveys of chief decision-makers show that current priorities are around controlling costs, reducing redundant processes, and getting information to on-the-spot decision makers. “That’s not unique to mining,” says Batina, but it does indicate “the foot is coming off the accelerator” and the time is right for taking a strategic view.

Mining your features
Some of the functions miners require are common to most industries — financials, project costing, asset management, maintenance, inventory, supply chain management, logistics, human resources, occupational health and safety, and so on. In that regard, a well-run mining company or mining service provider is not that different to any other wellrun company.

Despite that commonality, Erica Low, a product manager servicing the sector at Pronto Software, suggests miners’ exact requirements for these horizontal applications will vary according to location (eg, to cope with government reporting requirements) and the minerals being extracted.

Furthermore, processes are not as defined as they are in a manufacturing environment. Phil Edmiston, commercial manager at Minemax says mining is quite variable in terms of the materials, market price and demand. Risk and uncertainty abound, and although there may be estimates of what will come out of a mine, the reality can be different. Consequently, the dynamics are different in mining compared with other industries.

“IT can assist miners to find smarter ways of working, such as adopting lean principles, removing non-valueadding processes, and more closely integrating operational and business systems.”

An important differentiator is the way corporate objectives are achieved in mining, which is highly reliant on technical expertise. This includes some highly specific processes, such as geological modelling, ore body analysis and mine planning. James Braatvedt, a director of Ventyx, an enterprise software provider, says that the real value comes from the technical side, not an ERP system. He claims Ventyx “has the broadest portfolio of technical mining software,” which means it is well placed to help miners.

All tied up
In fact, according to Rob Stummer, managing director of IFS, an ERP solutions house, the mining industry was late to catch on to the advantages of ERP. Consequently, there are still a lot of opportunities for ERP systems to be integrated into mining operations. IFS offers software with broad ERP capabilities plus strong project management so users can manage everything from go to whoa in near real-time. IFS includes project management because, in Stummer’s opinion it is “the glue that holds all their [clients’] applications together”. There are various highly regarded point solutions for the mining industry, so integration “has got to be watertight” as it is very important that systems talk to each other; from planning through operations to decommissioning, “it all comes back to project management”.

Other important aspects include asset management (“absolutely critical,” according to Stummer) and occupational health and safety (“probably elevated above anything else in the mining industry”).

Batina of Precise Business Solutions agrees. “It’s entirely possible to link all these together,” he says, referring to planning, production management, supply chain, and so on. It is important to remember that, while there is a cost to integrating, there is also a hidden a cost of not integrating the systems, such as increased manual processes, inaccuracies and delays. As such, he expects that integration will become easier and more common over time.

With the boom slowing and the emphasis shifting from maximising output to minimising costs, SolveIT Software has chosen to take the ‘value chain perspective’. James Balzary, the company’s director of natural resources, says they look at the whole process from the material in the ground right through to the customer. This allows people to see how the decisions they make impact on the rest of the chain. The company’s software also fits in with other enterprise software, which helps explain the attraction for top-tier customers such as BHP Billiton.

By sitting between the software involved in low-level operations and the ERP system, SolveIT “becomes the place where decisions are made”. For example, the mine planning software can decide how to extract the resource from the ground, taking into consideration information from the supply chain. Planning and scheduling for people and assets can also be incorporated as part of this process. Handling all these aspects in one place makes it easier to achieve business KPIs than it is with separate applications, Balzary explains.

Optimum strategy
Software that supports mine planning and optimisation plays an important part in helping the industry to extract resources as economically as possible. Andrew Pyne, senior VP at Gemcom Software International, which provides specific mining software and solutions, agrees. He points to the company’s InSight product for mine production management which, he says, gives a good understanding of costs. When targets are missed it shows not only the size of the variance but also its cause. The optimisation side of the application allows new plans to be created when parameters such as price change.

“Software that supports mine planning and optimisation plays an important part in helping the industry to extract resources as economically as possible.”

Part of the planning process involves creating wireframe models from drilling information that can then be converted into block models showing the quantity and quality of the material available. Mathematical algorithms are then applied to determine the most appropriate approach to mining it.

