Fortescue Metals Group has been called a disruptor and the world’s mining majors are being forced to dump a commodity that, until recently, contributed a big portion of their income and profits. So have innovation and social pressures let mining’s disruption genie out of the bottle, or is it still business as usual in one of the world’s old-guard industries? Daniel Poller and Damien Williams think we’ll find out soon enough.
The CEO and Solutions and Implementation Manager at mining tech start-up Auto-mate are counting on the speed of the industry’s digital and automation journey picking up.
But whether they are helping miners to automate traditional vehicles and processes, or something more representative of a paradigm shift in the approach to extracting and processing minerals from the ground, remains to be seen.
Either way, Poller believes mining is ripe for change – possibly even the type of change that has created a new global corporate order, dominated by tech companies, over the past 20 years.
“Shale gas produced a fundamental technology shift and disruption in the oil space. It may have dragged the US out of recession [post the GFC],” he says.
“In the power industry, where I used to work, I think we are seeing a shift. Yes, the traditional energy majors have the capital base and know what to do to remain relevant, but we’ve had a lot of wealth creation in the renewable energy space and that’s only just started.
“So I think these big, capital-intensive industries are not impervious to change.
“In mining we see barriers to rapid change, but also forces and factors that might really challenge the industry’s leaders to plan differently in the years ahead.”
New world iron ore major FMG rode the recent price hike for the steel-making commodity to an A$80 billion market value before it was hit, like its peers, by iron ore’s reversal. As well as disrupting the Pilbara’s former iron ore duopoly and resetting the global sector hierarchy, and driving production costs down to levels once thought impossible, FMG has been part of the region’s switch to autonomous mining fleets and has dabbled in alternative equipment such as continuous surface miners and mobile overland conveyors.
Now the company is trying to drum up government and industry support in Australia to disrupt the global steel-making industry with ‘green steel’ made using renewable energy and hydrogen.
Along with the rise of state-backed Chinese mining majors over the past 20 years, FMG has been the standout agent of change in mining’s top-20 global list and it is signalling the revolution isn’t over.
Meanwhile, coal’s role as a profit engine for the world’s big miners seems to be over and rising investor heat on mining companies to cut carbon emissions, drive water and land use down, and demonstrate greater environmental and social stewardship has already been a catalyst for different corporate behaviour and decision-making.
Access to resources, capital and people are all challenges for mining companies, with the fight to attract and retain talent to drive the industry’s so-called ‘smart mining’ era of technological change now a hot discussion topic at most investment and technical forums.
Poller, who has spent more than 20 years in energy, mining and investment banking roles, mainly in Asia, before joining Auto-mate in 2020, believes a trend in mining toward greater collaboration between end-users of products and technology – miners and contractors – and suppliers, to leverage available skills and expertise, is only going to accelerate as the talent war builds.
“One of the great things about tech companies is that with relatively small amounts of capital you can create meaningful change, and create value. Whereas in the traditional mining field you need to invest so much into your exploration process, into your capital development process – it’s such a capital heavy game. You can’t have two kids in a garage saying, ok, let’s build a huge mining company,” he says.
“They can create a new tech company.
“So that is attractive to investors and it’s attractive to participants.
“If you’re a great data scientist do you want to work in a mining company or do you want to work at Facebook, Google, Amazon, or your own start-up. How do we incentivise talent to do that work here in our industry as opposed to somewhere else?
“We’re here really to democratise automation to some degree”
“Maybe the majors will still be able to attract that talent, but for the mid-tiers it will be more challenging. And that’s where a lot of the innovation focus in mining has got to be, partly because there are a lot more companies in that space and also because they have to be better users of capital because they generally don’t have the best orebodies.
“We are focused on the mid-tier players, much more than we’re focused on the large ones. We’re not here to compete with Cat or Komatsu on the ultra-class dump trucks. We’re here really to democratise automation to some degree.
“For the mid-tier players it’s not just about cost anymore. It’s about the implementation and having enough of the right people to be able to focus on it. We see projects being pushed back not because they don’t have the intention to automate but because they don’t have enough internal capability to get it done.
“I think that right now is the biggest barrier we have.”
Auto-mate on the one hand is a typical technology start-up knocking on the door of mining and contracting companies looking to land a place in upcoming project development schedules.
On the other hand, the company brings unique technology from Israel Aerospace Industries (IAI) and partner Bis Industries’ existing connections with many Australian miners, to the negotiating table.
Williams says there is no shortage of interest from miners in WA and elsewhere in the technology and support proposition Auto-mate has proposed. COVID travel restrictions, particularly for IAI technical experts, has delayed piloting of new machines and capabilities at WA mine sites. But the former Caterpillar technology area manager for Africa, Middle East and Asia Pacific and now Auto-mate’s solutions and implementation manager says the real challenge so far has been elevating automation projects into planning schedules ahead of “lower hanging fruit” that might range from a processing plant upgrade to standard fleet renewal.
“People are not saying they don’t believe in the ROI on technology,” Williams said.
“But some might say they could spend the money on a processing plant upgrade, or new capital equipment to get fleet utilisation up, and whilst that’s going to get them a lower ROI – they do it every day, they’ve already got the people in place, procurement channels in place, and so they’re going to do that first and then they will circle back to the automation project.
“This relates again to the internal people issue and having the capacity to deploy.
“As we’ve talked about, we as an industry need to be investing in these people and creating more internal capacity. Instead of mining companies going to the big tech players and leveraging their R&D spend, where we might get incremental gains but lose an expert from our industry to the tech industry, we need to have that R&D spend in our own backyard and retain the knowledgeable people in the mining industry.
“I see no reason why someone, a mining expert, should go to an AWS or a Google and spend five years of their career educating and convincing everyone how miners will get value of out a technology, or try to convince them to go to market with something truly innovative, when they can start solving problems today.
“We need to see those skills drawn to an industry that is going to provide the raw materials that will help disrupt transport, communication and energy markets over the next 10 years.”