In mid-2011, when ore poured out of mines to waiting ships and rivers of gold flowed back from overseas at $183 a tonne, the price of IT projects was the barest consideration for Australia’s miners.
“The more they could get out of the ground the better. For anything that was going to affect downtime in the mine, dollars didn’t come into the equation,” says Ian Warner from ISW, an IBM reseller and 28th in the 2012 CRN Fast50.
The only focus was maximising throughput in a literal and figurative gold rush which fostered a mentality of “getting stuff out of the ground as fast as I can and I don’t really care how much (the IT) costs”, adds Anthony Viel, partner at Deloitte Forensic.
And then came the fall. Last September prices hit $90 a tonne, mining billionaires sold off their racehorses, and mining companies re-evaluated their technology spending. There was a noticeable pull-back in IT spending from the middle of last year in line with the plunging ore price, says Malcolm da Silva, executive director of Microsoft enterprise integrator Velrada.
“When the price came off we saw some projects literally come to a halt overnight. Some you could see the writing on the wall immediately, and they eventually stopped too,” he adds.
Miners slashed their capital spend and reduced discretionary spending. The emphasis swung to value for money instead of blind pursuit of the production dollar.
Yet it seems one truism survives the vagaries of markets and the idiosyncrasies of sectors: every company is concerned with security.
“We saw a real uptick in security and data protection” last year, says Ronnie Altit from Sydney-based Insentra, seventh in the 2012 CRN Fast50. The highly certified Symantec integrator sold backup, anti-virus and anti-spam to mining clients.
“They’re obviously very concerned that their data is packed up and protected. Data sets are growing dramatically, user accounts are growing; they need to make sure their software is current and the latest versions with the latest functionality like de-duplication,” Altit says.
Anti-virus is also critical to protecting sensitive data used for competitive advantage such as how much ore is left in a mine, and the trade secrets that relate to getting it out. Yet despite the influx of state-owned companies from China, few if any alarm bells have been rung regarding espionage.
Altit notes that like virtually every other industry with exposure to the economic contagion of the past several years, the mining industry has developed a sharper eye for value and tendency to spend only on the must-have items.
ROIs of two to three years had fallen to 12 months just so miners could keep more cash available. Nice-to-have projects that brought non-crucial improvements or had “soft” ROIs were more likely to be shelved.
At a time when mining CFOs were asking for shorter ROIs, security projects escape these restrictions.
“Security has no ROI. It’s prudent to do it and required, but is it necessarily going to drive business benefit? Some of this stuff is like an insurance policy, it depends how much you are prepared to insure,” Altit says.
Despite the recent cooling of the iron ore price, Insentra still sees plenty of opportunity.
“We’re [Australia] still one of the largest coal producers in the world. We will certainly be talking to [iron ore producers] about doing more things to get in a stronger technology position,” Altit says.
The effect of a soft ore price was not just less money and more oversight. The search for greater efficiency and cost containment has increased interest in technologies that fall into two buckets –optimising supply chains and more efficient management of assets, Deloitte’s Viel says.
Financial services may turn to players like SAP to provide a single operating platform for their businesses, but the mining sector is a more diverse field. From tracking coal trains to monitoring contractors’ drug tests, the range of variables and key indicators is too broad for a single application.
“Mining organisations are unique [compared to] other industries in the world as they experience extreme variability of conditions in the field that makes the monitoring, control and the artificial intelligence applied even more important to the success of these operations,” says John Jessop, vice president, mining solutions, Ventyx.
In 2011, Ventyx’s Swiss parent bought $200 million Australian mining software company Mincom.
Jessop stresses mining companies need to make a “quantum leap in productivity and responsiveness and could do well to leverage models embedded in other industries for many years, such as full coordination between production departments, high levels of automation and ‘just-in-time’ approaches”.
He notes that in fully integrated production processes there are valuable opportunities to optimise each unit and ultimately achieve more than the sum of the parts.
“Another example illustrates the adoption of continuous processes in traditionally batch-based areas of the operation – load and haul,” Jessop adds.
“There are a number of operations adopting in-pit crushing and conveying systems to lift throughput from the mine, reduce traffic and related safety hazards, reduce staffing required at the mine and improve predictability.”
A proliferation of small vendors tackle the many steps in tearing minerals from the earth. Interestingly, the specific purpose of mining hardware and software means it doesn’t require a lot of expertise to implement compared to complex applications such as Oracle and SAP which require heavy customisation, Viel says.
One of those niche players is Intov8, an analytical tool that shows mine managers how to improve operations using data consolidated from the mine’s various monitoring systems. Miners’ first reaction to the falling coal price was to fire staff and protect margins, but they could save more money by making their business more efficient, says Intov8 marketing manager Lisa Evett.
“One mine site might save $1 million a year by moving their train loading performance from 92 percent to 96 percent,” Evett says. “But because they don’t have access to that information they don’t know how to make those changes.”
Money often falls through the cracks because of different management perspectives. Accountants managing the mine’s affairs often have little understanding of how to improve inefficiencies at the shift level, Evett says.
For example, most mines have contracts with Queensland Rail National (QRN) to move ore from sites to port. When 100 wagons show up at a mine, it pays for all of them regardless of how many it fills by the train’s departure schedule. By ensuring enough coal is ready to fill all the wagons and all crew are on hand, a mine can increase the amount of coal transported and sold on the ship by between 5 and 10 percent.
