The Digital Revolution Mining Starts to Reinvent the Future Februar Y 2017 the Digital Revolution

The digital revolution Mining starts to reinvent the future Februar y 2017 The digital revolution | Contents

Contents

Introduction 4 Success for mining companies Why should the mining sector pay attention? 7 is not about adopting the latest A new era of business 7 An opportunity for mining organisations applications or technology to reduce waste and create value 7 solutions, these will continue to What will the future digital mine look like? 8 Core mining processes – automating physical develop and evolve. They must operations and digitising assets 10 The digital mine nerve centre – data-driven instead embed digital thinking planning, control, and decision making 12 Support processes – re-imagined ERP into the heart of their business and automated support processes 14 strategy and practices in order How can mining companies achieve true digital transformation? 19 A measured and agile approach 19 to completely transform the way The time to act is now 22 corporate decisions are made Where to start 22 References 22 across the enterprise. Authors 23 Global contacts 24

2 3 The digital revolution | Introduction

Introduction

The disruption of business models through Building upon this innovation theme the advancement of digital technology has to focus on digital, we explore: Digital is now been a reality for other industries for many • Why digital is now a reality for mining impacting the mining years. Digital is now impacting the mining • What the future might look like and industry. Technology has advanced such industry. Technology what is possible that the barriers of high cost of entry, and a very physical value chain are no longer • How mining organisations can take has advanced such protection against large scale disruption. steps to protect themselves from that the barriers of disruption and falling behind the By bringing together our understanding industry or new entrants, while also high cost of entry, of shareholder value, mining operations, protecting against poor investments technology and analytics, we have developed or failure, through: and a very physical an approach to the “digital mine” which • Developing a digital strategy value chain are no helps mining organisations make the most and proactively managing digital of the digital opportunity and avoid the transformation longer protection many potential pitfalls that come with the • Automating operations and against large scale adoption of new technologies. digitising assets • Building a “digital mine nerve disruption. Our recent “Innovation in mining” studies centre” for data-driven planning, examined current perspectives on mining control and decision-making innovation around the world.1 Among the 31 mining companies involved in the Australian • Implementing supporting study, most agreed that successfully platforms and enablers navigating the industry’s mounting • Leading a diverse, distributed challenges and ensuring the long-term and connected workforce. sustainability of the sector requires moving beyond the status quo – doing things differently byembracing innovation.1

4 5 The digital revolution | Why should the mining sector pay attention?

Why should the mining sector pay attention?

Digital disruption has been changing businesses and operating models, reshaping competitive differentiators and in some cases, completely altering the entire fabric of an industry.

A new era of business An opportunity for mining organisations Digital is a new era of business, a stepping to reduce waste and create value stone in the evolution of the industrial For miners, the commodity cycle, cost world enabled by the exponential use and productivity pressure means that in of technology. Digital disruption has been many cases the easily attainable savings changing businesses and operating models, have gone. As such, innovation is needed reshaping competitive differentiators and to deliver the next wave of improvements. in some cases, completely altering the entire fabric of an industry. The potential for digital capabilities to create value by reducing waste is massive: For example, 10 years have passed since eradicating execution waste by reducing the launch of the first full touchscreen process variability, eliminating process smartphone. This single innovation is now waste by enhancing decision making, regarded as a pivotal game changer – having reducing structural waste by automating fundamentally changed the way people processes and improving systems, and communicate, consume information, removing design waste by using digital and enabling the creation of entirely new technologies in the design of new assets. billion-dollar businesses such as Uber. Beyond these cost and productivity While the biggest impact has been benefits (typically targeted at 10-20% in consumer-facing industries, there are improvement), the digital revolution growing examples of digital transformation represents a terrific opportunity to forge in asset-intensive industries such as much closer relationships with stakeholders, advanced manufacturing and natural facilitate knowledge sharing and training, resources. As industries become more drive new revenue streams, provide access data intensive, disruptive technologies to new markets and most importantly, make are increasingly taking a digital form. day-to-day operations safer for employees. Data and specifically the ability to organise, manage, process and utilise that data has become a competitive differentiator.

6 7 The digital revolution | What will the future digital mine look like? The digital revolution | What will the future digital mine look like?

