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Speaker 1: Hi everyone, I'm Mark Taylor and you're listening to Switch

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Speaker 1: on the BENF podcast. On December second of last year,

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Speaker 1: we did an episode on ethical cobalt Danta and I

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Speaker 1: interviewed Quacy and POFO about a recent trip he took

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Speaker 1: to the Democratic Republic of the Congo to look at

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Speaker 1: mines there. He talked about some of the minds he

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Speaker 1: saw that we're our teasonal minds where people were still

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Speaker 1: using pick axes and shovels to mind cobalt. But he

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Speaker 1: also mentioned about halfway through the episode about a mind

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Speaker 1: he saw that he called the most advanced mind he'd

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Speaker 1: ever seen. Now, today we're going to dig into that

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Speaker 1: topic a bit more. Yeah, I know pun intended. We're

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Speaker 1: going to talk about digitalization and mining. We'll talk with

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Speaker 1: BENF digital industry analyst Daniel lu about a report she

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Speaker 1: wrote with Quacy called Digitalization Strategies in Mining. BENIF clients

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Speaker 1: can find this report on beanf dot com, the BENF

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Speaker 1: mobile app, and the Bloomberg terminal. It has always Beneif

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Speaker 1: does not provide investment or strategy advice, and you can

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Speaker 1: hear the full disclaimer at the end of the show. Okay,

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Speaker 1: let's get to it. Hi, Daniel, him Mark, thanks for

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Speaker 1: coming in, Thanks for having me. Can we start off

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Speaker 1: today with the real basics. So why would anybody who

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Speaker 1: is not a miner care about digital advances in mining? Well,

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Speaker 1: I think the core of your question is why should

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Speaker 1: anybody who's not a minor right care about mining the industry? Okay,

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Speaker 1: So if you care about things, then you should care

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Speaker 1: about mining because mining is how you get the material

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Speaker 1: to make things. So if we expect economic growth, which

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Speaker 1: hopefully we all do, that usually translates into more things,

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Speaker 1: more new products, more technology, more material goods, and mining

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Speaker 1: is going to have to really boom and take off

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Speaker 1: to fuel that demand. So, in essence, if you care

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Speaker 1: about things, if you care about economic growth, you have

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Speaker 1: to care about mining. So the advances will talk about

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Speaker 1: today everybody should maybe be rooting for those, I think so,

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Speaker 1: I mean, if you're excited about electric vehicles, if you're

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Speaker 1: excited about the new iPhone next year, if you're excited

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Speaker 1: about really any new technology or any material good, then yeah,

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Speaker 1: you should be excited about these improvements in mining. That said,

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Speaker 1: what are the pressures that are facing miners to make

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Speaker 1: improvements that we will talk about in a second. Yeah,

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Speaker 1: so I think that maybe, um, it's a corollary to

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Speaker 1: kind of what's happened in oil and gas. So oil

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Speaker 1: prices have tanked and been very volatile the past few years,

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Speaker 1: and the same thing has been happening in the commodities markets,

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Speaker 1: so for iron, aluminum, cobalt, gold, everything like that. UM,

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Speaker 1: commodities have been in wild fluctuation. And obviously commodity prices

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Speaker 1: are directly linked to the revenue, the top line revenue

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Speaker 1: of all mining companies. So when commodity prices fall as

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Speaker 1: they have, that means mining companies lose a lot of revenues.

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Speaker 1: So in the past decade or so, if you look

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Speaker 1: at commodity indices, they've been swinging a lot and that's

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Speaker 1: resulted in up to loss of market cap for a

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Speaker 1: lot of major mining companies like Rio Tinto, Haliburton, Glencore,

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Speaker 1: a lot of these companies that are big players globally,

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Speaker 1: and a few of the ones that we write about

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Speaker 1: in our note. In the note, you also mentioned to

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Speaker 1: other challenges that are facing miners, a surgeon demand for

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Speaker 1: battery medals, and a focus on sustainability. Can you comment

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Speaker 1: on those how those are driving minors toick go digital. Yeah,

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Speaker 1: so more electric vehicles, more grid scale batteries on the

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Speaker 1: grid will require more battery metals like lithium and cobalt.

