Capital Equipment News September 2019

EDITOR'S COMMENT

ADAPT OR DIE

T he African mining industry is point is coal, which has seen a significant fall in prices this year. To give an idea, the price dropped to US$72,01 a tonne in June, said to be the weakest in two years and down 40% from its seven-year peak of US$119,74 in July last year. Market sources believe thermal coal prices appear poised for a sharp drop that could seriously squeeze producer profit margins, especially for high-cost mining companies. Several thermal coal producers facing high-cost structures are in Africa, and could be among those vulnerable to lower prices. Looking ahead, many existing mines are maturing, leading to the extraction of lower ore grades and longer haul distances from the mine face to the processing plants; ore-body-replacement rates are in decline; and new-mine-development times are increasing. Additionally, according to McKinsey & Company, global mining operations are as much as 28% less productive today than a decade ago – and that’s after adjusting for declining ore grades. So, how can the industry survive the tough cycle? To respond to these challenges, the mining industry has shifted its focus to improving productivity by “sweating” existing assets, but this strategy is not a long-term solution. As you will see in this edition of Capital Equipment News , achieving a breakthrough on productivity performance demands rethinking how mining works – experts believe that digitalisation is the answer to the current woes. How can digital innovation improve mining productivity? There are several digital technologies that have long been in the works and are now available and affordable enough to become operational under pressure. In the short term, falling commodity prices are squeezing cash flow. A case in

at scale across the mining industry. Their applications include building a more comprehensive understanding of the resource base, optimising material and equipment flow, improving anticipation of failures, increasing mechanisation through automation and monitoring performance in real time. Some of these technologies are not necessarily new to the industry. They have been applied at mines for years, but a major drawback is that they have been deployed in isolation. Alone, each of the technologies has potential; together, they represent a fundamental shift in both potential safety and productivity outcomes. There are several clusters of digital technologies that can help mines in their quest to improve productivity. For example, the South African market is being driven by asset reliability and prediction technology. This has become critical as operations seek to prevent unplanned downtime. Mines operate at high costs and one hour of lost production has a large impact. Globally, there are four key digital technology areas that are receiving attention from industry – computation power, data analytics, human-machine- interface and robotics. These are key enablers in unlocking value in a way that would have previously been cost inefficient or just plain difficult or risky – this is especially true when integrated holistically across the mining value chain. Mining has traditionally been slow to adopt new technologies due to the scale and complexity of its operations. However, the operating environment presently forces business to adapt or die. The rate at which changes need to happen in mining businesses is faster than it has ever been. Fortunately, technology is not only available, but is increasingly becoming more affordable to enable digital transformation.

Munesu Shoko – Editor

capnews@crown.co.za

@CapEquipNews

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CAPITAL EQUIPMENT NEWS SEPTEMBER 2019 2