The digital mine

What will the Drones for inspection, Integrated stock and safety monitoring remote operations

Autonomous Wearables for ﬁeld maintenance Diverse mobile future digital equipment and operator safety connected workforce

Digitised Geological IoT sensors for real time ‘Digital Twin’ – Data data capture Digitised engineering and mine look like? asset information

The question for business leaders is “I think the industry “ Harnessing the potential how to turn potential benefits into reality. Success for mining companies is not has not really embraced of digital technology will DISCOVER & ESTABLISH EXPLOIT RESOURCES BENEFICIATE ORE MOVE PRODUCT SHIP TO CUSTOMER about adopting the latest applications or what digitisation and unlock value across our technology solutions, these will continue to develop and evolve. They must instead technology can do. And business, helping us INTEGRATED OPERATIONAL PLANNING, CONTROL AND DECISION SUPPORT embed digital thinking into the heart of their business strategy and practices in I think that is the next grow our free cash flow order to completely transform the way piece we have to get our per share. In so doing, corporate decisions are made across REAL TIME DATA PLATFORMS the enterprise. mind around and where we will make ourselves Real time sensor data to Integrated well governed drive short interval control in execution, data platforms support all processes you should expect to see into a leading twenty-first reduce variability, and shorten and all time horizons To “begin with the end in mind”, we have planning cycles envisaged the future state digital mining a quantum change in century company— organisation and how this might transform how we do things.“ enhancing productivity the core mining processes, the flow of information, and supporting back-office Graham Kerr, South32 and efficiency at our processes. This vision of the future state The Australian Financial Review, HISTORICAL FUTURE 20 February 2017 mines, and improving is not based on theoretical concepts or Reporting and analysis of historical Future insight derived from decision-making and data and insight gained from historical analysis to improve planning, unproven technologies – it is based on analysing trends, patterns and DIGITAL MINE NERVE CENTRE simulate the integrated supply chain, capabilities which exist now and are already opportunities for improvement Data driven insights drive improved and predict future outcomes, performance across every learned from experience using analytics and AI tools being applied within energy and resources planning control and decision support across the mining businesses, but no organisation is yet doing area of our business.“ value chain it all in an integrated way. John L. Thornton, INTEGRATED ENTERPRISE PLANNING AND SUPPORT PROCESSES Barrick Gold Corporation To effectively lead in a digital mining Businessweek, 13 September 2016 environment, leaders needs to be adept MAINTENANCE SUPPLY ENERGY MANAGEMENT HSE & COMMUNITY FINANCE HR IT MARKETING at understanding and driving this change, using data insights to support effective and rapid decision making, and leading a more distributed workforce with fewer people based ‘on site’. Reimagined core systems RPA for IT/OT Integrated communications Diverse & inclusive Shared Services on cloud platforms support process convergence network with cyber security workforce & COEs As the location of work becomes more flexible, this enables a more diverse workforce to become involved in what traditionally would have been considered core mining, which also requires new skills and new practices for effective leadership and management.

8 9 The digital revolution | What will the future digital mine look like? The digital revolution | What will the future digital mine look like?

Core mining processes – automating A connected network of low cost, highly Remote operations, combined with all of the physical operations and digitising assets capable sensors using Internet of Things Digital in action above, will result in fewer people in hands-on Digital in action (IoT) technology will capture data in real TM The core operational processes in the Rio Tinto’s Mine of the Future operational roles, which will improve A Canadian synthetic oil producer’s existing solutions for management of asset time, to enable integrated planning, future mining value chain will be highly program centres upon driving productivity, safety, and reduce overall cost. information were not delivering value to the business. The data managed within control and decision support. automated, a wide range of digital capabilities production while improving health, the existing systems was often difficult to find, incomplete or viewed as will be deployed. safety and environment performance untrustworthy. Clean-up efforts were met with limited long-term success due A “digital twin” is a digital model of the through greater automation. Rio Tinto Globally, 69% of mining physical environment constructed using to lack of data integrity controls, validation and enforcement within the systems. Autonomous vehicles will improve safety, has the largest fleet of autonomous geological, engineering and asset information companies are looking productivity, and reduce cost (through fuel trucks in the Pilbara, and is widely To address these issues, the company developed asset and enterprise information such as ore body models, engineering recognised as a leading innovator at remote operation and management strategies, and selected and implemented a new engineering and maintenance savings). Drones will be drawings, parts catalogues and service and as one of the lowest cost information platform. The next-generation template solution for management used for data collection, inspection, stock manuals. Data from sensors and location- producers of iron ore in the world. monitoring centres, 29% of asset information has been developed and proven at scale through pilot control, condition and safety monitoring. aware mobile devices can then continuously implementation at a major facility, built on principles of supportability, maintainability 3D printing of critical spare parts will improve the ‘digital twin’, as an accurate Earlier this month, Rio’s driverless at robotics and 27% at reduce lead times and inventory holding reflection of the physical environment. train program made its first complete 3 and minimal customisation. journey without driver assistance, unmanned drones. cost. Wearable technologies will be used This begins by implementing standardisation Consistency of information management at the pilot facility has improved through for field maintenance and real-time machine although there was a driver on board of data formats to allow ongoing interaction enhanced business processes supporting creation, update and usage of asset inspection instructions, improving between systems across the mining to take over if things went awry. Quoted recently, Rio’s CEO Jean- information. Data quality has also been enhanced, and leading edge information operator-based care and safety. value chain. Sébastien Jacques said he took a ride management tools which enforce information quality at source have been deployed. on one of the driverless trains in the Pilbara in September. “It is working very well; we just have to ramp up the entire system, which we want to do in a very safe and structured way.”2