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Speaker 1: A lot of those are mine from artisanal minds today.

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Speaker 1: A lot of them involve humanitarian or environmental issues and

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Speaker 1: their supply change. So these two things really are linked.

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Speaker 1: To get more battery metals and to become more sustainable,

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Speaker 1: the mining company or the mining industry should look towards

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Speaker 1: technologies that can improve its operations, improve their yields, and

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Speaker 1: really improve transparency so that you can help make it

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Speaker 1: safer for humans. So going back to sustainability a little bit,

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Speaker 1: that's a growing trend all over the place, and it

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Speaker 1: seems to be mining is following suit or are they

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Speaker 1: kind of affording their own path. I think they're trying

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Speaker 1: to follow suit. Yeah, absolutely. I think a lot of

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Speaker 1: large investors, especially institutional investors, are paying a lot more

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Speaker 1: attention to efficiency, human rights issues, environmental stewardship in their operations.

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Speaker 1: And mining is a pretty materially intense industry. It creates

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Speaker 1: a lot of voice and it creates a really really

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Speaker 1: big impact on the landscape. So, yeah, there is in

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Speaker 1: increased E s G pressure across the board. But mining,

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Speaker 1: I think has a really big onus to use more

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Speaker 1: technology to improve its environmental footprint. So why is digitalization

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Speaker 1: the way to go for miners to accomplish these goals

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Speaker 1: or is it? Or there are other ways they could advance? Well,

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Speaker 1: I think number one, we should look at mining as

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Speaker 1: just one of several industries that are becoming interested in

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Speaker 1: digital technologies. So may manufacturing, power, utilities, oil and gas, transport, shipping,

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Speaker 1: you name it. All of these incumbent heavy industries are

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Speaker 1: becoming very, very interested in using new technologies to just

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Speaker 1: become leaner and better. And in a lot of regions,

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Speaker 1: especially in places like China and Germany, with a lot

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Speaker 1: of support for industrial technology, you as a company need

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Speaker 1: to adopt more digital technology if you want to compete

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Speaker 1: into the future. So for a lot of industries and

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Speaker 1: a lot of regions, going digital is no longer a

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Speaker 1: question of if or should I It's a question of

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Speaker 1: when or how, which I think is the natural next step.

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Speaker 1: And the next question, how are they going digital? Yeah?

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Speaker 1: So I have a lot of examples from our research,

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Speaker 1: but let's maybe start from the basics. So one of

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Speaker 1: the most basic technologies in industrial digitalization is sensors. Sensors

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Speaker 1: capture signals from the physical world and turn it into

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Speaker 1: digital So there's a lot of applications for sensors in mining.

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Speaker 1: Um One tidbit that I learned is that for every

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Speaker 1: unit of material that you dig out of the ground,

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Speaker 1: only one percent of that is usable at the end.

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Speaker 1: So that means everything that you dig up and transport

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Speaker 1: and use chemicals to refine needs to be taken care

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Speaker 1: of somehow so or one of the interesting applications for

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Speaker 1: sensors that we looked at is putting sensors on the

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Speaker 1: lip of a shovel truck. So when that truck digs

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Speaker 1: a new bucket of material from the ground, these sensors

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Speaker 1: can send kind of X ray beams into the material

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Speaker 1: and the dirt in the bucket, and then it can

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Speaker 1: instantaneously show you, the driver or the operator, how much

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Speaker 1: of the material in that bucket is, for instance, gold,

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Speaker 1: how much is cobalt, how much is aluminum? Basically how

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Speaker 1: much is how much does it contain what you're looking for?