Each parcel of material may have as many as 50 attributes to take into account in the planning process, says SolveIT’s Balzary who claims his is the first company to offer block-to-port optimisation. The SolveIT engine uses artificial intelligence techniques, including neural networks, to determine the best sequence of extraction to meet multiple objectives, while taking into account the inventory in the rest of the supply chain including stockpiles, processing plants, on trains or barges, at the port, and even on vessels that have already sailed.

Data typically comes from seven or eight systems – some of which may be supplied by parent company Schneider Electric – including laboratory systems (for information about the minerals), ERP (sales and marketing considerations), and HR (availability of people with specific competencies). “It’s a heavy integration implementation,” says Balzary of block-to-port optimisation.

“Mine planning is critical,” says Ventyx’s Braatvedt, as it has an impact on production, workplace safety, and equipment (through the risk of damage). Plans must be updated in line with the latest information, but if you don’t have the right software, a lot of that information is held by individuals and not readily available.

Boom time
SAP Australia’s principal of mining and resources Peter Hodgins says that the past few years have seen demand for resources outstrip supply. This has meant the focus was on getting as much of the product out of the ground and to the market as quickly as possible. In those years there were plenty of changes in the industry too and, thanks to the boom, the mining industry in Australia is now substantially larger than it was five years ago. Mincom was acquired by a private equity firm and then sold to ABB; Gemcom went public, was purchased by a private equity firm and then acquired by Dassault (triggering a revaluation of smaller private companies in the sector); and aerospace modelling and simulation company CAE diversified into the mining sector.

Even if further expansion is delayed, mining has moved to a different level.

Although the boom maybe slowing, IT companies that focus on mining have always struggled to hire good people, so Minemax’s Edmiston thinks retrenchments are unlikely. Furthermore, any downturn seen in the coal or iron ore markets has had little effect on the oil and gas industry: “they’re quietly forging ahead,” he says, even if they are getting relatively little attention. And parts of the mining industry are still doing well – “gold is booming along,” says Edmiston – so there are still hundreds of mining projects that are worth doing.

Bust? What bust?
The period of growth has certainly helped IT vendors. It increased the number of opportunities to win deals, but software is still a pretty small slice of a miner’s expenditure and there continues to be many opportunities to use IT to improve the efficiency of existing operations. That optimism seems widespread. “We’re getting quite a few big wins,” says Balzary, “it doesn’t seem to be slowing down.”

Similarly, Pronto Software’s Low does not expect the current disruption in the mining industry to cause a downturn for the part of the IT industry that supports it, largely because mines typically have a 10¤15 year life. There is no sign of adverse effects on Pronto’s business at this stage, she says, as mining is still very strong.

Now that the demand for minerals has slowed, miners’ attention is shifting to cost control in order to maintain profitability, says SAP’s Hodgins. Instead of developing new sites, the focus is on things like automation, providing field workers with access to information, and mergers and acquisitions. “I don’t believe it [expenditure on IT] is going to be significantly different,” he says, but “we will be having different conversations [with customers].”

Australian miners are especially exposed to market changes, says Pyne of Gemcom Software, due to relatively high labour costs and the continuing strength of the Australian dollar. This means they are particularly prone to turning off the expenditure tap as quickly as possible. That said, IT can help by reworking production plans to extract minerals as efficiently as possible rather than as quickly as possible.

Triple Point Technology’s Phillip Spencer, (director of global support for coal and mineral supply chain solutions) agrees, and says that while some projects have been put on hold, software is just as useful for minimising costs as it was for maximising output.

Lean and mean
The challenge is to support miners as they try to improve efficiency, in part by more closely integrating their technical and commercial operations, says Hodgins. SAP is now developing software more specifically for the mining industry such as analysing telemetry data from mining equipment, which will involve working more closely with equipment manufacturers.

Process control and automation also needs to be integrated with technical and production software, says Vantyx’s Braatvedt, in part because of the high cost of outages. These can run into the hundreds of thousands of dollars per hour. Not surprisingly, “we’ve seen a lot of interest in this,” he says.

Triple Point has a department specialising in integration. They look after projects that, for example, take data from instrumentation systems and feed it into scheduling and replanning processes.

SAP’s Hodgins also notes an increase in remote operations. One aspect of this is the provision of ‘expert on demand’ services, where off-site specialists receive photos, video and other data, from which to advise their colleagues in the field, something that SAP’s software, in conjunction with mobile systems, can assist with.