Drones for inspection, Integrated stock and safety monitoring remote operations Autonomous equipment Digitised geological Wearables for ﬁeld maintenance Diverse mobile data IoT sensors for real time and operator safety connected workforce data capture ‘Digital Twin’ – Digitised engineering and asset information

DISCOVER & ESTABLISH EXPLOIT RESOURCES BENEFICI ATE ORE MOVE PRODUCT SHIP TO CUSTOMER

INTEGRATED OPERATIONAL PLANNIN G, CONTROL AND DECISION SUPPORT

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REAL TIME DATA PLATFORMS Real time sensor data to Integrated well governed drive short interval control in execution, data platforms support all processes reduce variability, and shorten and all time horizons planning cycles

HISTORICAL FUTURE Reporting and analysis of historical Future insight derived from data and insight gained from historical analysis to improve planning, analysing trends, patterns and DIGITAL MINE NERVE CENTRE simulate the integrated supply chain, opportunities for improvement Data driven insights drive improved and predict future outcomes, learned from experience planning control and decision using analytics and AI tools support across the mining value chain

INTEGRATED ENTERPRISE PLANNING AND SUPPORT PROCESSES

MAINTENANCE SUPPLY ENERGY MANAGEMENT HSE & COMMUNITY FINANCE HR IT MARKETING

Reimagined core systems RPA for IT/OT Integrated communications Diverse & inclusive Shared Services on cloud platforms support process convergence network with cyber security workforce & COEs The digital revolution | What will the future digital mine look like? The digital revolution | What will the future digital mine look like?

The digital mine nerve centre – Real time data derived from processing Central to enabling this will be an integrated data-driven planning, control, equipment and machinery sensors during and well governed data platform to support Digital in action and decision making operation will enable short interval control analysis across all time horizons, and a A major global miner with multiple iron ore mines in one Australian region moved its short-term production, planning and control The direct benefits of automation and to identify key drivers of process variability, centre of excellence in data management, activities from the mine sites to its new remote operations centre. digitisation in execution will be significant, and drive rapid and focused operational reporting and analytics, which employs The new operations centre included the implementation of a supply chain visualisation tool that represents an end-to-end (pit to and even greater value realised when the improvements. specialist data scientists and analysts. Integrated Drones for inspection, port) view of the iron ore supply chain, showing key operational metrics in near-real-time, permanently displayed on large screens, data is used to plan, optimise and integrate stock and safety monitoring remote operations the activity across the value chain. More timely data from across the value with data sourced from 16 disparate systems. This was the first time that the client was able to see its total supply chain in one place, chain will also enable ore-body models, Digital in action assisting decision-making for the whole business. Autonomous To fully leverage the automation of core mine plans, and financialWearables models for ﬁeld tomaintenance be Dundee PreciousDiverse Metals mobile - a Canadian- equipment and operator safety connected workforce Pit to Hub (monthly) 80% Hub to Rail (monthly) 80% Rail to Port (mobthly) 80% Port to Harbour (monthly) 80% operations, companies will need to rethink updated more frequently, and shorten the based international mining company Pit Pit to Hub (daily) 80% Hub Hub for Rail (daily) 80% Rail Rail to Port (daily) 80% Port Port to Harbour (daily) 51% Harbour the way in which they generate and process planning cycles. has combined innovative thinking PvP Shipping Yard 1 U PvP IoT sensors for real time ‘Digital Twin’ – U PvP U PvP U 20% 40% 20% 40% Digitised Geological 15% 30% 26% information, and utilise data-driven analytics 24% data capture and integrated technology in oneDigitised of engineering and Site 1 Data 30% 30% 15% asset information Mine A techniques to optimise their complex 27% 28% Reporting and analysis of historical data will its underground mines. Through an Broken Stock 75% 38% Truck Crusher Stockpile 75% 38% 18% 10% T X Stockpile T X Vessel systems all the way from pit to customer. T X T X enable insight from trends, patterns and initiative called ‘Taking the Lid Off’, it Digger Train Loadouts Car Dumper Ship Loader Port Departures opportunities for improvement learned exhibited the way in which a myriad Shipping Yard 2 The information layer or “nerve centre” Site 2 from experience. of communication and location 50% Junction1 50% of a digital mine will bring together data Mine B technologies, as well as software Broken Stock Digger Truck Crusher Stockpile Train Loadouts Car Dumper Stockpile Ship Loader Vessel across the mining value chain in multiple Future insight will be derived from systems, can combine to create an time-horizons, to improve planning, control Shipping Yard 3 historical analysis to improve planning, intelligent mine management system, Site 3 and decision-making, in order to optimise 50% simulate the integrated supply chain, and including features such as real time 50% volume, cost and capital expenditure, and Mine C Broken Stock Digger Truck Crusher Stockpile Train Loadouts Car Dumper Stockpile Ship Loader Vessel predict future outcomes. Increasing use production management, tracking also improve safety. of analytics and artificial intelligence (AI) and monitoring.4 Note: This sanitised image is illustrative of the client’s actual supply chain visualisation tool. tools will support knowledge workers.

