Andrew Lane: making a step change

Modernisation, innovation, and new technology are about to change the mining industry forever, Andrew Lane tells Leon Louw.

Andrew, you are well known as a thought leader in the mining industry; where did it all start?
I started my working life as an electrical engineer with the telecommunications company Altech. After that I moved into manufacturing and worked at Nampak and Bidvest for several years. I started consulting 16 years ago, and joined Deloitte in 2012. Almost all the projects I’ve been involved in during my career as consultant, up to now, have been mining related.

That said, I must emphasise that I am not a mining expert. My role is to assist companies to solve problems and to find the right solutions.

Talk about the South African mining environment is widespread. What is your view and outlook for the country’s mining industry?
There is an emerging consensus that the commodity prices are on an upswing. Therefore, the doom and gloom is a lot less than what it was last year. Iron ore, coal, and copper prices have all made an impressive comeback. Gold continues to be difficult to predict. 

alane

However, the country is not marketing itself as an attractive investment destination. We can write for days on the political dynamics and why investors get cold feet. But the bottom line is that miners only really care about two risks: the geological risk (what’s in the ground) and the regulatory risk. All the other potential risks, for example the political risk, can be dealt with. But mining companies need the regulations to be fixed and consistent over the long term. Mine owners must be 100% sure about what’s in the ground and the regulatory regime before they will invest in a foreign country.

The main concern for me is that investors are extremely nervous about the regulatory regime in South Africa now — and it is not just because the Mineral and Petroleum Resources and Development Act (MPRDA) has not been finalised yet. It is also not only about the new proposed mining charter. In my view, it is what politicians say on public platforms. Emotive statements can create a perception among potential investors that South Africa will not always remain an investor friendly mining destination. The South African government faces massive challenges in finding an economic order that achieves their transformation goals while still remaining investor friendly. I don’t think they have figured out the solution yet. South Africa won’t be successful if we continue leaking money at the current rate.

Are there any solutions?
Of course, there are solutions. We need to improve the communication between the mining industry and government. Ideally, you would want those parties to work together — under a shared value construct. We have got ourselves into a space where we are working against each other and we are talking past each other. Everybody is telling everybody else what to do. For me, those are the factors that we need to land on an economic order that works and to get a healthier dialogue going between industry and business.

What are the current challenges for mining companies?
For the deep level platinum and gold mines there is a mechanisation imperative. Mining companies in both sectors are at a crossroads. Mining is one of those endeavours that gets more difficult the longer you continue. The tonnes you dig out tomorrow will cost you more than the tonnes you dug out yesterday. Most gold and platinum mines in South Africa are getting into increasingly deeper and more difficult territory.

Most of the mines are old and have multiple decline systems. It takes half a shift just to get the workers to the stope and back again. If mines remain in a space where they cannot be profitably and safely mined with current mining techniques, then we have a challenge. Mechanisation must happen. And it will happen — the forces of economics will ensure that mechanisation becomes a reality. The trick is going to be how do you deal with the socio-economic impact of mechanisation.

We need to think more innovatively about the socio-economics of our mines. The big question is, how do we remain sustainable (as a mining community) in an environment where there are fewer wage earners. I don’t have the answer.

Do you think that mines are using their social spend prudently?
No, not in all cases. I think mining companies can use its social spend better. I would like to contend that 80% of the social budget is wasted in the industry, because it is viewed as the cost of compliance. Most companies don’t necessarily achieve the social outcomes they would like to achieve. One of the submissions I made around the new charter was that before you ask for more money, let’s get value out of the money that has already been spent. Four per cent of net profit is a big number — to deploy that in a way that creates sustainable livelihoods would make a huge difference in the country. This is the kind of innovation that needs to happen alongside the technical innovations to make it work.

How important is innovation in the mining industry, and how can we promote more innovation?
We need to make a step change in performance. We all know that the hard rock, deep level mines are desperately looking for a continuous autonomous mechanical solution. The question is how do we use this information better? For example, how do we manage energy better? When you talk about innovation, there is no silver bullet that will solve the entire problem. Innovation is about convergence. You can’t just say let’s put an autonomous miner in there. That on its own is not good enough.

What we should ask is how do we use the internet of things and get information out in real time, but at the same time ask the right questions, for instance, how do we manage energy better? How do we capture wasted energy of a smelter? How do we make sure that when the truck is on a decline that we generate energy back into the network? How do we optimise the mix between diesel and electric? Electric is far better up a slope, but you are tied to wire. We need to bring all these factors together in a way that will enable us to manage an operation at half the unit cost than what we are currently doing. Every single aspect in a mining operation provides a manager with a range of important data. If he or she has access to all that data in real time, they will be able to manage the mine more efficiently and cost effectively.

Will digitisation play a role in making that step change?
We need to ask how digital technologies will enable us to make a step change in performance, for example, where is the waste in the business? And how will a digital intervention eliminate that wastage. Think of it in terms of a hierarchy. If you start at the bottom level, you try to eliminate the variation — it’s the good old-fashioned Six Sigma. You want to get the process under control. So how does the data help you do that?

There is no doubt that any mine manager would want complete and accurate data in real time. In a traditional mining operation, a manager would only know what happened yesterday when the nightshift supervisor comes out in the morning and when the next shift has already gone down. However, if the data is produced in real time, the manager can intervene, as they know exactly what happened, what is not happening, and why it has happened. That’s where digitisation starts playing a pivotal role.

The other obvious area is in terms of predictive maintenance. For example, the load haul dumper (LHD) can be pulled into the workshop before it breaks in the haulage and before days are lost in production. Once we have the system under control we can look at the next level. We can look at the data from a continuous improvement point of view. So, we need to bring other variables into play. Where are the step change opportunities? If we designed it differently, where would we get a step change? Digital is about real practical interventions to solve real problems and eliminate waste, but you also want to have the data coherent all the way through. So, if a CEO is sitting in his or her office and wants to determine the tonnages from day to day or even from hour to hour, the same information would be received as the supervisor on the ground. That process eliminates a delay in information and enables a CEO or a manager to intervene more expediently.

How do you think a mining operation will look in 10 or 20 years from now?
It will be exactly like what I have been describing to you. Continuous, autonomous, and there will be a mix of energy sources (electricity, solar, wind, natural gas, and diesel). The mine will be data enabled, remote controlled, and it will employ very smart, productive people. People will be highly skilled. There will definitely be less and less room for semi- or unskilled labour. We need to do something to create a supply of the skills that we need and make sure the people on the outside have access to that opportunity. It is imperative that this more productive mining business will create a multiplier effect into the rest of the economy. A vibrant upstream manufacturing industry is needed.

Click below to read the May 2017 issue of Mining Mirror.

MM May2017

 

 

Pin It

 African mines Online150 African Mining150 Mining Mirror150 mining Africa online150 MMPR150 MTE150 Plant Equipment Hire150 Quarry Southern Africa150African Mines Handbook150

Home Features Personality Profiles Andrew Lane: making a step change