Navigating the Digital Frontier: Three Strategies for Mining Industry Transformation

The mining industry is at a pivotal stage and the next decade will be crucial in determining the future of the industry. While the global shift towards renewable energy sources has sparked a surge in demand for essential minerals, mining companies face a formidable array of challenges. From heightened scrutiny on licensing to talent shortages, asset reliability, declining new discoveries and geopolitical complexities, the path ahead is anything but straightforward.

To overcome these challenges and seize the opportunities presented by the digital age, mining companies must embrace technology as a strategic ally. Developing new technologies and deploying them at scale is going to be a key factor in future success stories. According to Axora's mining innovation forecast, the percentage of mining companies characterizing their advancement in adopting a digital strategy as "advanced" grew by 6% in 2022, reaching a total of 53%. However, a one-size-fits-all digital strategy is no longer sufficient.

Instead, miners should consider three distinct approaches: Pragmatic/Adoption, Nurture/Scale, and Lead Tech Advancement.

1.?????? Pragmatic/Adoption

In this approach, mining companies leverage mature technologies and readily available solutions, such as ERP systems, cloud storage, cybersecurity and employee collaboration tools. These enterprise-wide functions are not a source of strategic differentiation, so simplicity and efficiency are key. Functions like finance, procurement and transactional HR can be simplified by adopting business process that are already embedded at packaged IT applications. Those areas were highly automated or outsourced by other industries and mining companies can benefit from the current maturity by adopting an aggressive "buy" strategy.

Shifting to a simplified landscape also enhances data sources, unlocking the potential for analytics and artificial intelligence (AI). Many mining enterprises already employ a centralized model in their core ERP and enterprise solutions, making a pragmatic approach highly advantageous due to the digital technology's maturity in these areas. IDC in its 2023 predictions highlighted that by 2024, 50% of the top mining organizations will utilize cloud-based operational planning and simulation tools, providing decision support, greater analytics and improved optimization capabilities.

By adopting established business processes and market-ready solutions, miners can accelerate their digital transformation, freeing up resources for more critical endeavors like analytics and AI.

2.????? Nurture/Scale

Unlike enterprise functions, talent availability for core technologies in mining operations, with deep knowledge of physical operations and digital models, can be scarce and take a long time to train and mature. Bridging this gap requires creating remote operating centers that bring together multidisciplinary teams and enhance supply chain transparency. However, productivity improvements have not met expectations, partly due to pandemic restrictions, though even after the restrictions were lifted increased the trend remains negative.

In the realm of mining operations, the landscape is predominantly characterized by OEM/Hardware provider solutions, with global service support still evolving and talent scarcity across the board. Large mining companies often rely on local small/medium-sized service providers, usually acting as distribution channels for hardware solutions, while a limited number of global service providers offer consistency.

To embrace a Nurture/Scale digital strategy, mining firms must establish governance that encourages experimentation and pilot initiatives at the business/site level, with a clear focus on scaling from day one. Central funding and value office disciplines play pivotal roles in continuously assessing progress and offering guidance beyond localized site or commodity-specific needs. Building nurturing, long-term partnerships with vendors is crucial, enabling vendors to invest more while allowing mining companies to tap into a stronger talent pool and encouraging vendors to expand talent resources in challenging locations. By 2025, IDC expects that 50% of mining organizations will have implemented digital talent strategies either by developing those in-house or purchasing services from system integrators.

This strategy is particularly relevant in the context of AI, where numerous existing applications in mining operations present untapped opportunities for scalable solutions. A nurturing strategy encourages experimentation at the business/site level while maintaining a commitment to scaling from day one. It also involves managing long-term partnerships with vendors to build stronger talent pools and incentivize further investment in challenging locations.

3.????? Lead Tech Advancement

Exploration and mining development are critical for mining companies' strategic advantage, but new discoveries have dwindled and senior talent is in short supply. To address these issues, mining companies should take the lead in advancing exploration and mining development technologies. This shift is picking up pace and as per IDC’s predictions for 2023, they expect 40% of mining organizations to utilize geological mapping satellite data. Historically, the industry has relied on internal solutions and less technology-intensive processes. Still, the future demands significant investment in talent development, partnerships with academia and ventures to foster innovation. Top leadership sponsorship and a subculture dedicated to tech advancement are essential.

The exploration and mining development technology vendor ecosystem primarily consists of niche players and start-ups, though certain industry players have dabbled in geospatial technology and 3D vision to some extent. However, upcoming challenges demand that mining companies assume a leadership role in advancing technology within this domain. This entails substantial investments in talent development, entrepreneurial ventures, and collaborations with academia. Mining firms can draw insights from industries like Oil and Gas that have treaded a similar path, but this journey will necessitate direct top leadership support and the establishment of a dedicated subculture.

By adopting these distinct digital transformation strategies, mining companies can better navigate the challenges of talent availability and ecosystem characteristics. Embracing technology is not just an option; it's a necessity for the mining sector to thrive in the next decade. As the world transitions to cleaner energy sources, mining companies have a unique opportunity to drive positive change, and technology is the key to unlocking it. The industry is making large strides, as evident from the IDC 2021 Mining survey, where 95% of CEOs indicated that digital investment is a focus and 27% even self-assessed themselves as pioneers. The consulting majors are also investing a lot to offer end-to-end services to their clients. For example, Accenture completed the acquisition of Bangalore-based Flutura in June 2023 to strengthen the company's industrial AI services for clients in the mining and heavy industry space. A one-size-fits-all approach simply won't suffice in this complex landscape.

I'd like to thank Aldo Souza, Liv Carroll?and?Eric Croeser?for their contributions to this article.

My posting reflects my own views and does not necessarily represent the views of my employer, Accenture.

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