DISCOVER & ESTABLISH EXPLOIT RESOURCES BENEFICIATE ORE MOVE PRODUCT SHIP TO CUSTOMER

INTEGRATED OPERATIONAL PLANNING, CONTROL AND DECISION SUPPORT Digital in action A major global miner was seeking opportunities to identify latent system potential across their pit, rail and port network. REAL TIME DATA PLATFORMS Data-driven analysis generated over two million Real time sensor data to Integrated well governed drive short interval control in execution, data platforms support scenarios to identify significant unrealised value reduce variability, and shorten all processes and in the system and tested each of them against planning cycles all time horizons operational reporting data to measure the feasibility of the proposed changes (i.e. based on historical performance, the analysis determined if it was possible to process, move, or operate in each scenario). This determined the most achievable scenario with the greatest potential HISTORICAL FUTURE increase in value. Reporting and analysis of historical Future insight derived from data and insight gained from historical analysis to improve The analysis highlighted that higher production analysing trends, patterns and planning, simulate the DIGITAL MINE NERVE CENTRE and greater shareholder return could be achieved opportunities for improvement Data driven insights drive improved integrated supply chain, by adjusting traditional assumptions in the mine learned from experience planning control and decision and predict future outcomes, support across the mining using analytics and AI tools and system planning. All of this within a system value chain which was previously considered as “at maximum capacity”. INTEGRATED ENTERPRISE PLANNING AND SUPPORT PROCESSES This rapid scenario based analysis is now being used to augment planning decisions on an MAINTENANCE SUPPLY ENERGY MANAGEMENT HSE & COMMUNITY FINANCE HR IT MARKETING ongoing basis.

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Drones for inspection, Integrated stock and safety monitoring remote operations

Autonomous Wearables for ﬁeld maintenance Diverse mobile equipment and operator safety connected workforce

Digitised Geological IoT sensors for real time ‘Digital Twin’ – Data data capture Digitised engineering and asset information The digital revolution | What will the future digital mine look like? The digital revolution | What will the future digital mine look like?

