Can digital innovation transform the fortunes of the mining and metals industry?
Five years after this century’s commodity boom peaked, the global mining and metals industry is still adjusting to a set of strong headwinds:
There is no evidence to suggest that these trends will reverse any time soon; on the contrary, they are likely to persist indefinitely, becoming the industry’s ‘new normal’.
At the same time, digital technologies in many areas of the economy are creating new challenges and potential opportunities.
Advanced technologies are already changing and being reinforced by changes in consumer mindsets. For example there is a shift – especially among urbanites and millennials – from viewing transportation as private property to one of a service, based on the rise of Uber and other car-sharing models.
Digital technologies are becoming an essential enabler in the pivot to more sustainable lifestyles, business models and societal institutions. They are opening up new options in the design, manufacture, use and end-of-life recovery of products we consume. New technologies and tools for maximizing energy efficiency are changing the ways we design, construct and manage housing, offices and factories.
These macroeconomic and digital trends are projected to heavily impact the metals and mining industry, with the likelihood of greater disruption in the future, including:
Metals and mining companies are starting to seize the opportunities offered by digital technologies to deal with these changes, transforming their operations, their business models, and their relationships with the communities in which they operate. Cost reduction is a major driver, but so too are growth, safety and greater connectivity. For example, at its Pilbara iron ore mine in Australia, Rio Tinto already operates 69 autonomous trucks. Metals and mining companies are using advanced analytics around equipment conditions and maintenance practices to achieve step-change improvements in asset reliability. Metals traders and distributors are creating new business models which greatly reduce inventories and transportation costs based on digitally-enhanced platforms, forecasting and supply-chain management tools.
Understanding the full impact of digital innovations – for society and the industry – is at the heart of current research by the World Economic Forum’s Digital Transformation Initiative.
We see four main areas in which digital technology can have the greatest impact:
1. Automation, robotics and operational hardware
Digitally enabled hardware tools can perform activities traditionally carried out manually or with human-controlled machinery.
2. Digitally enabled workforce
Connected mobility, virtual and augmented reality can empower and track field workers in real time.
3. Integrated enterprise, platforms and ecosystems
Operations, devices and systems can be connected end to end, boosting efficiency.
4. Nextgen analytics and decision support
Processing data with algorithms and artificial intelligence offers real-time support for decision-making and projections.
Clearly, the potential impacts on the industry and stakeholders – workers, local communities and governments – are huge, leading to such questions as:
New technologies will be highly disruptive to current industry business models. However, innovation and widespread adoption of digital technologies bring an opportunity to fundamentally reshape their businesses, making them stronger and more connected to workers and communities. Understanding the full potential impacts of this digital transformation – and quantifying its value for industry and society – will be vital.
We will be publishing our report into digitalization in mining and metals later this year. The latest news and research from the Digital Transformation Initiative can be found here .
SOURCE: World Economic Forum