Industry Trend Analysis - Investment In Smart Mining To Accelerate - JUNE 2017

BMI View: Miners will increasingly invest in technology integration, including automation and internet connectivity, to improve competitiveness in a volatile mineral price environment. Major diversified miners, with the largest budgets, operating in developed markets capable of providing widespread internet access and skilled labour , will drive this trend.

The acceleration of technological integration in the mining industry will widen the gap between the top low-cost producers and junior miners, as well as improve the competitiveness of developed markets compared to underdeveloped. Following the first wave of installing sensors, equipment and employee monitoring devices, the next phase of modernisation in the industry will be the collection and analysis of data to streamline operations and anticipate problems - the application of big data, Internet of Things (IoT) and automation ( see ' IoT: The Future Of Mining ' , February 16 2016).

The benefits of applying technology to mining operations are clear: increased efficiency lowers costs, improved safety records and lesser waste and environmental impact. Over 2015-2016, at the bottom of the commodity price bust, miners turned to technology to cut costs and improve performance to better withstand future price volatility. For instance, in 2016, top copper miner Codelco increased the 'innovation budget' to USD75mn from USD60mn in 2015 and in December of 2016 created the Codelco Tech unit to drive innovative efforts. In September 2016, top gold miner Barrick Gold partnered with Cisco to develop a flagship digital operation at the Cortez mine in Nevada which will inform the eventual global rollout. Industry leader Rio Tinto rolled out the Processing Excellence Centre in Brisbane, Australia, and autonomous fleet utilisation in 2015.

Technology To Give Low-Cost Producers Additional Edge
Select Companies - Gold Mining All-In Sustaining Costs (USD/oz), 2016
Average based on Bloomberg Senior Gold Miners data. Source: Bloomberg

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