Support processes – re-imagined A lean set of corporate processes will be Shared services centres and Centres ERP and automated support processes assisted by robotic process automation of Expertise will employ a mix of on-shore, Digital in action Digital in action (RPA), which will automate repetitive human off-shore and robotic workforce, with Finally, the effects of digitisation will extend Automation is transforming the labour market. A global mining and metals organisation has beyond the core operations and the flow of activities to reduce costs and errors, and increased human-machine interaction DISCOVER & ESTABLISH EXPLOIT RESOURCES DeloitteBENEFICIATE estimates OREthat by 2035 approximatelyMOVE PRODUCTbeen a relatively earlySHIP adopter TO CUSTOMER of RPA within the artificial intelligence (AI) which will closely and new and different skills. information to the supporting processes 35% of current jobs in the UK will be automated.5 support knowledge workers. mining industry. After an initial proof of concept and systems of functions such as supply, Similar trends are expected in Australia and focused on the invoicing process in its global HR, and finance. The convergence of information technology A diverse, distributed INTEGRATED OPERATIONALSouth PLANNING, Africa. Robotic CONTROL Process AND Automation DECISION (RPA) SUPPORT shared services centre, it is now applying (IT) and operational technology (OT), and tools provide the ability to automate repetitive automation within its supply function. Mining organisations are going to be the integrated management of these and connected processes including data gathering and data entry challenged to completely re-think their The objective was to automate the manual work historically separate domains, is an enabler by ‘doing what the user would do’ via a software corporate structures, as new entrants workforce will expect for automation and digitisation of both core robot which securely logs into applications and of the supply team in expediting the material to the mining industry without existing and support processes. works with the visible user interface to enter orders and to seek to increase expediting coverage an enhanced userREAL TIME DATA PLATFORMS corporate infrastructure are able to information, navigate through screens and extract to more than what is currently just the top 25 establish new and innovative models for Real time sensor data to Integrated well governed Fully integrated communications networks, experiencedrive shortconsistent interval control in execution, and process the results. vendorsdata platforms due to the support manual alltime processes consuming process, delivering their non-mining requirements. leveraging the Long Term Evolution (LTE) reduce variability, and shorten high volumeand of all work time and horizons frequency of updates. with the home In other industries such as financial services, where spectrum, will support the mobile workforce planning cycles The solution included automation of SAP There is a strong and growing trend across all platforms, and cyber security will consumer experience. RPA has been widely applied in shared service towards not simply upgrading, but mitigate the risks of greater connectivity. centres, processing efficiency improvements from supply data into an integrated data platform, fundamentally “re-imagining” Enterprise RPA have typically been a factor of three to seven the development of a dashboard for inventory Resource Planning (ERP) and other support Technologies will enable work to be moved to times: in other words, a robot typically processes expediting analysis and reporting to site systems, using cloud-based solutions locations which can support a more diverse five times what a full-time equivalent (FTE) supervisors, and RPA for automation of the that have a low cost of ownership and and inclusive workforce, including primary employee would achieve. vendor communication process. contemporary user interfaces. carers and people with physical disabilities. HISTORICAL FUTURE Reporting and analysis of historical Future insight derived from data and insight gained from historical analysis to improve planning, analysing trends, patterns and DIGITAL MINE NERVE CENTRE simulate the integrated supply chain, opportunities for improvement Data driven insights drive improved and predict future outcomes, learned from experience planning control and decision using analytics and AI tools support across the mining value chain

INTEGRATED ENTERPRISE PLANNING AND SUPPORT PROCESSES Digital in action An Australian state government infrastructure agency

established a core system program to create one common MAINTENANCE SUPPLY ENERGY MANAGEMENT HSE & COMMUNITY FINANCE HR IT MARKETING platform, with one standard set of back-office processes (finance, HR, procurement). This became the foundation for an asset management program to establish a single source of truth for assets.

The solution is based on the core SAP business suite (ECC 6.0) on premise, cloud-based solutions for HR Reimagined core systems RPA for IT/OT Integrated communications Diverse & inclusive Shared Services (SuccessFactors) and procurement (Ariba), and HANA on cloud platforms support process convergence network with cyber security workforce & COEs Cloud services for selected external applications. The new core systems platform enables and supports the mobile workforce, with a simplified user interface that was not possible with the legacy, end-of-life systems.

Common standardised processes, combined with greater integration between applications, founded on a single source of data, enable a more holistic view across the organisation, and improved reporting and decision-making. The improved reliability and efficiency of assets is potentially worth billions to the state government over 10 years, in terms of avoidance of new capital from Treasury.

14 15 The digital revolution | What will the future digital mine look like?

Digital in action The convergence of IT and OT has been an increasing conversation point within the mining industry in recent years, and we are now seeing many of the large global miners evolving towards organisational alignment – to remove the historical separation between IT and OT environments – in search of lower operating costs and more efficient teams. Effectively delivering IT/OT convergence is as much a people, culture and change management challenge as it is a technology project.