More widespread automation can lead to a safer and more efficient environment, but it needs the support of a well-optimised software suite. When mines introduce remote operations therefore, it can be a catalyst for increased integration.

Edmiston predicts we will soon see companies such as Rio Tinto saying how ‘smart’ they have become – more efficient, better health and safety outcomes, and so on – through the use of remote operations and autonomous equipment.

There is also the emerging mining segment; new companies with greenfields operations and often with no existing technology beyond Excel and MYOB, says IFS’s Stummer. Return on investment is especially important for these players that need to keep upfront expenditure on a tight chain, so the option for a modular, progressive build out is a key feature.

“Edmiston, commercial manager at Minemax, predicts we will soon see companies such as Rio Tinto saying how ‘smart’ they have become – more efficient, better health and safety outcomes, and so on – through the use of remote operations and autonomous equipment.”

Triple Point’s Spencer also sees small miners using little more than Excel, but as they mature they need tools to manage their resources “and that’s where our software fits,” he says.

Key to the future
Stummer says he thinks the end of the boom has been blown out of proportion. Large miners may be putting big projects on hold, but they generally have mature systems that would be brought to bear on those projects. “We’re not seeing a slowdown in the emerging miners space,” he says.

The mining industry, like others, is getting smarter, says Pronto’s Low. Features such as business intelligence, reporting, analytics and dashboards are of increasing interest. “We’re trying to make sure the modules are streamlined and integrated really well,” she says. Spencer has a similar view, pointing out that the massive amounts of data generated by mining needs to be distilled in to key metrics.

Mobility and beyond
Mobility is a major part of mining as mentioned by a number of vendors. “It’s definitely a focus at our company,” says Spencer, with mobility options being added to various Triple Point modules such as vessel operations. A number of Pronto modules already support mobility and there will be a new version of the company’s mobility software in the Pronto release scheduled for May 2013. Given that so much mining takes place at remote sites, mobile capabilities need to be very strong and fully integrated with the other systems, suggests Stummer.

The move to tablets and smartphones is a hot topic and a real trend for the industry. “We’re leaders in this space,” he says, highlighting features such as real-time expense management and job scheduling for technicians, thanks, in part, to the acquisition of 360 Scheduling and Metrix.

Ruggedness also needs to be considered when it comes to using mobile devices at mine sites. While there continues to be a need for more durable smartphones and tablets, protective cases are available for some popular models. And despite the current wide use of iPhones and iPads, “we see [the mining industry] moving towards Android,” says Stummer.

Cloud technology has improved, he adds, and can now reach even remote sites within Australia.

“I think it is important to look at a cloud-based approach,” says Stummer, but he notes that security is an issue for miners so they typically prefer on-premise systems. Whether cloud really is less secure than on-premise is debateable, but Stummer does expect attitudes will evolve over time.

Spencer agrees that internet connectivity “does not seem to be that much of a problem in Australia,” and Triple Point’s software can be deployed in the cloud to support a dispersed workforce. It is a different story, however, in other areas: one customer had no real alternative to an on-site deployment at a site in the Kalahari region of South Africa.

On the horizon
Looking further ahead, automation may play an important part in keeping costs down, suggests Gemcom’s Pyne. Labour and diesel fuel can account for half the operational costs of mining, and automation can reduce both aspects.

Gemcom’s parent company Dassault is strong in the field of simulation, and the company thinks this can be applied to mining automation. Changes to the software will be needed, but Dassault has 4000 programmers as well as simulation experience in various industries. “A lot of our competitors don’t have that sort of horsepower,” he says.

SolveIT is also working towards benefitting from increased interest in automation and, like Pyne, Balzary believes his parent company’s involvement in automation will help it to integrate decision support systems with automated operations. In two to four years he expects a transition to true decision systems, where a lot of routine decisions are made completely automatically. Faster decision making is “one of our core value propositions,” he says, and the reason why Schneider Electric acquired SolveIT.

But for that to happen, the time the software needs to reach a decision must be slashed from a couple of minutes to less than a second through a combination of increased hardware speed and improvements to the algorithms.

Nevertheless, the future heralds a new breed of leaner, meaner and intelligent mining software.


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