The missed opportunity cost is not measured at the head office, which only sees a fixed cost for the supply of the wagons, Evett says.
“We display all those details in a live dashboard called Cash Burn so (the mine managers) can see in dollar terms how much they’re missing by having inefficient train loading performance. Without our software it’s best guess.”
Mine managers can compare results over time and compare and review best practice across several operations.
Ventyx’s Jessop stresses that the future for IT in the mining sector is in the creation of solutions that link what’s going on in the field, both in terms of actual operations and shifting geological profiles, to the business processes in real time.
“This change is taking the form of greater integration, visibility and ‘intelligence’ across operational technology (OT) production control systems, business information technology (IT) systems and the geotechnical information systems that manage the company’s critical assets, logistics, planning and operations,” Jessop explains.
“The result will be unprecedented agility in response to changing conditions in the operations and to both supply and demand fluctuations.
“Next-generation technology solutions (converging both IT and OT) provide the visibility and insights required to improve the power of the control operations, while integrating many operational ‘silos’ (drill/blast, load/haul, concentrator, smelter) that typify many mining operations today, enabling mining organisations to operate with a more complete and actionable view of their operations.”
Big mines equals bigger data
Deloitte Forensic, which analyses mining applications to find the best of breed, notes increased activity around big data and big data technologies.
“Big data is supply chain optimisation,” says Deloitte’s Viel, adding that miners have planted sensors throughout the supply chain to collect information in real time at a granularity never seen before. It’s a trend changing the way mines respond to operational challenges.
Take spare parts management. A mine can stop functioning if a crucial piece of machinery fails and remains offline until a replacement part can be sourced, imported and transported to the mine site. And often the cost of these parts is astronomical.
Naturally miners are loath to spend large amounts of capital creating parts inventories they may never use. But by using big data techniques, more and more are figuring out how to maintain slim inventories without increasing risk.
“You can only optimise that when you understand the lifecycle of spare parts,” Viel says. “It wasn’t important two years ago when you just needed to have spare parts on board because you wanted to get things out of the ground as quickly as possible.”
Viel compares the miners’ current obsession with supply chain and asset management to the experience recently faced by airlines which cut costs on all fronts to remain competitive. The miners need to answer the same question:
“Do I need to maintain the same schedules or can I achieve my objectives while better maintaining my spare parts and inventory?”
The sheer volume of data captured through sensor networks is challenging the typical database approach, Viel says. Instead of pouring the data into a database and asking queries at a point in time, the deluge of real-time data may need to be processed on the fly.
But according to Insentra’s Altit, there are few adequate solutions for storage and backup of mega-data sets, and the space will continue to be in flux until early adopters start driving others towards it. People are watching and waiting.
One area where big data is gaining real traction is the public sector, which has the money to fund cutting edge practices without too much concern for returns.
One example is GeoScience Australia, a government organisation that provides pre-competitive data to mining companies to increase the accuracy of their prospecting, provides free access to a vast mass of information about Australia’s subterranean and sub-aquatic areas.
Room for niche players
The size and wealth of Australia’s mining sector has spawned a robust community of high-level consultants and attracted some of the biggest systems integrators in the country. But there are still nuggets of opportunity for niche technology resellers to dabble.
Managed print specialist SmartPrint (third in the 2012 CRN Fast50) has several well-known mining companies on its dance card including Cardno, Ausenco, Sandvik and Bateman Engineering.
“A lot of them are large corporates and they can make an educated decision to focus on their core business which is mining,” says Jason Ganis, SmartPrint’s director. “We’ve found them to be pretty easy to deal with.”
Like all SmartPrint’s customers, its mining clients make a commercial decision to reduce costs by analysing their printing patterns. The difference is many miners have multiple sites in far-flung regions that don’t have a local copier dealer to supply parts and toner. Two customers with offices in Kalgoorlie and in Ireland have found that suppliers don’t always have the infrastructure to maintain good relationships.
“The vendors can supply the equipment but if it breaks down they have a big problem fixing it. Downtime can be massive, up to two months if they have to put it on a ferry or a ship,” Ganis says.
SmartPrint sometimes installs a rescue device to eliminate downtime and analyses vendors’ coverage to recommend the best solution. Xerox might be the best in one remote area because they fly technicians in every week for a big mine next door, Ganis says.
The company provides the best fit of vendors and locks it in with tight SLAs. It uses automated toner replacement to head off supply issues and remote service diagnostics to reduce on-site visits.
“Instead of sending someone out to Karratha and finding out a copier needs a maintenance kit and we’ve just driven out for five hours, we can courier it out to them,” Ganis says.
The managed print provider has to cater to all tastes formed through small-town alliances.
“One office in Karratha might like the Konica dealer whereas the Brisbane office might like Canon and HP,” Ganis says.
Juggling the variables, weighing risk and pricing in profit can be tricky when servicing remote and regional offices. SmartPrint follows the same principle as city clients by aggregating machines in head office and mining towns to give the miners metro pricing under a holistic solution.
But it doesn’t always work and the company is selective.
“There might be months when we take a bath on it and months when we make a profit. We wouldn’t just do one in the middle of nowhere with one machine,” Ganis says.
“It has to have scope where we can reduce the client’s costs. Otherwise we will tell them ‘you’re doing well, this is a premium service’.”
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