1960 - 1979 1980 - 1999 2000 - 2010 Today 2020

OT Application

OT COMMON

OT Technology OT Environment Database Middleware Technology Operating System IT IT Hardware

COMMON IT IT Application

Analog operational Compute technology IP technology arrives to • Prevalence of networks processes (terminal arrive into industrial industrial controls along (3G/4G/WiFi) blocks and relays) operations (PLC, DCS, PC) with network connectivity • Sensor prices decrease (WAN/Internet) • Cyber risks increase

Digital in action BHP launches online freight platform to sink shipping costs Reuters, 26 January 2017 “BHP Billiton has launched an online system under which shippers compete to offer the best price to haul cargoes of commodities such as iron ore and copper to the mining giant’s customers. BHP this week allocated its first cargo using the auction-style platform, which it hopes will save money as it bypasses brokers who traditionally help negotiate vessel-hire rates between cargo owners and shippers. Such platforms could potentially overhaul the way miners contract freight services, reducing their costs at a time when commodity markets appear to be picking up following years of low prices.”

16 17 The digital revolution | How can mining companies achieve true digital transformation?

How can mining companies achieve true digital transformation?

A measured and agile approach To thrive in the digital future, mining Although it can seem daunting to organisations should approach digital execute on an effective digital strategy, transformation by considering the following embracing the digital future should not five areas of focus: be a make-or-break proposition. Agility 1. Developing a digital strategy and will be key, and will likely be a buzzword, managing digital transformation but it must be combined with ruthless 2. Automating operations and digitising discipline in driving and demanding value assets from digital initiatives. This means that 3. Delivering the “digital mine nerve strategies that fail are quickly shelved, centre” for data-driven planning, while strategies that deliver can be rolled control, and decision making out in phases. 4. Implementing supporting platforms and enablers A holistic organisational perspective will 5. Leading a diverse, distributed and also be necessary: To leverage the power connected workforce. of digital transformation, miners cannot afford to get caught up in the widgets and toys. Instead, they need to embed digital thinking, processes and structures into their entire organisation in an effort to take corporate decision-making to the next level.

18 19 The digital revolution | How can mining companies achieve true digital transformation? The digital revolution | How can mining companies achieve true digital transformation?

We consider the typical challenges faced by mining organisations, and suggested approaches:

#1 #2 #3 #4 #5

Developing a digital strategy Automating operations Delivering the digital mine Implementing supporting Leading a diverse, distributed and managing digital transformation and digitising assets nerve centre platforms and enablers and connected workforce Rather than spawning disconnected From our experience with major To deliver on the digital mine nerve centre, Today, many roads to digital transformation As the digital mine becomes a reality, our Executives serious about reaping initiatives, digital strategy has to be mining organisations in programs such companies must establish a capability are blocked by core systems such as ERP, interpretation of what work is and how it the benefits of the digital future must motivated from the enterprise level and as autonomous haulage and remote to use data to resolve a wide range of which are often expensive to run and gets done is constantly changing. The consequently ask some hard questions: clearly define the value of digital initiatives operations, we understand the benefits business problems. In essence, intelligent maintain, and inflexible for future changes. future of work needs to consider the impact • Can current incumbents make to the organisation as a whole. and key considerations for successful business decisions will ultimately hinge on Upgrading core systems to cloud-based of human machine interaction on future this transition? implementation. In this context, access to timely and relevant information, applications and platforms can deliver work, workforce, and workplace. The future • How can they train for new skills Digital initiatives are often focused on collaboration is critical as companies in all time horizons. total cost of ownership (TCO) benefits workforce will demand and expect an and capabilities? the technical solution and are not always will need to operate in an ecosystem (typically in the range of 20-40%) and improved user experience, based on their driven by a well-articulated vision and • How can they foster a supporting of providers and partners, and will also Most organisations only use a fraction improved user experience, as the capability experience as consumers. strategy, nor a direct link to business value. and inclusive culture? need strong program management of the data they are already collecting, let of these solutions, and the associated “as Digital transformation should begin with and integration capabilities. alone the potential real-time volume that a service” business models, have matured. 74% of global business executives surveyed an understanding of the desired future could be captured via IoT, and many are still by Forrester state that they have a digital state, and the value to be created. 74% of global business A key question is how many mining struggling with limited business intelligence Around the edges of core systems there strategy, but only 15% believe they have the organisations have really delivered on the capability from historical ERP environments are typically many manual processes and necessary capabilities and skills to execute executives surveyed A key challenge in this new digital era is the promise of remote operations centres to and non-integrated operational systems. spreadsheets. Complementary to core that strategy.6 ability to deliver change at the pace that challenge and change their operations, system changes, RPA can replace some by Forrester state that achieves short-term results (within existing including taking advantage of a global Skills and experience in data science tasks currently performed by humans, The digital mine is an organisation constraints) while maintaining flexibility to skillset (most operations centres are still they have a digital and analytics are in demand and scarce. presenting an opportunity for cost transformation, it requires a new approach enable longer-term transformation. New single product/single country focused). approaches can be tested in a pilot or Establishing the capability for an insight- reduction in support processes and to leadership, a culture which embraces strategy, but only 15% driven organisation requires developing shared services. Mining companies should data-led decision making and diversity, sandbox environment, rolled out in phases, Most asset-intensive organisations or easily shelved. and embedding data science and analytic embark on proof of concept and pilot a new way of operating and diverse and believe they have the face challenges with management of skills across the organisation, as well implementations to test the potential different skills and capabilities. This is no engineering and asset information necessary capabilities Another key challenge is the large number as the foundational data platforms and benefits and gain experience in a rapidly easy task for mining companies, which will throughout the asset lifecycle, including of vendors offering products and platforms analytic tools. growing domain. increasingly find themselves competing for data integrity issues and time wasted and skills to execute to provide solutions for many digital scarce digital talent. To succeed, companies 6 looking for documents. An initial step opportunities, but no single vendor has a must bring in these new skills whilst also that strategy. towards the creation of a “digital twin” complete solution for the entire future supporting their current high talent pipeline should be an assessment of engineering Shareholder Value digital mine - organisations will need to be to successfully make the transition. 5 able to manage an ecosystem of providers, data management (EDM) capabilities and which will evolve over time. maturity, to highlight the gaps and focus Revenue Growth Operating Margin Asset Efficiency Sustainability digitisation efforts on the areas of greatest Selling, Property, Production Plant & Receivables Company Business Safety & External Reserves Volume Price General Income Tax Reserves & Inventory Funds Cost Equipment & Payables Strengths Continuity Wellbeing Factors value and impact. & Admin Resources

