Mining Needs Disrupting
The mining industry is good at innovations that deliver incremental improvements to operating practice but has been historically poor at innovations that can deliver decisive change. There are now positive signs, however, of companies being more 'disruptive'.
It can be argued persuasively that the mining industry is good at 'sustaining' innovation but poor at 'disruptive' innovation. Over the past three years Goldcorp Inc. (now Newmont Goldcorp) has been trying to do something about the latter with its annual C$1.0 million DisruptMining Challenge.
Sustaining, or routine, innovations are those that improve the performance of already established products and services. This is by far the most common type of innovation, and the one that most mining companies and equipment manufacturers embark upon to deliver operating improvements.
Disruptive innovations, in contrast, are those that create new markets and/or disrupt existing value networks, and so displace established market-leading companies and products. Chief amongst these innovations for the mining industry are digital technologies, such as those that were explored in the recent Mining Beacon blogs on Artificial Intelligence (AI) and the Internet of Things (IoT).
Disruptive innovation includes products or services that initiate a profound change in operating practice, and eventually deliver radically lower prices and/or sharply enhanced efficiency. For miners, this disruption has been coming mainly from smaller, technically aware, companies (especially start-ups), rather than the major companies, which have tended to focus on what they do best and pursue incremental improvements rather than revolutionary changes.
These innovations are driving the industry continually to refresh its business model, and as we enter the fourth industrial revolution (see AI blog) the rate of necessary change is accelerating. To be leaders in this new environment, mining companies must adopt mindsets and practices that embrace perpetual change, and position themselves to identify opportunities, foster innovation, integrate the technology and take advantage of the competitive advantage.
Blockchain is perhaps the best recent example of technology that has disrupted the mining industry (and is an exception to the rule of junior companies taking the initiative).
Blockchain, which is already changing the operating dynamic of numerous companies associated with the mining industry, is defined by Investopedia as "a decentralised distributed ledger that records transactions between two parties. It moves transactions from a centralised server-based system to a transparent cryptographic network. The technology uses peer-to-peer consensus to record and verify transactions, removing the need for manual verification."
Blockchain technology was first outlined in 1991 by Stuart Haber and Scott Stornetta, two researchers who wanted to implement a system where document time-stamps could not be tampered with. However, it was not until almost two decades later, with the launch of Bitcoin in January 2009, that blockchain had its first real-world application.
Mining companies and metal traders most impacted by blockchain technology include those for whom there is a competitive advantage in being able to demonstrate conclusively that their metals/minerals are sourced ethically. This is particularly beneficial to companies legitimately mining and trading precious metals, cobalt and diamonds.
With regard to diamonds, Alrosa and De Beers are at the forefront of the industry's blockchain initiatives. They are collaborating on the blockchain traceability platform, Tracr, to create an "immutable and secure digital trail" for each diamond from mine to jeweller. Tracr integrates participants' existing record-keeping system and each diamond's attributes with images, planned outcome images and its physical properties to verify authenticity through data science and physical identification techniques. The data is then consolidated into a digital trail and verified at each key milestone of the diamond's passage.
In March 2017, Goldcorp launched an annual competition "to encourage ideas, spawn technologies and generate opportunities to tackle the mining industry's most vexing challenges". The Vancouver-based company offered a C$1 million capital investment to the winners "to bring their disruption to mining" (www.DisruptMining.com).
The DisruptMining Challenge offers entrepreneurs "a platform to bring disruptive and exponential technologies to the sector, whether it's unlocking exploration opportunities; finding operational and production efficiencies; reducing the environmental footprint and delivering on sustainability commitments; or developing alternative ways to finance mines and capital projects." Last year the company stated, "our goal is to uncover the next revolutionary concept that will truly disrupt our industry".
To-date there have been three of these annual challenges (co-hosted by KPMG and timed to coincide with the PDAC conference). There were five finalists in the inaugural event in March 2017; Bio-Mine Ltd (bio-intelligent organisms for metal recovery), Cementation (pump-driven shaft hoisting), Goldspot Discoveries (machine-learning for exploration), Kore Geosystems (drill-rig instruments) and Tradewind Markets (for an electronic trading platform).
In March 2018, the four finalists were Acoustic Zoom (which aims to unlock the potential of Canada's mineral exploration sector with high-frequency 3D imaging), EnviroLeach Technologies (developing an eco-friendly, and economic, alternative to cyanide), LlamaZOO Interactive (which has created MineLife VR, a software platform that enables companies to represent a mine plan from exploration to reclamation in an interactive 1:1 scale) and Open Mineral (which is digitising the relic practices of physical commodity trading).
In March 2019 the three finalists were Anaconda Mining (for a revolutionary drilling approach for narrow vein deposits), Andritz (training artificial intelligence to autonomously operate a mineral processing facility) and Voith Turbo (an IoT application that increases the intelligence of belt conveyors).
In response to an enquiry, Newmont Goldcorp said it is "pausing" the DisruptMining Challenge for next year but is "continuing to plan for 2021".
By its very nature it is hard to predict what the future holds for disruptive innovations in the mining sector. Completely new mining methods and equipment, however, are surely likely. Such innovations are certain to benefit the industry's marginal operations by reducing the cost of extraction.
Nevertheless, despite the expectation of compelling improvements in operating practice, the next phase of innovation must surely address the mining industry's two most important issues, namely health and safety, and community relations.
Many innovations to improve the health and safety of miners were addressed in a previous blog, although more still needs to be done. The industry's community relations remain problematic, however, and are made harder by the speed that social unrest can be exacerbated by the unprecedented access to communications technology. Miners need new innovations to not only improve their product but to deliver the positive message.