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Speaker 1: And then you as an operator can then make the decision, oh,

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Speaker 1: there's too much waste in here. It's not worth it

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Speaker 1: for me to spend so much fuel to transport it,

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Speaker 1: so much water, so many chemicals, so much power and

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Speaker 1: electricity to process it. Or if it has above a

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Speaker 1: certain threshold, then that makes you helps you make a

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Speaker 1: smarter decision about where to send that truck of material,

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Speaker 1: so scan it, then choose to dump it or ship

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Speaker 1: and then it just enables smart routing. Basically, it helps

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Speaker 1: you avoid so much more downstream power, chemicals, water, energy

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Speaker 1: that you maybe would have otherwise wasted. Another cool technology

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Speaker 1: is drones and robots. So in mining, oftentimes you'll dig

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Speaker 1: up a whole bunch of material and then you'll just

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Speaker 1: basically leave it in a stockpile on your site and

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Speaker 1: then get to it later for processing. So humans have

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Speaker 1: to walk around and take manual measurements or use their

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Speaker 1: eyes to gauge how much material is in a aisle

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Speaker 1: of rock. That takes a lot of time, and that

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Speaker 1: takes a lot of people just walking about, sometimes an

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Speaker 1: inclement weather, sometimes maybe in dark, dangerous conditions. You can

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Speaker 1: do that much faster, much easier with a drone that

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Speaker 1: just flies overhead. It uses a smart camera on board

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Speaker 1: to make an estimate of the volume of material. That

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Speaker 1: is in a stockpile, and then that gets you information faster.

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Speaker 1: That gets you information much more frequently, which is great.

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Speaker 1: Same thing with robots. So precision mining is something that

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Speaker 1: a lot of companies are really really interested in. It

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Speaker 1: means they're not just blindly digging material out of the ground.

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Speaker 1: I'm not saying that they are now, but they can

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Speaker 1: get better, right, they can become more accurate, and then

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Speaker 1: if you have really agile robots that can dig in

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Speaker 1: very very precise ways, that helps you reach your ultimate

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Speaker 1: mineral better. Probably the hottest technology in the mining industry

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Speaker 1: is autonomous haul trucks. So these are the trucks that

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Speaker 1: transport the mineral that you just dug up from your mind.

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Speaker 1: Then they transport it to your processing site. Now, these

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Speaker 1: are the big, giant trucks with the wheels that are

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Speaker 1: bigger than people. Okay exactly. So I think a lot

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Speaker 1: of the public and a lot of I didn't know

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Speaker 1: this before, but the mining industry has been using fully

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Speaker 1: automated hall trucks for a decade or more. Autonomous. Fully

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Speaker 1: autonomous so no driver there. Either they travel on a

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Speaker 1: preset GPS route or they can be remote controlled by

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Speaker 1: you know, like a joystick from a control tower, which

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Speaker 1: is really cool and I think that UM sounds fun.

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Speaker 1: So that's been a really great application of technology UM

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Speaker 1: and it's spreading through that to those to be autonomous.

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Speaker 1: It's been popular. For instance, for one company that we

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Speaker 1: profiled called Frio Tinto, a lot of their operations are

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Speaker 1: in Australia, so compared to other major mining companies, Australia

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Speaker 1: has a really high cost of labor. So for Rio Tinto,

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Speaker 1: if you can automate as many processes as you can

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Speaker 1: and avoid high labor costs, that directly translates into their

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Speaker 1: bottom line. And it's not just cost right, it's also

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Speaker 1: removing humans from potentially risky or dangerous situations. On the

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Speaker 1: equipment side, if you can put data and autonomy into

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Speaker 1: that truck, you can route it. Again, it's with smart routing,

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Speaker 1: so you can route it better, less wear and tear

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Speaker 1: on the internal gears and tires, and sometimes you can

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Speaker 1: see up to forty or increase in the lifespan of

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Speaker 1: your tires, which is really cool. So it sounds like

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Speaker 1: each one of these things is a percent here, percent

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Speaker 1: there that really adds up to make a real impact

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Speaker 1: on the company's bottom line, I think. So, yeah, I

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Speaker 1: think there's no magic bullet now that gets you with

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Speaker 1: one technology yield. But yeah, it's it's a conglomeration of

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Speaker 1: a lot of different things. And that's actually a good

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Speaker 1: point is that many companies are experimenting with bringing a

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Speaker 1: suite of these technologies altogether. So a lot of companies

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Speaker 1: are experimenting with fully, fully automated and fully electric underground minds,

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Speaker 1: which is really really cool. So underground minds are tend