Digital in action | Deloitte Digital AgilityTM Framework

Engagement Intent and Scale Platforms Strategic Disruptors Operational Evolution Perspective Experience Digital in action | Deloitte Enterprise Value Map for Mining Operational Eng. Evolution Platforms Business Value Strategic Objectives Shareholder Value Disruptors 5 Experience Experience Operational Evolution Revenue Growth Operating Margin Asset Efficiency Sustainability Engagement Strategic Platforms Disruptors Selling, Property, Production Plant & Receivables Company Business Safety & External Reserves Volume Price General Income Tax Reserves & Inventory Funds Cost Equipment & Payables Strengths Continuity Wellbeing Factors & Admin Resources INNOVATION STRATEGY AND BUSINESS DESIGN

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Engagement Intent and Scale Platforms Strategic Disruptors Operational Evolution Perspective Experience Operational Eng. Evolution Platforms Business Value Strategic Objectives Disruptors Experience Experience Operational Evolution Engagement Strategic Platforms Disruptors

INNOVATION STRATEGY AND BUSINESS DESIGN

The time to act is now Authors

Digital disruption is absolutely a reality for Where to start With the technological For more information please contact a Deloitte mining professional: the mining sector. What we’re seeing is that By understanding the changing landscape “the mining industry is going through one and the drivers of these changes, mining landscape rapidly of the most intense periods of change we organisations can put their best foot have ever seen, and the ability to innovate forward by equipping themselves with evolving, there’s no – to evolve, adapt, and improve – is insights and practical steps on how to 1 time to waste. indispensable.” tackle the challenges and opportunities of a digital revolution. With the technological landscape rapidly evolving, there’s no time to waste. It’s clear If not ready for a full enterprise-wide Steven Walsh Paul Klein George Simpson Andrew Swart that “organisations, big or small, that are digital strategy and transformation, Partner | National Partner | Technology Director | Technology Partner | Global Mining not able to adapt to this new era of mining organisations can start by Consulting Lead, Strategy and Architecture Strategy and Architecture Consulting Lead automation are likely to struggle. Although automating specific processes or digitising Energy & Resources D: +61 8 9365 7060 D: +61 8 9365 7048 D: +1 416 813 2335 their workforces may have scale, brawn or a pilot set of assets. It’s important to deliver D: +61 8 9365 7097 M: +61 419 013 405 M: +61 416 025 717 [email protected] M: +61 418 813 302 deep technical skills, they are unlikely to be solutions focused on business value as [email protected] [email protected] [email protected] able to compete against the might of the quickly as possible, “fail fast, fail cheap”, machines or organisations with a workforce and learn. It’s time to get on with it. with more adaptable skills.”7

