Aussie miners urged to take in more tech

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Aussie miners urged to take in more tech

Analysts look to automation to reverse productivity declines.

Australia's mining companies need to take their investments in technology further to eke out operational efficiencies and reverse labour productivity losses that have built over the past decade, according to analysts BIS Shrapnel.

The firm's infrastructure and mining unit senior manager Adrian Hart told iTnews that lower commodity prices provided some impetus for miners large and small to make "fundamental changes" to their operations. This will provide some clear opportunities to take advantage of information technology.

Hart said that the era of increasing commodity prices had enabled miners to "just to let things slide the way they've been going, and just make do with the existing systems, [rather] than really have a big attack on the costs they're leaking by using those existing systems.

"The mining industry in the past decade has started on a lot of technologies, but they haven't really had that big pressure put on them to use it to bring down costs in a substantial way," he said.

"I think a lot of companies now will be looking quite heavily into how [they] change these systems fundamentally to get long-lasting productivity improvements.

"They need to make some fundamental changes in the way that they mine the ore ... and technology is going to be a big part of that."

Hart's comments come on the back of the release of BIS Shrapnel's Mining in Australia 2012 to 2027 report, which forecasts a "new war on costs within the mining sector", on the back of pressure from "low commodity prices, high and rising costs and the lowest labour productivity in a generation". (pdf)

Hart branded labour productivity in particular, as an "absolute disaster", pegging it at "60 percent off its peak in 2000/01", its weakest level since 1987.

"Labour productivity in mining operations has simply collapsed over the past decade," he said.

Miners were partially tackling the labour issue with a clampdown on contractors, causing several contract labour firms to "feel the pain".

"The next five years will be a battle of the balance sheets between miners, suppliers and contractors as the industry seeks to lower costs and restore productivity," he noted.

However, there would be opportunities for contract labour growth in areas such as maintenance as mining firms look to "integrate and optimise existing operations" and boost the productivity of existing sites.

Such a push also presents opportunities for technology system providers, such as those offering automated systems, which could drive productivity gains and efficiency.

Rio Tinto revealed last week that it had found an additional seven million tonnes a year in iron ore capacity within existing operations through the use of technology, such as automation and big data analytics.

While noting miners like Rio Tinto had already made some investments, Hart believed there was further room for technology spending.

"I think they [mining firms] need to go a lot further now. I think technology is reaching the point where they can implement a lot more labour-saving technologies, or certainly technologies that can make things a lot more productive," Hart said.

A key focus for the BIS Shrapnel report is to dispel talk about the mining boom "in a past tense".

"I think it's a bit too early to talk about mining as being yesterday's economy again," Hart said.

"I don't think its going to provide the economic growth that it has in the past because we're going to miss that big construction growth driver from having lots of new investment all at once, but it's still going to stay really high in terms of investment.

"When you take a long term perspective of this ... it's still going to be a huge and very important sector.

"It probably puts the onus on those in it and also the rest of us to make sure that it works as efficiently as possible because it will be a big part of the economy."

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