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Speaker 1: to be more risky, right, um, and they tend to

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Speaker 1: involve more investment. They start as open pit or above ground,

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Speaker 1: and then once they run out of easy to dig

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Speaker 1: material or mineral, then they move underground. So it's almost

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Speaker 1: an evolution of the mine. Um. So a lot of

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Speaker 1: companies are experimenting with going fully autonomous, fully electric for

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Speaker 1: underground minds, which I think is really cool. And again

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Speaker 1: there's that human element of an improving workers safety and

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Speaker 1: improving impact on the environment as well. So last Sunday,

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Speaker 1: I was eating lunch and I was I was watching

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Speaker 1: YouTube confession and I found myself watching a Bloomberg short

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Speaker 1: documentary on space mining. I saw that you did. It

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Speaker 1: was fantastic. You know, shout out to the Bloomberg media

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Speaker 1: team for making it. It was really fantastic. And one

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Speaker 1: of the points they made was that a lot of

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Speaker 1: the technologies that they are working on for space mining

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Speaker 1: may not ever mine an asteroid, but they are being

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Speaker 1: able to be used on minds here on Earth. Where

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Speaker 1: are most of the advances coming from. So are these

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Speaker 1: being you know, developed specifically for mining or from space mining,

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Speaker 1: or they borrowing from other industries? No, I mean, believe

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Speaker 1: it or not. Even though mining has been using autonomous

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Speaker 1: hall trucks, for instance, for a decade, a lot of

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Speaker 1: other industries are very very far along. And that's one

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Speaker 1: thing that I think the mining industry has been really

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Speaker 1: good at is looking at other industries, other pure industries

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Speaker 1: sometimes and then learning from them, learning what they did well,

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Speaker 1: and learning what technologies had the most impact. A lot

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Speaker 1: of airlines, for instance, use predictive maintenance on their aircraft

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Speaker 1: to Yeah. So it's a piece of software that uses

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Speaker 1: AI to read the sensor data coming from each individual part,

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Speaker 1: each individual um or something. Yeah, and then if it

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Speaker 1: senses that, oh, the vibration is off by a tiny

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Speaker 1: little bit, it can predict I think that means that

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Speaker 1: the engine will break down, or I think it means

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Speaker 1: that this gear will start to become more ineffective in

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Speaker 1: two weeks time or something like that, and it'll raise

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Speaker 1: its hand and it'll send you an alert. And that

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Speaker 1: means you can schedule your operations and maintenance at much

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Speaker 1: much better times. You can avoid catastrophic failures, and you

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Speaker 1: can schedule your maintenance to happen maybe on downtimes when

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Speaker 1: you're not losing a lot of dollars by bringing that

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Speaker 1: machine down. So Mining has been learning a lot from

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Speaker 1: the airline industry on predictive maintenance and bringing a lot

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Speaker 1: of that technology to for instance, it's hall trucks or

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Speaker 1: the mills and processors in mining refineries. Um, same thing

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Speaker 1: for the automotive industry. I think Mining has done a

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Speaker 1: really good job at looking at automation in the automotive

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Speaker 1: manufacturing space and trying to figure out what it can learn,

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Speaker 1: what it can take from that. So I don't think

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Speaker 1: it's necessarily a bad thing that mining has been a

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Speaker 1: little bit late to the game to adopt digital technologies,

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Speaker 1: because it means they have all these great lessons to

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Speaker 1: learn from and maybe it gets them to their result faster.

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Speaker 1: Even you mentioned that Rio Tinto has has autonomous hauling vehicles.

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Speaker 1: Can you talk about some of the advantage that the

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Speaker 1: other competitors have made, So who is leading in digital

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Speaker 1: in mining across all technologies? From our research at least,

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Speaker 1: it seems that Rio Tinto is a pioneer and on

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Speaker 1: the leading edge. Is there a reason for that? Um?

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Speaker 1: I think it has to do with the fact that

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Speaker 1: really well and then identified automation as the technology to

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Speaker 1: make the biggest impact on their operations, and that a

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Speaker 1: lot of that has to do with kind of the

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Speaker 1: labor costs that we talked about earlier, UM, But they've

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Speaker 1: just been really methodical about applying automation to high value

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Speaker 1: segments and high value pieces of equipment over the past decade.