David Cormack John Woods Ben Ninio Adriaan Davidse References Partner | Consulting Partner | Consulting Director | Consulting Director | Consulting D: +61 8 9365 7071 D: +44 20 7007 5992 D: +44 20 7007 9449 D: +1 416 874 3176 M: +61 4 2386 1116 [email protected] M: +44 7477 286825 [email protected] [email protected] [email protected]

1. The Innovation in mining: Australia 2016 study, p 2, conducted by Deloitte in association with Diggers and Dealers and the Association of Mining and Exploration Companies (AMEC). Accessed at https://www2.deloitte.com/au/en/pages/ energy-and-resources/articles/innovation-mining.html

2. Rio chief spruiks value over volume, The Australian, 15 February, 2017.

3. IDC, September 1, 2015. “Robotics, Transparency, and Virtual Reality: The Critical Role of Digital Transformation in Mining. Accessed at http://www.idc.com/getdoc.jsp?containerId=prAE25879615 on October 25, 2016

4. International Mining, November 9, 2016, “Rick Howes’ ‘Taking the lid off’ makes an Outstanding Innovator.” Accessed at http://im-mining.com/2016/11/09/rick-howes-taking-the-lid-off-is-an-outstanding-innovator/ Roland Labuhn Andrew Lane Rhyno Jacobs 5. Agiletown: the relentless march of technology and London’s response, p 5, Accessed at https://www2.deloitte.com/uk/en/ Partner | Consulting National Mining Leader | Associate Director | Consulting pages/growth/articles/agiletown-the-relentless-march-of-technology-and-londons-response.html D: +1 587 293 3217 Deloitte Africa D: +27 113 045 299 M: +1 403 612 0537 D: +27 115 174 221 M: +27 828 592 440 6. Forrester, 2014. Referenced in Decoding Digital Leadership, Deloitte 2016. Accessed at https://www2.deloitte.com/uk/en/ [email protected] M: +27 833 262 849 [email protected] pages/public-sector/articles/decoding-digital-leadership.html [email protected] 7. Talent for survival, Essential skills for humans working in the machine age, 2016. Accessed at: https://www2.deloitte.com/ uk/en/pages/growth/articles/essential-skills-for-working-in-machine-age.html

22 23 The digital revolution | Global contacts The digital revolution | Global contacts

Global contacts

Global Leader, Mining Global Leader, Energy & Resources Colombia Turkey Phil Hopwood Rajeev Chopra Julio Berrocal Uygar Yörük +1 416 601 6063 +44 20 7007 2933 +57 5 360 8306 +90 312 295 4700 [email protected] [email protected] [email protected] [email protected]

Africa Australia France United Arab Emirates Andrew Lane Juliet Bourke Damien Jacquart Salam Awawdeh +27 11 517 4221 +61 2 9322 7379 +33 1 55 61 64 89 +971 4 376 8888 [email protected] [email protected] [email protected] [email protected]

Africa Brazil India United Kingdom Tony Zoghby Eduardo Tavares Raffaini Kalpana Jain Tim Biggs +27 11 806 5130 +55 21 3981 0538 +91 11 4602 1406 +44 20 7303 2366 [email protected] [email protected] [email protected] [email protected]

Africa Canada Mexico United Kingdom Cathy Gibson Phil Hopwood Cesar Garza James Ferguson +27 11 806 5386 +1 416 601 6063 +52 871 7474401 x4401 +44 20 7007 0642 [email protected] [email protected] [email protected] [email protected]

Americas Canada Peru United Kingdom Glenn Ives Andrew Swart Karla Velasquez John Woods +1 416 874 3506 +1 416 813 2335 +51 1 211 8559 +44 20 7007 5992 [email protected] [email protected] [email protected] [email protected]

Argentina Canada Poland United States Edith Alvarez Ben-Schoeman Geldenhuys Tomasz Konik Sandeep Verma +11 4320 2791 +1 416 775 7373 +48 32 603 03 35 +1 214 840 7182 [email protected] [email protected] [email protected] [email protected]

Argentina China Russia United States Alejandro Jaceniuk Michael Liu Igor Tokarev Amy Winsor +54 11 4320 2700 ext. 4923 +86 10 85207813 +74 95 787 0600 x 8241 +1 303 312 4156 [email protected] [email protected] [email protected] [email protected]

Australia Chile Southeast Asia United States Nicki Ivory Christian Duran Rick Carr Kara Bresnahan +61 8 9365 7132 +56 22 729 8286 +65 623 27138 +1 212 436 7448 [email protected] [email protected] [email protected] [email protected]

Switzerland David Quinlin +41 58 279 6158 [email protected]

24 25 Notes

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