Digitalisation to help mining companies improve efficiency

The Wood Mackenzie 'Global trends: what to look for in 2019' report looks at emerging business models that ensure global mining companies remain at the forefront of the energy transition.

"Building a world-class, low-cost, mining business seems to be the mantra. Major players, such as BHP, Rio Tinto and Vale, are increasing the share of electricity and automation in mining operations. The objective is to not only reduce scope 1 emissions (from their own activities) and air pollution, but also to lower human involvement and opex. By employing data analytics, companies are chasing productivity and efficiency and lowering costs as a result. The aim is to stay at the lower end of the cost curve should demand for traditional mining commodities fall.

“In 2017, BHP set a long-term goal of achieving net-zero scope 1 and 2 emissions in the second half of this century. In 2018, Rio Tinto announced successful deployment of AutoHaulTM, establishing the world’s largest robot and first automated heavy-haul long-distance rail network in the Pilbara region of Western Australia. The key question will be whether other mining majors follow this trend in 2019," said Wood Mackenzie Research Director, Prakash Sharma.

The report also highlights other strategies being employed by miners, including a full transition away from fossil-heavy businesses, decarbonisation and capitalisation.

"Exiting from coal or fossil-heavy businesses altogether is something we saw in 2018. Examples include Rio Tinto, Wesfarmers and Consol.

"BHP, South32, Mitsubishi, JERA and Banpu have all made moves to reduce the carbon footprint of their legacy businesses. This has incorporated either divesting thermal coal business to focus on metallurgical coal or moving into related areas such as renewables and battery raw materials. In addition, BHP sold its US shale assets in 2018 to BP for US$10.5 billion vs the US$15.1 billion it originally paid to acquire them from Petrohawk. Teck Resources also announced it was developing its QB2 copper project in Canada, which it believes has a robust demand profile due to the rise of electric vehicles and renewables.

"Glencore and Yancoal have leveraged existing capabilities to develop an efficient and competitive higher-energy coal portfolio. Both firms made huge strides in Hunter Valley in 2018, collaborating and consolidating in the premium thermal coal market. Meanwhile, Indonesia’s Adaro Group expanded into the metallurgical coal business by acquiring Kestrel from Rio Tinto in Australia.

“Increasing investor, regulatory and consumer pressures will continue to push companies towards decarbonising their portfolios. Reputational risk is increasing for some. Strategies may differ, but everyone – upstream, refining, power utilities, mining, shipping and automakers – is thinking about it. Finance and insurance firms are also tweaking portfolios to reduce their carbon footprint. We expect more companies to unveil energy transition blueprints in 2019,” added Sharma.

Read the article online at: https://www.globalminingreview.com/mining/23012019/digitalisation-to-help-mining-companies-improve-efficiency/