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Speaker 1: Like I said, they've had this program for ten years,

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Speaker 1: so they've been able to reap a lot of rewards.

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Speaker 1: So I think Rio as a leader there. We talked

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Speaker 1: a lot about sustainability earlier, and you know, there are

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Speaker 1: a lot of companies out there that are making carbon

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Speaker 1: neutral pledges and even carbon negative pledges, which is really exciting.

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Speaker 1: But the same thing is happening in mining, So Anglo

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Speaker 1: American is a good example of a company that has

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Speaker 1: a goal of making mining carbon neutral. In a recent

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Speaker 1: episode on the battery supply Chain, I believe it was

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Speaker 1: with James Rith, he talked about Dimeler wanting to come

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Speaker 1: up with a carbon neutral battery that would also involve

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Speaker 1: carbon neutral mining cobalt, I would assume, or lithium. So

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Speaker 1: how does how would carbon neutral mining work? Well, I

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Speaker 1: think in the near term it will probably involve a

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Speaker 1: lot of carbon offsets rather than technologies that actually avoid emissions,

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Speaker 1: but a lot of software. For instance, energy management software

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Speaker 1: in a mining processing plant can cut down on your

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Speaker 1: energy usage by so much and that can be really helpful.

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Speaker 1: They're also thinking about the same thing in terms of water,

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Speaker 1: so water use in mining is a huge issue, especially

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Speaker 1: because a lot of mining operations happen in water stressed

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Speaker 1: regions or countries. So there's a lot of innovation going

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Speaker 1: on with trying to help the industry be able to

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Speaker 1: get that one percent of material out of the one

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Speaker 1: percent that you dug up using as little water, as

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Speaker 1: little energy, as little chemicals as you can. So more

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Speaker 1: stuff is going to mean more mining, more advances, so

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Speaker 1: the mining companies can survive all this, uh this more

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Speaker 1: mining that's going to come. What's next? Is there a

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Speaker 1: big overarching theme you're seeing coming up? I think we're

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Speaker 1: still in the early days in mining and in a

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Speaker 1: lot of heavy industry overall. Actually a lot of industries

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Speaker 1: are just figuring out how to apply these technologies make

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Speaker 1: them work because a lot of these technologies, let's be honest,

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Speaker 1: they're very expensive because a lot of them are new.

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Speaker 1: So how to make them work and how to make

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Speaker 1: them cost effective? I think strategy as well. There hasn't

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Speaker 1: seemed to be one silver bullet digital strategy that has

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Speaker 1: emerged as the go to model in mining. I think

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Speaker 1: oil and gas is actually a little bit further ahead

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Speaker 1: in that, but it hasn't happened yet in mining, which

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Speaker 1: I think is actually really exciting. So a number of

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Speaker 1: the companies that we profile in our upcoming peace they're

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Speaker 1: experimenting with different strategies. They're experimenting with who takes care

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Speaker 1: or who takes responsibility for technology. Is that the central

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Speaker 1: office or is it each mining site? Or you know,

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Speaker 1: do I develop more technology in house so that I

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Speaker 1: can own it, or do I buy it from partners

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Speaker 1: who maybe further along, but obviously that's an additional cost.

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Speaker 1: So I think it's an exciting UM time because there's

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Speaker 1: a lot of figuring out left to do UM and

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Speaker 1: then just going back to what we said at the beginning, right,

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Speaker 1: mining is directly linked to economic output. Mining is one

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Speaker 1: of the oldest industries probably on Earth. It's probably the

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Speaker 1: oldest industry to find. You have to find the rock

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Speaker 1: to make the tool right right exactly. So in order

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Speaker 1: to create all of these promising new things, and in

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Speaker 1: order to create the world of tomorrow filled with all

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Speaker 1: these great technologies that we all want and look forward to,

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Speaker 1: it's a lot of that is going to depend on mining. Daniel,

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Speaker 1: Thanks for joining us. Thanks mor it's been fun. Bloomberg

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